Trade the Trade

BellaMike Bellafiore's (Bella's) Blogs, Trading Psychology2 Comments

A trader sent me this review of his work of yesterday:
I made ~$250-300 right on the open which I was fairly happy with considering the stock I was trading didn’t move exactly how I wanted it to. I was trading actively, controlling my risk and in the trades I needed to be in. Most importantly, I was involved. None of the bigger plays worked but a couple of 15-25c scalps on 1000 shares generated some cash flow. It really helps to have cushion after the morning because it allows you to be more aggressive when you see the bigger picture intraday swings developing in the late morning. I ended up making a few trades where I was looking for 30c or a half point but couldn’t find anything that I really liked today after 11:00.
I was not thrilled with the psychology of his trading and responded:
being up of down doesn’t help you at all.  get that out of your head.  you job is to make trades where the risk/reward is in your favor.  some aren’t gonna work.  some will. whether they do or not is not up to you.  and making trades b/c you are up or negative is really fundamentally bad trading.  and something you need to stop immediately.
is it a good trade?  if it is and you are down $500 then pull the trigger.  if you are up $1500 and it is a bad trade then don’t make it.  if a trade calls for being aggressive then be aggressive no matter your dopey P&L.   just make good trades and let the results come. trade the trade!
Mike Bellafiore

2 Comments on “Trade the Trade”

  1. Hi Mike, first of all I would like thank you all guys form SMB for great job you do sharing your knowledge of trading and markets, and especially how to approach trading at your website and blog, I am big fan since I have read your book. I trade live over 1.5 year and similary to the post above, first year the most I have worried about was PL, made loads of trade not based on trade potencial, RRR but on how I well I did last trade, scaling in to loosing position with hope that market comes back /which usually paralized my decision making to take other good set ups, tide up lots of margin in the accoutnt/ and committing other trading “crimes”. Thanks to very conservative MM I havent blow my acc and although the results after first year were positve, not what I expected. In the first Q of this year I went down 10% of my equity. This was a trigger. I said to myself, its time to take it seriously. Since april, I started to focus on the execution, and as you say in your book, on One good trade and than another and another, and vualaaa I get the results. I made less trades every week since april but ended every single week positive and pretty much within the target I set up for myself. Now my biggest worry is how to stay in the good evolving trade and get most of its potencial which I find quite hard. Thanks again all of you for fantastic web and please keep posting great material for us home traders;-) Jan

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