Making One Good Trade Decision

smbcapitalTraders Ask2 Comments

I’m a newbie, trading for my second month live at a young prop office in Moldova, been trading my account unsuccessfully for almost 2 years before this.

I wanted to share a short story of Thursday’s trading.

In the morning I couldn’t find any good opportunities for my approach to the Market, but then came the news in BP and I knew this would be the one for today.

So I started to Read the Tape.

Once BP got below 45.50 I could feel how sellers took control, then the .56c offer couldn’t lift -awesome! and then even better the 50c offer held too and sellers would smack the bids, so I got short with a stop above that. Soon after I shorted aggressive buying came in, and I got away and started to think long.

As it pulled back close to 50c I was trying to get long but wasn’t fast enough, so I waited for something else. And then the bids would not drop that easy, buyers stepped in and around 45.82c the bid was holding, once that was confirmed I got long. After it held above for a while it dropped and I got stopped out.


After this second loss I kinda got discouraged(“God I suck reading this tape!”) and started to watch other stocks and I wasn’t paying close attention to BP’s Tape(big mistake!). I just saw a bounce of the low and decided to go long – ripper. After a short walk I came in and re-shorted when it couldn’t trade above $45, added when it held lower and got stopped out- what a rip!

And here starts the interesting part of the story:) Cool enough my recording was on. At noon, I went back to watch the recording and I was amazed with what I saw.

After I got stopped out of the first long, BP came back to that 45.50 and a clean amazing hold on the offer at 45.60c signaled the first short entry. I even exclaimed sell when I was watching the film :). The real short was right here below 50c with a stop at 61c 62c. Not watching the tape till the end resulted in me getting long in front of that 60c and then executing a short which was 50c too late.

I read your One Good Trade multiple times now, I just want to say thanks for inspiring to watch tape for the past 2 years!

Any advice and feedback will be uber appreciated!



Excellent job with your review process here.  Recording your screens and then playing back the Level 2 to get better at Reading the Tape is an excellent best practice.

When we make trade decisions we do not just use the Tape.  We consider The Big Picture, Intraday Fundamentals, Technical Analysis and the Tape.  We look for stocks that have a news catalyst- Intraday Fundamentals.  We generally trade with the trend on the long-term and intraday technicals.  We are cognizant of what is moving the market overall and market support and resistance levels.  We watch the Tape to help determine good entries and exits and confirm strength/weakness.

There are plays where we just Read the Tape.   Momentum trades, scalps, microscalps, etc.  Reading the Tape is a very important skill to develop for the short term trader and swing trader.  But most of our trades are Trades2Hold where we hold until there is a reason to exit.

I hope that helps.  Gr8 job by you working hard on your trading game.  I love it!

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“You can be better tomorrow than you are today!”

Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected].

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2 Comments on “Making One Good Trade Decision”

  1. Hi, I am the Head of Trading of the Company mentioned in the article, just wanted to add that Vasile is one of our most hardworking trader and we are trying hard to develop the habit of self analysis and trade improvement for all our guys. Its a long process, hard one but Im looking forward to improve the guy’s skills and take the best practices from the of Prop Trading Companies!

    Vasile – Great Job and Thanks Mr. Bella for supporting and giving us valuable advice.
    Trade Smart!

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