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10 Tips for the Road to Trading Success

11/07/2013 6:00 am EST


Michael Bellafiore

Author, One Good Trade: Inside the Highly Competitive World of Proprietary Trading

Veteran trader Mike Bellafiore of SMB Capital shares his advice to a newbie trader who is about to trade live for the first time, which others could also find helpful.

“This is [name deleted]. I was in the summer training program at SMB. I’m going live tomorrow and was wondering if you could give me some basic tips for me to think about.

I’ve been following SMB on real time, watching the morning meetings, and training everyday since the summer on the ThinkorSwim simulation platform. I know how different it is trading live and the thing is, I don’t have much room for error, so my main goal is to keep my losses controlled. If there’s any advice you could give me it would be great. Thanks”

Here are my ten tips for when you first start trading live:

1) Embrace the mindset to improve every day. Your job is to get better everyday and not make money. Shark, highlighted in The PlayBook, has the best mindset of any trader I ever coached. Be like him.

2) Trade with 100/200 shares. After every ten days of profitable trading, bump up your trade size.

3) Set a very tight intraday stop limit. If this is the worst you are going to be as a trader, then keep your risk low.

4) Work with a mentor/coach. There is very little evidence of anyone becoming great at anything without critical feedback, wrote Matthew Syed in Bounce. If trading is your passion and the performance data demonstrably validates this assertion, then shouldn’t you have a coach?

5) Build your playbook. Each day, archive a setup that made the most sense to YOU. Doing this will speed up your learning curve.

6) Ferret out your A+ trades from your playbook and trade them with more size.

7) Be bionic. Build trading scanners for your favorite plays and get connected to a trading room. This is not the 90s. Utilize technology to become a bionic trader.

8) Keep a trading journal. On our desk, our developing and new traders complete a detailed trade review before they leave. Frankly, it is hard to take you seriously as a new trader if you are not doing this.

9) Keep a psychology trading journal. Yes, you cannot become a consistently profitable trader without profitable trading strategies. But you also cannot trade those setups profitably if your psychology is weak.

10) Be grateful for each day you get to trade pro. Trading is a privilege, not a right.

By Mike Bellafiore, Co-Founder, SMB Capital

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