Develop a Game Plan, Place Alerts, and Leverage Technology

02/12/2016 6:00 am EST

Focus: STRATEGIES

Michael Bellafiore

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

Veteran trader Mike Bellafiore of SMB Capital shares a question-and-answer between him and a subscriber in which he outlines the three trading principles he follows before the open in order to help traders hopefully not miss out on their best trade ideas.

Question: Hi Balla, I’m following you and SMB for the last year. I’m in a stage of developing my Playbook. I have a question for you today. I missed three set-ups (Yelp short below 15.50, BRX long at 21.76, FOXA long at 23.89). All three set-ups are part of my playbook and I’m trying to trade them with bigger size. Do you have a suggestion how to improve in this regard? How not to miss “my” trades? Thanks!

Mike’s Response: One thing I do before the open is develop a game plan. What stocks do I want to trade first? What prices do I want to enter positions? This helps a trader to not get overwhelmed when the market opens. There is all this data flashing buy on multiple screens in nanoseconds. Sorting out your best stocks and best trades before the open helps you not miss good trades.

So for Thursday I narrowed my trading universe to:

chart
Click to Enlarge

And drilling deeper I wanted to most focus on being long Twitter (TWTR) if it could hold above 14.

Also, a good habit to develop is to continually place alerts throughout the trading day. What is a great long and where?  What is a great short and where?  When a stock hits this price, an alert goes off on my trading platform so I do not miss the opportunity.

In addition, leverage technology to spot your best set-ups. Consider building filters that find your best setups. To read the entire article click here…

By Mike Bellafiore of SMB Capital

Related Articles on STRATEGIES