Traders Ask: Are you concerned when a fellow desk member is on the opposite side of your trade?

Dear Mike,

I just recently applied to SMB, and as my interest was piqued, I decided to do more research by reading your book. I was instantly hooked. It cleared up a lot of my misconceptions and, to be honest, made me feel a bit abashed about some of the answers I put down in the application. At the same time, it made even hungrier to learn more about trading. (I admit that I am very curious as to the plays you have written in your trading playbook).

Anyways, I had a few questions:

You said that it was a common occurrence that one of your traders (you mentioned Steve) would oftentimes call out the opposite position as the one that you were in. You obviously don’t want the firm’s capital working against itself, and you also wrote that your traders shouldn’t cut in front or trade against each other. Would this kind of situation be a problem? Do you prefer the firm working as one big book?

On the flipside, is it a disadvantage to having too many people trying to perform the same trade? I imagine it could happen quite often if everyone is in the “In Play” stocks.

Lastly, what would you say are biggest things that have changed in SMB, and in trading in general since the publication of the book? I see that you’ve developed your training programs further and further, and this was a big part of what attracted me to SMB over the league of lesser firms.

Anyways, thank you for your time! Your insight, from blog and book, has already been greatly appreciated.

Bella

Am I concerned if one trader to my left is long and I am short? No. We think of each play as a set up. Or a play. Every trader is working on his unique PlayBook. These are plays that the trader has developed with guidance from The SMB PlayBook, some of which I will be sharing in my next book with the Financial Times Press. But they are to make these trades their own (Michael Martin discusses this in length in a lecture to our desk that we will share on the blog shortly), with their own trading DNA for each set up.

A good example was today in QCOM. At 55.30 in QCOM GMan was long on the Open, with a stop below 25c and trying to catch a move to 56. I was short from in front of 40c, with a stop above 50c and trying to catch a move towards 55. GMan thought he saw a reversal signal and placed a GMan Reversal Trade. I saw QCOM as still weak and heading towards its significant support level of 55. GMan tends to look for fades quicker than me. I tend to stick with the trend longer than him. Often there is not a right answer, just good risk/reward opportunities for different traders.

We are not trading against each other. We are making two separate trades, with separate stops and differing upside.

Thank you for noticing the growth of SMB Training. There is so much more coming by the end of the year. The next two big programs we are releasing we actually want to keep as a secret for now. But they are being built to target the two biggest areas of struggle for the new and developing trader. And they are in partnership with two of the most giving people in the trading community, which is most important to SMB.

Bella

One Good Trade