Traders Ask- the loss limit, resilience, and confusion

BellaMike Bellafiore's (Bella's) Blogs, Traders Ask1 Comment

Hi Bella —

I’ve been reading your book carefully and enjoying it very much.I live in Las Vegas; and would much rather trade stocks than play in the casinos.

I’ve been an occasional end-of-day trader for over 10 years. Now, since last October, I’ve been endeavoring to teach myself how to day-trade. So far, I think your book is the best one that I’ve encountered on that subject.

My question is this: On page 224, you speak of the “intraday loss limit.” That makes sense. But, I found it somewhat contracted by your discussion on page 101 concerning “Happy Prints” who was down $100,000 — but was encouraged by his manager to keep trading.

Does this apparent discrepancy reflects the difference between a new and an experienced trader?

This is the difference between Old School training (none ūüôā ) and new school trader training. ¬†Back in the day there was just a risk administrator who might come over if he felt you were down too much. ¬†This can cause all sorts of problems as a successful trader does not want the risk guy to manage his trading. ¬†What does the risk manager know about his present positions? ¬†A trader knows best how to determine his risk with the positions he is trading generally. ¬†Today our intraday loss limits are preset. ¬†These are agreed to by the trader and our floor manager. ¬†If an experienced trader hits their loss limit they can ask to be reset but this is very rare.

From your recent blog, I get the impression that you expect a trader who reaches his intraday loss limit to remain at his trading desk and prepare for the next trading day. Do the concepts of “resilience” and the “intraday loss limit” contradict each other in any way?

Resilience can mean: 1) coming back strong after a day you were stopped out or 2) fighting back after starting down negative.  Resilience does not mean fighting back after you have ignored your intraday stop limit.  That is called being undisciplined and will lead to an unnecessarily  huge rip soon.

Also, for a trader such as myself (i.e., a 64 year old person living in Las Vegas — day-trading for a few months only), what would be the best way to begin to interact with your training program?

Reach out to Roy Davis, Director of SMB U. ¬†He is an excellent resource to answer any of your questions. ¬†You can reach Roy at [email protected].

Thanks for the question.  I hope that helps.

One Comment on “Traders Ask- the loss limit, resilience, and confusion”

  1. I will recommend reading Mark Fisher book ” The logical Trader”. I have been trading full time for 3¬†years¬†and did not become¬†successful till 6 months ago when i read mark Fisher book and his system.

    I had to practice for 500 hours in SIM account to fully understand and execute mark Fisher system. System is so simple that most traders just can not believe it. If a trader has discipline and patience- mark Fisher system will get a trader hit the ground running.

    System works best for volatile trading instruments.For day trading , we need VOLATILITY to succeed.

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