One Bad Trade (a new trader education video series)

Learn how a junior trader from our desk made One Bad Trade in our new trader education videos series. See how a junior trader absolutely had the right idea about where a stock was headed but still lost money because of poor entries and exits.

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learn how a junior trader from our desk
made one bad trade in our new trader
education video series hi I’m Mike
bellifiore co-founder of SME capital and
we’re a proprietary trading firm located
in midtown Manhattan and I’m also the
author of the trading classic one good
trade and the playbook click our
subscribe button so you don’t miss any
of the videos they’re producing for you
in the trading community see how a
junior trader absolutely had the right
idea about where a stock was headed but
still lost money because of poor entries
and exits let’s dive in so this is my
trade yesterday and no of X it’s the
anti playbook that you asked us to put
together this is the view opera
tradesmen trade in a low flow stock
that’s gotten overextended over the last
like two three months the antipodal
trade is something that we’re trying for
the first time ever so there have been
lots of people who suggested that we
actually do this and I know that a lot
of people do this in their head or on
the side but really this is the first
time that we’re actually doing this
internally and sharing with each other
and the idea is there’s a couple
different ways to get better but one of
the significant ways to get better is to
understand trades that you do not trade
well and to internalize that to put them
down in variables to create as you say
an anti playbook for them and then
there’s bad trading
there’s taking maybe trades in your
playbook but not necessarily executing
them well or flubbing them a little bit
but the idea is the way for us to get
better as traders is yes to build from
what we do well to build a playbook to
understand what our a plus trades are to
grow from them but then also to
understand what’s keeping us back and if
just eliminate or get better at
eliminating the trades that we don’t
trade well the trades we shouldn’t be
taking or we should just be getting rid
of them they should be we should rid
them from our results we can make
significant progress and so this is our
first step
seeing what that’s like internally and
then seeing on how they can help us so
all right
and backs what do you got so bigger
picture we obviously know what happened
with the the actual spy we had that
aggressive sell-off of the bottom and a
lot of people trying to short the pops
on the way up you have people like
unlock and everybody’s saying that we’re
getting super overvalued and everything
like that but there was really no retest
of the lows like everybody was expecting
which kind of created almost an
environment where shorts were getting
trapped in this China short a bear
market rally which is one of the
toughest things ever and we started to
consolidate the priorities into kind of
a range and we were actually gapping up
on this day in the actual spies on news
of a vaccine so just some of the
intraday fundamentals to novo vac so
I’ll get to the chart after but it’s a
late stage biotech company focusing on
the development commercialization of
vaccines so basically a lot of people
were betting that this stock I consider
it a low float the float is about 50
million though they were basically
betting that this stock was going to be
here this company was going to be the
one that actually cured the virus the
corona virus so they they basically had
that a first first initial leg up a lot
of people are shorting in here like the
20s and everything like that then they
came out and had earnings on this day
where they actually announced they were
getting funding from a non-profit that
originally invested about four million
dollars but they were investing initial
384 million dollars which is the biggest
in this and then after that we kind of
consolidated in here you know a lot of
shorts this is becoming an extremely
crowded trade shorting these low floats
especially with so many new accounts
opening up and basically what happened
was we kind of just consolidated we
didn’t get that real crack down to $40
and then about three or four days after
the earnings we gapped up on it was like
an upgrade from I think like B Reilly
just some lower tier firm and we really
had a run up but the biggest thing for
me that I that got me interested even
more so in the short was kind of just
the volume dying off obviously we had a
ton of volume almost every single day
that the flow was being exchanged but
you could see compared to like the day
of the earnings the volumes really
starting to die off so I’m starting to
think maybe this thing’s losing steam
just losing buyers and that’s kind of my
fundamental thesis behind it this is the
first day the original day that it
gapped up you can see that it kind of
popped and just held this V wop area so
what I like to do on these low floats is
I like to wait for it to get below this
area to start like a really higher
timeframe unwind and that’s that’s where
I would use like my playbook for like
Viwa por tres mins and all of those
playbook trades that I use when they get
below a significant intraday or daily
level if you want to learn three
real-world setups that our traders use
including the simple setup that we teach
all of our new traders and the setup
that turned one of our traders into a
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couple of hours from this trading
workshop then from years of online
education the actual setup here how I
trade it is I really just look for the
unwind zone to
and a break it gets below that 56 $55
area you see some real volume come in
and then it bounces back into view up
and when I fade things into view up I
kind of like to wait from sellers to
take control so for me I define that as
kind of just breaking the trend line
making a significant lower high which
you could see it kind of did in here
this is really the first signal that
sellers were taking control back into
view out which is how I like to put on a
view opera trace in for a trade to hold
so when it makes a lower high Kyle that
to you signifies that the sellers are in
control yeah sometimes I get on the
chart yeah it’s right in here so you
could see it’s kind of it bounces back
and then it has a trend line coming up
into view up and then once you really
start to get that first consolidation
and then a lower high put in right
around here that’s where I really start
to think the sellers took back control
into view up and that’s what I like to
get involved and you know that strikes
me as a trade decision by you so other
traders are gonna short based on price
interview ah
if you certain type of traders are going
to when they see the weakness when they
see the breakdown when it pops back up
they’re just gonna shore it into the pot
they maybe even scaling into view wow
that’s one strategy you can make into
becoming a successful back side trader
and then other traders what they do is
they wait for it to come near Viwa and
they’ve hone in on the tape
they are highly attentive to the tape
and they look for the sellers from the
tape to be in control and when they
start to see the sellers in control and
that’s below vie whop after the break
down into the retracement near view op
when they see the sellers winning on the
tape and it confirming on the tape that
were more likely to go down boom they’re
gonna hit it hard and be really
aggressive and what you’re doing here is
you’re saying along the type of trader
that wants to see it show me the
near via WAP I’m the type of trader who
wants to see technically based on my
technical analysis skills that it’s
showing me the weakness which which is
great and I’ll wait for that and that’s
gonna be my signal and I would assume
you’re gonna cover that against the
against the top or above the you op and
and give that a wrong based on a
technical entry that makes sense
is that about is that a fair description
of what you’re looking for yeah
definitely I’ve I’ve tried kind of
fading interview op it it just doesn’t
work for me I really like to see the
actual turn get put in before I like to
get involved so here my actual trade
executions this is a two-minute chart
but so like I said as soon as I start to
kind of see the turn I start putting in
kind of feeler positions risking like a
hold above this level and then when it
actually confirms you see a little bit
spike in volume that a lower high I like
to put on my full position your exit is
a hold above you up yeah is it your exit
a wick above you up or it’s a price and
time above you up no it’s it’s not a
wick of a view up it’s more of like a
price in time so I like kind of like
watch the wick I’m I usually take off at
least half of my ad over the lower high
if it holds above that and then I get
totally flat so I’ll usually like let it
wick I’ll see where wicks up to how the
how that’s being reacted to relative to
the regular price action you know if the
wick is like super extended then I might
just cut it if it kind of just wicks up
for a couple seconds then comes back
under I’ll probably keep it so your
thought process there is I’m gonna cut
at least half of it because the thesis
is if the trades gonna work it should
work right away it’s not working right
away my entry thesis is in this correct
as I thought let me cut half
let me get out of the hole of its
holding above you up is that how you’re
looking at it yeah yeah exactly and that
was actually part of my mistake in this
I got down to half on this wick up here
when it really never showed that I was
holding up in here that in this area
like I said I really need to let it show
me that it’s holding above like this $56
area to get out of that half position
that full position that I’m taking out
and then I actually I realized that I
messed that up so I hit in and I got
back to full size and it kind of ruined
my price so I ended up just having to
get out of that and that was kind of
just a mistake that I’ve been making
recently all right let’s talk about that
so yeah and that’s why I asked you about
what your exit is because look some
people are gonna say hey I’m going to
get out just based on price and some
people are gonna say no my exit is price
and time and you want to know which one
you want what what your reason is for
how you’re getting out if you’re gonna
be more of a swing trader if you’re
gonna be more of a selective trader
price and time is a better way for you
to get out I think a couple other things
that you want to be thinking about in
this trade as well is it’s crowded right
yeah stuff there’s a lot of it yeah
there’s lots of people trading this and
what part of what you need to sign up
for for your swing trade is how you
gonna deal with a wick that may mean
nothing are you gonna save some risk
allocation for if that happens you know
are you going to upon entry be a little
bit smaller and give yourself a little
bit more of a stop because it’s crowded
and it can be Wiki also there’s a
shortage of interest in this name
it’s it’s also in a sector that
everybody’s trading right now that a lot
of people are trading right I shouldn’t
say everybody’s trading right now that a
lot of people are very interested in
right now
hot sector and so and it’s been and it’s
done really well for a while now so
you’ve got people who are gonna try and
support it and keep this to keep the
stock up so you want to be thinking
about that going along and so yeah I
mean an example of you not trading at
your best is you not sticking to your
exit plan which is time and price not
just price yeah and look and look what
it could do I mean you sort of you
cannot you got out of a position in a
position of strength right and a
position you really like and a trade
that was really working and then you got
back in at a bad price because you got
in a bad price you had to take yourself
out even though the overall idea was
still working tell me what you do a
little bit later so usually what I like
to do is I like to take this as a more
of a swing position and then I like to
take a momentum lot when I actually see
the real breakdown in these so I was
kind of eyeing this like fifty four
fifty dollar area it’s been bouncing in
there a couple of times so I was trying
to get involved for a momentum lot in
there but I think because I realized
that I wasn’t really making as much as I
should have because I screwed up the
initial entry I was kind of hitting the
momentum a lot and really keeping my
stop way too tight you know for the
momentum odd it should be like a hard
stop above here and like a soft stop
like a hold above this $55 area which
you could see it never spends more than
like 30 seconds above it at all so I
actually took two small losses in this
area when it was just kind of in a range
from my momentum not and then I finally
did get the momentum lot
I covered into the flushes I like to get
flat basically into the low of day on
the momentum on
unless it’s below the law of day so
again he took if you take a couple of
stops right there because price is
giving you a signal to exit but not
priced in time is that fair yeah now
definitely that’s definitely uh accurate
luck Givens you’ve been trading really
well and you’ve been doing a really good
job being very selective in your trading
and you’ve been on a trading really
strongly relative to your experience and
your class doing really well and so one
thing I would ask you to think about I
don’t want to change the way that you
trade and if this is too disruptive to
the way that you trade just scratch it
and gone but the way I look at this
trade particularly the type of trailer
that you are it strikes me as I
understand how you want to enter with
the momentum for something that’s
working and sort of hit hit new lows but
you’re hitting the momentum you’re
hitting the new lows because you are
saying that’s confirming more so that
I’m right and I understand that trade
but when I look at that chart and when I
look at where that chart is on a daily
chart and when I think about how much
it’s run off and what I think about the
trade you’re trying to make and when I
see the large down move after the open
and I see the volume in that large down
move and I see the stock unable to get
above the wall and I see it trading
cleanly down after it fails to get above
the UI those are also signals and signs
particularly based on technical analysis
that this stock is likely to trade lower
those are lots of signs those are lots
of technical signs that today this is
going to trade lower and so that can be
enough for you to be adding to your
short when it’s still hovering below
view up and time passes and so you can
look for the tops of consolidation areas
areas below view up over time as time
passes and short those those tops short
the tops of those ranges as opposed to
hitting only the new lows and and so you
know that that is a way that that people
look at this is look if it was gonna
turn around it would have turned around
by now it has it time is elapsed it’s
less likely that it is going to turn
therefore it’s showing me more technical
reasons it’s showing me more technical
penis so I can add risk because time is
showing me that I’m more right than
wrong and so as time goes by as I said
and as you find those areas of
resistance below you up you can think
about exchanging hitting new lows for
shorting those highs and adding to your
swing position or you can think about
doing both or of course you can just say
that doesn’t work for me and keep doing
what you’re doing but I do think I
understand what you’re trying to do by
hitting lows or P close
momentum lows with the trade but but
I’ll give you I’ll give you that to
think about that’s definitely something
I’ve been working on it and I I do have
the habit of kind of ruining my initial
swing trade with these momentum Lots so
that’s definitely something I could take
into account when I do develop these and
then yeah just to finish the trade I
just I like to take out the momentum
into lo of days when I see the tape
start to turn a little bit and then I
typically get flat my swing trade or at
least the majority of it depending on
how it is you know this this trade like
you’ve said a couple times is super
crowded so I just got flat once the
initial trend down breaks and it makes a
higher low right right in here I just
started bidding out of my swing position
yeah that’s how my trade at it so just
for the review I noticed the last like
two or three weeks I after I started
seeing a little bit of success I really
started like tightening my stops not
giving things the full risk that they
deserve almost in like fear of giving
back what I’ve gained last like two or
three months which definitely hurt me so
I think the biggest takeaway that I have
from this is I just need to trust my
system to develop more of a system for
defining what what would be like time to
exit in that in that price as opposed to
just getting out if it wicks up
especially in a name that wicks around
like that so much and when I do make a
trade mistake in the middle of my trade
I can’t just immediately get back in and
worst prices like this that’s something
that I do sometimes as well you know get
out and then it goes back when in my way
and I realize I never should have gotten
out and then I kind of just get like and
it end up getting chopped you’re out and
arrange for a little bit which I think
just just goes back to trusting my
original entry and the system I’ve
developed now I just think you need to
think about one more thing which is
in a stock like this that’s so crowded
and volatile another advanced technique
that you probably going to need to learn
how to utilize especially when you get
bigger is you’re probably gonna need to
take stops based on price or at least
the big portion of stops based on price
and then watch what it does when it
takes you out on price so you’re gonna
have to get to the point where you take
you take it off or you take some of it
off but then recognize whether or not
it’s a wick you know just a temporary
price spike or it’s a change in
direction and particularly with
something that’s really crowded
particularly in something that’s a
backside tray particularly something
that’s been up so much you’re going to
have to be able to take it off and then
quickly see that it is a wick I put it
back on
against the high wick and be in it if
it’s gonna go down stop out above the
wick high obviously if you’re wrong but
that’s that’s something for you to be
thinking about and that’s where your
tape reading skills come in handy that’s
where your open mind is on
open-mindedness comes in handy and again
that’s a pretty advanced concept so
we’ll get to that in time as you can do
better I apologize for making you go
first showing one bad trade and but I
will stipulate you’ve done very well and
so we purposely had you go first since
we thought you can handle it hey go
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