{"id":156,"date":"2008-10-04T08:34:59","date_gmt":"2008-10-04T12:34:59","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=156"},"modified":"2008-10-04T11:17:33","modified_gmt":"2008-10-04T15:17:33","slug":"getting-caught","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/getting-caught","title":{"rendered":"Getting Caught"},"content":{"rendered":"

Yesterday after the Close\u00a0SMB celebrated our outstanding month of September with some drinks, cigars and\u00a0food (lots and lots of food).\u00a0 Nothing against Queens but I am going to have to talk\u00a0to\u00a0CBA about choosing that locale.\u00a0 It was a little far from\u00a0Manhattan.\u00a0 During our celebration I had an interesting discussion with a new trader (“Triple Threat”)\u00a0who got caught in GS yesterday after the\u00a0passage of the rescue plan.\u00a0\u00a0 Let’s discuss\u00a0what to do if you get caught in a position well out\u00a0of the money.<\/p>\n

All of our traders are taught to develop an exit plan for if their stock trades against them before they enter a position.\u00a0 Most new traders\u00a0focus on\u00a0making money.\u00a0 All good, experienced, profitable traders focus on not losing money and just letting the\u00a0gains materialize.\u00a0\u00a0Defense first.\u00a0 You don’t want to be playing basketball with a\u00a0guy who scores\u00a020 but gives\u00a0up 30.\u00a0 But that is way too much information about me already.\u00a0 Before you enter a position\u00a0decide where and who you will hit\u00a0if the stock trades against you.<\/p>\n

Now there will be the unusual occasion where you just can’t get out.\u00a0 First\u00a0please do not be that trader who cannot get out of a stock.\u00a0 Being a great intraday trader necessitates being fast.\u00a0 If you are not then\u00a0get faster.\u00a0 You should almost never get caught in a position.\u00a0 There better be breaking news, or system failures, or a stock that just drops out like a falling knife for you to\u00a0get\u00a0caught.\u00a0 So first, don’t get caught.\u00a0 Be fast.\u00a0<\/p>\n

But again there are going to be those rare occasions where you get caught.\u00a0 What do we do?\u00a0 Yesterday Triple Threat got long GS and was immediately 2 points out\u00a0of the money.\u00a0 I could hear him behind me trying to trade out of his position.\u00a0 First, remain calm and think.\u00a0 You have already taken a huge loss.\u00a0 The\u00a0first time Triple Threat\u00a0took a huge rip (he was four points out\u00a0of the money) his hands were shaking as he was attempting to trade out of his position.\u00a0 Yesterday he was calm and thinking\u00a0out loud with a trader\u00a0whose advice he\u00a0values about what to do.\u00a0 So that was\u00a0well done.\u00a0 Second, you should\u00a0develop a new exit plan.\u00a0 If the stock gets below\u00a0a new exit level that you determine then exit.\u00a0 Third, your overall mindset should be to exit at the best price possible.\u00a0 You goal at this\u00a0point should be to take the smallest loss possible.\u00a0 Finally, move on.\u00a0\u00a0The act of taking your loss often frees the trader to make another good trade.\u00a0 When they are still in this losing position they are paralyzed with their exit.\u00a0\u00a0They are consumed with\u00a0this loss and unable to place a new good trade.\u00a0 But when you hit the bids and just accept your loss a burden is lifted from your shoulders and you can go back to work.\u00a0 You can concentrate on making One Good Trade.\u00a0<\/p>\n

\"201223128692151mail.gif\"<\/a><\/p>\n

Hey I have gotten caught before and am here to write about it.\u00a0 I remember back in the day making a technical play in CMRC and losing\u00a0$36k.\u00a0\u00a0Yeah that was no fun.\u00a0 But\u00a0the most encouraging statement from\u00a0Triple Threat last evening was his thought that his rip in GS would make him a better trader.\u00a0 That\u00a0has been true for me.\u00a0\u00a0That rip in CMRC\u00a0taught me\u00a0a valuable lesson about technical analysis.\u00a0 I was buying CMRC based\u00a0upon prices from a different market.\u00a0 A market\u00a0created during the Internet bubble.\u00a0\u00a0And I was buying during\u00a0the bursting of the internet bubble.\u00a0 The prices and support levels created on the way up were not\u00a0going to be support in a different market and on the way down.\u00a0 And so I learned.\u00a0\u00a0That\u00a0$36k lesson has made\u00a0me much more since.\u00a0 And Triple Threat will become a better trader because the lesson the market taught him yesterday.<\/p>\n

Specifically what did the market teach Triple Threat yesterday?\u00a0 Price is important.\u00a0\u00a0And that patterns must be seen for the market that they are trading.\u00a0 More clearly, Triple Threat bought GS into a pullback because GS had developed a pattern over the past few days of pulling back and then trading higher.\u00a0\u00a0There were two new variables for\u00a0his trade yesterday, however.\u00a0 GS was much higher.\u00a0 And\u00a0the rescue plan had been passed.\u00a0 Buy the rumor and sell the news.\u00a0 Stocks sold off hard after the passage and GS and the market\u00a0was now going to trade much differently\u00a0than the previous two days.\u00a0<\/p>\n

Triple Threat is probably our most consistent new trader.\u00a0 He does not have too many trading days when\u00a0he is net negative.\u00a0\u00a0And so him getting\u00a0caught ought to provide more color on this trading anecdote.\u00a0 And Triple Threat will make back the rip.\u00a0 And go on one day to share this rip with a new trader.\u00a0 Good traders get caught.\u00a0 They find the\u00a0lesson in their rip.\u00a0\u00a0They learn and they get better.\u00a0 They turn a rip into a positive learning experience.\u00a0<\/p>\n

Enjoy your weekend.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Yesterday after the Close\u00a0SMB celebrated our outstanding month of September with some drinks, cigars and\u00a0food (lots and lots of food).\u00a0 Nothing against Queens but I am going to have to talk\u00a0to\u00a0CBA about choosing that locale.\u00a0 It was a little far from\u00a0Manhattan.\u00a0 During our celebration I had an interesting discussion with a new trader (“Triple Threat”)\u00a0who got caught in GS yesterday … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,10],"tags":[22,4676,30,18],"class_list":["post-156","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-mike-bellafiore-bellas-blogs","tag-day-trader","tag-day-trading","tag-prop-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nGetting Caught | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/getting-caught\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Getting Caught | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Yesterday after the Close\u00a0SMB celebrated our outstanding month of September with some drinks, cigars and\u00a0food (lots and lots of food).\u00a0 Nothing against Queens but I am going to have to talk\u00a0to\u00a0CBA about choosing that locale.\u00a0 It was a little far from\u00a0Manhattan.\u00a0 During our celebration I had an interesting discussion with a new trader (“Triple Threat”)\u00a0who got caught in GS yesterday ... Read More\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smbtraining.com\/blog\/getting-caught\" \/>\n<meta property=\"og:site_name\" content=\"SMB Training Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/smbcap\/\" \/>\n<meta property=\"article:published_time\" content=\"2008-10-04T12:34:59+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2008-10-04T15:17:33+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif\" \/>\n<meta name=\"author\" content=\"Bella\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@smbcapital\" \/>\n<meta name=\"twitter:site\" content=\"@smbcapital\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Bella\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught\"},\"author\":{\"name\":\"Bella\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#\/schema\/person\/80500a901d0e5ce0a27fa996bb1b9161\"},\"headline\":\"Getting Caught\",\"datePublished\":\"2008-10-04T12:34:59+00:00\",\"dateModified\":\"2008-10-04T15:17:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught\"},\"wordCount\":856,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage\"},\"thumbnailUrl\":\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif\",\"keywords\":[\"Day Trader\",\"day trading\",\"prop trading\",\"smb capital\"],\"articleSection\":[\"General Comments\",\"Mike Bellafiore's (Bella's) Blogs\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.smbtraining.com\/blog\/getting-caught#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught\",\"name\":\"Getting Caught | SMB Training\",\"isPartOf\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage\"},\"thumbnailUrl\":\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif\",\"datePublished\":\"2008-10-04T12:34:59+00:00\",\"dateModified\":\"2008-10-04T15:17:33+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.smbtraining.com\/blog\/getting-caught\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage\",\"url\":\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif\",\"contentUrl\":\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/getting-caught#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.smbtraining.com\/blog\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Getting Caught\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#website\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/\",\"name\":\"SMB Training Blog\",\"description\":\"Lessons from the trading desk\",\"publisher\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.smbtraining.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#organization\",\"name\":\"SMB Training\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2022\/07\/Logo-e1658419502954.png\",\"contentUrl\":\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2022\/07\/Logo-e1658419502954.png\",\"width\":230,\"height\":81,\"caption\":\"SMB Training\"},\"image\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/smbcap\/\",\"https:\/\/x.com\/smbcapital\",\"https:\/\/www.youtube.com\/user\/smbcapital\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#\/schema\/person\/80500a901d0e5ce0a27fa996bb1b9161\",\"name\":\"Bella\",\"description\":\"Mike Bellafiore is a co-founder of SMB Capital, a day trading firm which takes great pride in its exceptional training program. SMB Capital is an equity prop trading desk that trades on 5th Avenue in New York City. Mr. Bellafiore is a graduate of the University of Connecticut School of Law. He has traded professionally for more than a decade.\",\"sameAs\":[\"https:\/\/www.smbtraining.com\/blog\/bellas-blog\"],\"url\":\"https:\/\/www.smbtraining.com\/blog\/author\/bella\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Getting Caught | SMB Training","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.smbtraining.com\/blog\/getting-caught","og_locale":"en_US","og_type":"article","og_title":"Getting Caught | SMB Training","og_description":"Yesterday after the Close\u00a0SMB celebrated our outstanding month of September with some drinks, cigars and\u00a0food (lots and lots of food).\u00a0 Nothing against Queens but I am going to have to talk\u00a0to\u00a0CBA about choosing that locale.\u00a0 It was a little far from\u00a0Manhattan.\u00a0 During our celebration I had an interesting discussion with a new trader (“Triple Threat”)\u00a0who got caught in GS yesterday ... Read More","og_url":"https:\/\/www.smbtraining.com\/blog\/getting-caught","og_site_name":"SMB Training Blog","article_publisher":"https:\/\/www.facebook.com\/smbcap\/","article_published_time":"2008-10-04T12:34:59+00:00","article_modified_time":"2008-10-04T15:17:33+00:00","og_image":[{"url":"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif","type":"","width":"","height":""}],"author":"Bella","twitter_card":"summary_large_image","twitter_creator":"@smbcapital","twitter_site":"@smbcapital","twitter_misc":{"Written by":"Bella","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#article","isPartOf":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught"},"author":{"name":"Bella","@id":"https:\/\/www.smbtraining.com\/blog\/#\/schema\/person\/80500a901d0e5ce0a27fa996bb1b9161"},"headline":"Getting Caught","datePublished":"2008-10-04T12:34:59+00:00","dateModified":"2008-10-04T15:17:33+00:00","mainEntityOfPage":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught"},"wordCount":856,"commentCount":0,"publisher":{"@id":"https:\/\/www.smbtraining.com\/blog\/#organization"},"image":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage"},"thumbnailUrl":"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif","keywords":["Day Trader","day trading","prop trading","smb capital"],"articleSection":["General Comments","Mike Bellafiore's (Bella's) Blogs"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.smbtraining.com\/blog\/getting-caught#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught","url":"https:\/\/www.smbtraining.com\/blog\/getting-caught","name":"Getting Caught | SMB Training","isPartOf":{"@id":"https:\/\/www.smbtraining.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage"},"image":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage"},"thumbnailUrl":"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif","datePublished":"2008-10-04T12:34:59+00:00","dateModified":"2008-10-04T15:17:33+00:00","breadcrumb":{"@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.smbtraining.com\/blog\/getting-caught"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#primaryimage","url":"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif","contentUrl":"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2008\/10\/201223128692151mail.gif"},{"@type":"BreadcrumbList","@id":"https:\/\/www.smbtraining.com\/blog\/getting-caught#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.smbtraining.com\/blog"},{"@type":"ListItem","position":2,"name":"Getting Caught"}]},{"@type":"WebSite","@id":"https:\/\/www.smbtraining.com\/blog\/#website","url":"https:\/\/www.smbtraining.com\/blog\/","name":"SMB Training Blog","description":"Lessons from the trading desk","publisher":{"@id":"https:\/\/www.smbtraining.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.smbtraining.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.smbtraining.com\/blog\/#organization","name":"SMB Training","url":"https:\/\/www.smbtraining.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.smbtraining.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2022\/07\/Logo-e1658419502954.png","contentUrl":"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2022\/07\/Logo-e1658419502954.png","width":230,"height":81,"caption":"SMB Training"},"image":{"@id":"https:\/\/www.smbtraining.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/smbcap\/","https:\/\/x.com\/smbcapital","https:\/\/www.youtube.com\/user\/smbcapital"]},{"@type":"Person","@id":"https:\/\/www.smbtraining.com\/blog\/#\/schema\/person\/80500a901d0e5ce0a27fa996bb1b9161","name":"Bella","description":"Mike Bellafiore is a co-founder of SMB Capital, a day trading firm which takes great pride in its exceptional training program. SMB Capital is an equity prop trading desk that trades on 5th Avenue in New York City. Mr. Bellafiore is a graduate of the University of Connecticut School of Law. He has traded professionally for more than a decade.","sameAs":["https:\/\/www.smbtraining.com\/blog\/bellas-blog"],"url":"https:\/\/www.smbtraining.com\/blog\/author\/bella"}]}},"_links":{"self":[{"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/posts\/156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/users\/144"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/comments?post=156"}],"version-history":[{"count":0,"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/posts\/156\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/media?parent=156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/categories?post=156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smbtraining.com\/blog\/wp-json\/wp\/v2\/tags?post=156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}