Summary of Mike Bellafiore's One Good Trade

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 Proprietary trading is the most exciting part of Wall Street that no one pays attention to. It is not a bailed-out government bank, a broker-dealer, or a hedge fund, though it does run on some of the same core principles.
#2 Proprietary trading is done for the benefit of the company’s partners and employees only, not for the benefit of any client. The firm is the client. Some prop traders make big profits quickly, but many are unable to thrive in an unbending universe.
#3 At a proprietary trading firm, the trader makes all the decisions. The success of the trade is completely dependent on your trading ability. If you are correct, the firm and you make money.
#4 As a prop trader, you never know when you are going to enter a market that rains money. The market had shrugged off every piece of negative news since 2009, when SPY traded at 70, so Steve advised that if SPY held above 109. 10, this would be a signal that Dubai was just another piece of news the market would likely ignore.

Sujets

• Finance
• General
• Business
• Economics
• General officer
• Economie gestion

Informations

• Publié par: Everest Media LLC
• Date de parution: 14 mai 2022
• Nombre de lectures: 0
• EAN13: 9798822508859
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on Mike Bellafiore's One Good Trade
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4
Insights from Chapter 1

#1

Proprietary trading is the most exciting part of Wall Street that no one pays attention to. It is not a bailed-out government bank, a broker-dealer, or a hedge fund, though it does run on some of the same core principles.

#2

Proprietary trading is done for the benefit of the company’s partners and employees only, not for the benefit of any client. The firm is the client. Some prop traders make big profits quickly, but many are unable to thrive in an unbending universe.

#3

At a proprietary trading firm, the trader makes all the decisions. The success of the trade is completely dependent on your trading ability. If you are correct, the firm and you make money.

#4

As a prop trader, you never know when you are going to enter a market that rains money. The market had shrugged off every piece of negative news since 2009, when SPY traded at 70, so Steve advised that if SPY held above 109. 10, this would be a signal that Dubai was just another piece of news the market would likely ignore.

#5

Proprietary trading is the act of trading stocks on your own, without the help of a big bank or hedge fund. It is highly competitive, and only the best firms can compete.

#6

The traders I have worked with and trained are better than I ever was. They have taught me more than I ever taught them.

#7

In this chapter, you'll meet Franchise, MoneyMaker, Dr. Momentum, GMan, Z$, The Yipster, and JToma. They all represent different points on the spectrum of trader ability.

#8

I had to interview a young man named Franchise from the University of Connecticut with one of those names as ethnic as my own. He was a former college athlete who had traded before, and he had that firm handshake that said he was all business yet still carried himself with humility.

#9

The story of Franchise illustrates how competitiveness, when harnessed correctly, can provide the energy a developing trader needs to improve. He was doing well, and he wanted to improve. He kept detailed notes about the weaknesses he needed to improve in his trading journal, watched video of his trading on his laptop while commuting home, and asked thoughtful trading questions.

#10

A good trader does not succumb to the initial overreaction that the market is too hard. A good trader assumes there is always an escape, and takes the necessary actions to make his trading more profitable.

#11

MoneyMaker’s hunger for success was genuine. He had the ability to focus, which was not natural to him, but he developed it as a former professional athlete who had to hit hundreds of balls for hours in 100-degree weather.

#12

MoneyMaker is a special trader. He has an uncanny feel for the order flow, and he is positive 80 percent of all trading days. He has had patches where he struggled, but he rebounded later that summer for a huge August.

#13

Dr. Momentum is the smartest person I have ever trained. He looks and is young, 24. He talks incessantly. He is the anti-Franchise. He looks like your accountant, sounds like a crazy cousin on speed, and is not athletic or cool. But he will land a girl here and there through sheer genius and good fortune.

#14

I ask my candidates whether they enjoy new restaurants and travel. Those who travel and sample new restaurants are more willing to take risks. Dr. Momentum, for example, spent three weeks in Japan, Hong Kong, and China during his vacation in 2009.

#15

The young trader who is always chattering is also tempted to overtrade. And restraint is a virtue that he has not yet learned but the Street generally values. But I have my money on Dr. Momentum trading for many years.

#16

We had to interview a young man named Gilbert Mendez, who wanted to intraday trade equities. He claimed to have a black box for foreign exchange. We did not allow him to take our lecture home, but he was still the best candidate we had ever interviewed.

#17

GMan was a temperamental trader, but he was learning how to fade trade, which is an excellent way to learn how to Read the Tape. He would repeat what I had said a few weeks before about a stock. He still does.

#18

GMan is the best trader on our desk. He has been stopped out once since he began with us, but he is the guy who can beat you in a race giving you a start halfway to the finish line.

#19

Z is the most consistent trader on our desk. He was positive for two years straight. He is like the Joe DiMaggio of trading, the legendary Yankee great who holds the record for consecutive games with at least one hit.

#20

After the close of every trading day, you can find Z$ without fail at his desk watching tape of his trading. He constantly reviews his trades in his mind. Discipline is his strength. He sticks with what works while expanding his playbook with new trades that work for him.

#21

The most important aspect of trading is not your gross profit and loss, but your risk-adjusted return. If you want to make $5,000 a day, you must be able to make $500 in a single day consistently, then $750, then $1,000, then $1,500.

#22

The Yipster is the poster child for taking the beginning slowly. He won my award for Most Improved Trader after barely missing the mark in terms of making money. He kept a detailed spreadsheet of all his trades, and he was always searching for ways to improve.

#23

I got a phone call in 2009 from a woman named Rachel Pine, who was consulting for CNBC. She wanted to hire more traders for their Fast Money program. I was excited about the prospect of being on CNBC, as it would only help our recruiting efforts.

#24

JToma is a great example of how SMB became a successful trader. He is positive and persistent, and his wife wouldn’t go out with him when they first met so he reoffered a date at Nobu, one of the most delicious and expensive restaurants in the world. She accepted.

#25

JToma was able to turn his trading into a career, and made enough to trade his own account. But in his first three months, he lost almost all of his money. He was down to his last $50k. The average trader would become depressed. But JToma shrugged it off and continued trading.

#26

You must develop the habit of hitting stocks that trade against you. You must have a conversation with yourself, explaining why you are so interested in proving that you are correct with a position. Trading is not about being right; it is about finding setups that offer you a good risk/reward ratio and pulling the trigger.

#27

All I ask for is excellent risk/reward opportunities, and then I execute. Being good at your job requires an obsession with your trading fundamentals. Money is just the by-product of you executing fundamentally solid trades.

#28

The most common mistake made by new prop traders is to sell a stock too early. It is important for them to understand that if they missed out on a whole point of the move, their sale was still correct.

#29

The mantra of a new trader should be: I am a trader, not an investor. In an ideal world, traders catch a stock’s entire intraday move. Sometimes, you’ll get all three points of an anticipated three-point move. And yes, sometimes you’ll sell or cover too early. But the analysis is always the same. Did you make One Good Trade and then One Good Trade. That is all you can do.

#30

traders often overvalue a rip, thinking that one good trade justifies the entire practice. You must blend a potential three-point chop with your rip in order to judge the latter.

#31

A Good Trade is not arrogant in the slightest. It is not about you, but about the trade. If you have a great position, and it is working, you still must manage it. You can be slow to sell, but you must be looking for clues of when to scale out.

#32

The concept of making one good trade is based on the advice of Coach K at Duke University, who screams from the sidelines Next Play. The idea is to stick to your guns and make one good trade after another, as the market will never be able to go down forever.

#33

The day does not end until the bell rings. These gunners were up some good money for first-year traders, but they embraced the principle of not being satisfied. They were like a Buddhist Monk who lives in the moment.

#34

As traders, we need to be specific about what we are doing poorly. We need a template by which to judge ourselves. And this template should be soaked in trading fundamentals.

#35

The essence of One Good Trade is to focus on the process rather than the results. You must have the discipline to hit a stock that has exceeded your exit price, and Rock Star lacked this discipline.

#36

There are two parts to proper preparation for you: the preparation necessary before the Bell rings, and the specific trading information you must obtain before you can make a trade.

#37

The earlier you arrive, the more time you have to leaf through news. Read briefing. com again in the morning and pick a few stocks. Think about your style and determine the best two stocks of the day for you.

#38

The hard work of a prop trader is about gathering important information before making any trade. This is what we mean by hard work. Most successful trades are easy ones, but they result from doing the above, seeing an excellent and simple trading opportunity, and then pouncing.

#39

The same principle applies to trading. You must show up every day and search for support and resistance levels. These will positively impact your trading.

#40

Good traders are patient. They understand that they will not be in every move, so they wait for setups with which they are comfortable and confident. They do not buy a stock at any price above its support level.

#41

A trader I sat next to w