🕸️briefing.com
🚶Steven Schonfeld – considered by many as the godfather of the prop trading industry
📚Techincal analysis using multiple time frames – Brian Shannon (alphatrends.com)
🕸️Trader Mike’s blog
📚Liar’s Poker
📚🎬Moneyball
📚The Yankee Years
📚The Black Swan
📚Trading for a Living
📚Outliers
📚Talent is Overrated
📚The Talent Code
📚Trade to Win
🕸️Trading Blogs
•Traderfeed
•Alphatrends
•Afraid to Trade
•Trader Mike
•Kirk Report
•Seeking Alpha
•ChrisPerruna
•Quantifiable Edges
•TradingSuccess
•Wall Street Cheat Sheet

🚶Dr. Steenbarger(the godfather of trading psychology)
🕸️The Daily Trading Coach
📚Life’s a Campaign
📚The Disciplined Trader (Mark Douglas)
📚How I Trade for a Living

🕸️briefing.com (economic new release)
📚Brian Shannon’s
🚶Ari Kiev, Dr. Brett Steenbarger, Doug Hirschorn, Mark Dougals (top trading psychologists)
📚Technical Analysis Using Multiple Time-frames
📚These Guys are Good

🚶Bill Cara caracommunity.com

A great trader is an elite performer. Elite performers spend every day trying to improve.

☕Traders learn more about themselves in a year of trading than many learn in their entire adult lives.

💰Your risk-adjusted return is more important than your gross P&L.

💰You should never lose more than half of your median intraday gains.

Do not judge a trade based upon its results! A profitable trade may or may not have been a good trade, what I call One Good Trade. A loser may have been One Good Trade. If your fundamentals for a trade is sound, then that is One Good Trade.
Consistently profitable traders obsess about making One Good Trade and not money.
Your job is to make One Good Trade and then One Good Trade and then One Good Trade.

I am a trader and not an investor.

At SMB, we ask our traders to follow a set of 7 fundamentals before entering every trade. How closely we follow these fundamentals is how we judge our trades:

💭”By failing to prepare, you are preparing to fail.” — John Wooden

A checklist of things you can do to put yourself in the best position to compete in the markets.

On our desk, we do not make a trade unless we know the average volume, daily range, important technical levels, short interest, and fresh news for our stocks.

💭”Genius is one percent inspiration and ninety-nine perspiration.” — Thomas Edison

A prop trader should not work 100 hours a week.

Watching your trading screens intently and gathering important information is how we define hard work. We must ask the following questions at rapid fire pace:

💭”In this game, the market has to keep pitching, but you don’t have to swing. You can stand there with the bat on your shoulder until you get a fat pitch.” — Warren Buffet

Learning to get stocks at the right price is a skill that good intraday prop traders learn.
And it’s a very important skill. Do the math if you learn to save 1c on average for every trade, and you write two million shares in a month, how much extra will you make? That’s an extra $20k in your pocket.
If you watch your screens patiently all day, plays will emerge. Good risk/reward setups will appear. Consistently profitable traders do not force trades. They embrace the important part of their job-just waiting for a setup to develop.

You must establish your position at a good price with the proper timing as well.

The next time you are in a trade can you summarize your detailed trading plan in one sentence?

💭”You must have a backup plan for every situation.” — Brian Shannon
⇒And you must do this before you enter your every trade.
⇒Your plan should also include an exit strategy for if the stock trades in your favor.

Discipline is executing your plan as you set out to do it, without altering it in the middle.
Discipline is executing your detailed plan every time.

You can’t try to be a disciplined trader. You must be a disciplined person to be a disciplined trader.

One way to keep a better sense of discipline is through vigorous exercise.
⇒A healthy body leads to a healthier, more disciplined mind.

Not only must a prop trader communicate their best trading ideas but they must review their trades.

💭”Find the trading plays that make sense to you and make more of them with more size.” — Mike Bellafiore

Good prop traders constantly strive to improve their performance.

Replay important trades in your head.

When the market slows, this is the time to think through your important trades. Do this multiple times during the trading day. Ask yourself these questions:

Also, talk to other traders on your desk who are trading your stocks. Ask for their thoughts. You will get better as you gain experience, but you will get much better if you improve your technique while you are gaining experience.
Print out your trades. Were you disciplined? Did you execute on your stops? Did you do worse in a stock than you thought? Are you trading some stocks better than others? Are there so me stocks that you just don’t trade well?
🔑⇒Get into the habit of evaluating your more important trades during the day.

🔑Learn to judge your trades based on how closely you followed your trading fundamentals.

Trading is about skill development and discipline.

The Essay Exam
Here are thirteen questions that are important to us initially. And if answered correctly as defined by us, will get you in the front door.

The First Interview
If HR likes your answers, you will get an interview. Again, we are searching for that reciprocal good fit. We start with questions that are important to us, and explain what we offer. Some questions that we typically ask are:
•Have you ever traded before?
Do you own a personal account?
• What do you do daily that demonstrates your interest in the markets?
• Is there a favorite trading blog that you read? (Hint: SMB Blog is a really good answer here)
• What is the best trading book you have read? (Hint for the future: the book you are presently reading.)
• Where do you see yourself in five years? (Hint: On a trading desk.)
• Describe the last incident that caused you stress? What was your response?
• Describe the last time you were angry or frustrated? What caused your reaction? (My last question is not a good answer.)
• Who is your favorite professional athlete and why? (Hint: Michael Vick, Pacman Jones, Plaxico Burress, Stephan Marbury, or another me-first athlete is not a good answer.)
• If you were to fail as a trader, what would be the reason?
• What was the cause of the recent housing crisis that required a bailout from our federal government? (Barney Frank is incorrect.)
• We interview hundreds of candidates for a few spots; why should we give you an opportunity?• Please describe something that took a long time for you to be good at.
• Dr. Steenbarger describes a Trader A and a Trader B in his article that we asked you to read. Would you be Trader A or Trader B?
• Would you describe yourself as conservative, moderate, or entrepreneurial as it relates to your job career? (Hint: the last choice.)
• Why did you decide to go to (insert their college)?

Trading is about personal skill development, discipline, and controlling your emotions.

Trading is a skill learned by doing, not just by reading a lot, theorizing, or the faux art of “paper trading”.

If trading is your passion, then open up a trading account as soon as possible, start trading small, and put that on your resume.
Scour the internet for trading blogs of most interest to you, and plaster that on your resume.
Read books about trading and smack them on your resume.

One common question that I am asked during an interview is: “Who is the worst trainee?”
A: Anyone who thinks they really know what they are doing.

It is imperative that you work on the right things. You must focus on the process and learn how to trade from those who have done this a lot longer than you have.

🔑Preconceived notions about what is important before you trade professionally can be harmful.

The Pyramid of Success

🔑If you want to recognize your potential, then be the best listener on your desk or in your trading community; listen to experienced traders. Listen to what the market has taught us.

“We make trades where our win rate is 60~70% with a downside of one and an upside of five.”

Based on the routine I’m about to describe, you would think traders are professional athletes who train six to eight hours a day in the off-season preparing for a lucrative season both statistically and financially. Well, they kind of are.
For example, at one prop firm,

New traders train from 8AM~6PM every day at firms that offer rigorous training. And they cover a lot. At the end of the day, most trainees have given it everything they have.

Some just do not want to go through all of their trades after the bell. There is so much to do before and after the Close. You will not do all of this work unless you love trading.

The problem is that if you do not do all that the market requires, you will almost certainly fail.

🔑Most trades work for you right away. One of the fundamentals taught by active trading prop firms is to hit stocks that trade against you. Those who never master this fundamental will fail.

How long it takes to start making money as a trader? Many interviewees offer that they have heard it can take a year. Some state that it is not possible to make money for two years. We have found that most of our better traders consistently make money before the end of their third month. But it can take a year for some others. But on average at a prop firm, it takes about six to eight months.

A good training program will only place you in setups where you can succeed. You will trade the easiest setups when you start. For example, for the first week live, new traders might only trade support and resistance levels. The next week, new traders then shift to breakout trades exclusively. The next week, they focus on momentum trades. After that, they focus on consolidation plays. But they start with one trade at a time.

When you first begin, you must focus on the process. You must allow 8~12 months to become consistently profitable. If you are not willing or are unable to do this, you should find another occupation. Some are not able to commit this much time either financially(at best, you will be on a small draw) or psychologically to this pursuit. If this is the case, then again, please find another profession.

I cannot express to you how unimportant the results are from your first six months of trading.Like spring training, they do not matter. For example, I lost $36,000 in my first eight months of trading. During these nascent months, you are building the foundation for a 20-plus year career. 🔥☕Do you think in year 10 that your results in your first six months will be significant?

Becoming a consistently profitable trader just might be the hardest thing you will ever do in your life. Respect the process. You are not entitled to make it. You are entitled to work very hard for 8~12 months, be trained well, and find out how good you can be.

Your job is not to make money. At the best prop firms, a new trader is taught to just focus on making good trades.

Remember this life lesson: I am a trader and not an investor. I do not study long term trends.

If you can just find a way to hang in there, then the good times will come. If you can find a way to stay in the game, then you can become an experienced trader. But you have to survive. And some just can’t.

A daily journal was suggested and implemented. A plan for every trade was discussed and now is followed. Ambitious goals were set and surpassed. Favorite setups were identified and exploited.

You can quit, or you can find a way to hang in there. And if you live to play another day, enormous trading opportunities will come.

As a short-term trader, even if you develop the correct bias about the direction of the market, stock, or sector, you still must possess the trading skills to capture these moves. Wasting your time on predictions is energy and time lost for what will truly make all the difference, skill development.
Derek Jeter does not spend time working on his fastball (he is not a pitcher), and you should not sharpen your skills as an analyst (you are a trader!).

It’s called trading, not predicting.

💭”Trade what the market is doing, not what you’d like it to do in your nihilistic fantasies” — Dr. Steenbarger

There is something that cannot be taught to new traders. You must believe. You must believe that you will become great.

You can train at the best prop firm in the country, but if you do not believe that you will succeed, then you will not. If you cannot visualize yourself as a successful trader, then you will never become one. If you never obtain the confidence that you will succeed, then you will not survive to enjoy the most opportunistic markets.

Stock in Play

💰I want to find setups where my downside is 1, my upside is 5, and my win rate is 60.

💰All I need are the technical levels, news, average daily volume, short interest, and the average daily range.

But what we cannot do, what a trader must never do, is make excuses.

We ferret out data about the stocks that is meaningful to us such as average daily volume, short interest, important technical support and resistance levels, average daily range, etc.

💰Reading the Tape is the first skill that new traders should master, the very first skill!

In trading, you have to develop beyond just one skill(ex: technical analysis) and one of the most important is Reading the Tape.
⇒Some call it reading the Level 2.

💭”My experience is that an understanding of (and the ability to read) order flow is one important factor that separates the older, successful generation of day traders from the newbies who only know simple chart patterns and indicator readings.” — Dr. Steenbarger, (godfather of modern trading psychology)

Experienced traders trading multiple positions can enter trailing stops, but I always advise new traders to trade with “both hands on the wheel” and enter limit orders.

I counseled this new trader to continue working on the skill of reading the tape and to sell the stock on the offer when the tape showed weakness.

💭”Reading the tape must be learned through personal experience and long observation.” — Alan Farley, TheStreet.com

When you learn how to Read the Tape, it is like the stock is talking to you. If you develop this skill and listen with an open mind, you will have an edge over your peers.

Let the tape talk to you.

💭”There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.” — Jesse Livermore

When we Read the Tape, we determine whether there are more buyers or sellers at a given price. We carefully watch order flow. We search for what we call held bids and offers, and unusual volume done at the same price that creates a key intraday level.

The key to being a tape reader is locating where most of the volume is being done intraday.

When the stock is exceptionally strong on the prior Friday, stocks after days like that one Friday tend to trade much higher.

Do not fall in love with charts. The order flow is more important than any chart. Use your trading skills to supplement your chart reading.

It is easier to learn how to Read the Tape, or at least learn how to Read the Tape for signals to buy or sell than to learn how to trade with just charts.

💵When we find a stock in an uptrend and then spot a held bid, this is a long.
💵When you spot an important intraday resistance level cleared, you get long.

Scoring, simply put, is the skill of maximizing your P&L.

How to “score” as a trader.
※Set a max intraday trading loss.
💭”I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the winning shot and missed. I’ve failed over and over and over again in my life, and that is why I succeed” — Michael Jordan

Why do you think coaches pull their players when they are not playing well?
→ They are more harmful on the field than off.
→ You need a system to yank yourself over to the bench. A stop loss is your answer.

When you first begin set your max intraday loss for half of your median gross P&L.
Even the most experienced trader must set a limit.

Each time period should be treated like a different business.

A list of adjustments you should consider for Midday trading if this is your worst time period:

Common sense tells us that when a stock trades against your predetermined exit price, holding it only increases the chances that you will lose even more money.
⇒ Do not move your initial stop loss.💵

The first thing new traders can do to improve their results is stop pretending they have a feel for where a stock may go.💵
⇒It will take at least three years before you will be able to develop a feel just based on the news for where a stock may trade.

On the long side, the best catalyst that we spot is called a held bid in an up-trending stock.
⇒When a bid is smacked quickly and for significant size, and this bid does not drop, that is what we call a held bid.
⇒This held bid foreshadows a large market order more times than not.

For each of the trades that I make I develop if-then statements.
⇒The single most important task by the new trader during the first part of our training program is completing their if-then statements. In fact, our traders cannot go live unless they submit to their mentor their if-then statements for each trade setup.

💵「”To improve as a trader, you must determine which setups make the most sense to you! And then you must make more of them and with more size.”」

Not enough traders make more of their absolute best trades.

We all slump. The problem is not slumping, but rather letting the slump last for an extended period of time. You must learn how to get out of the slump.
I laugh thinking about how many slumps I have been through in my trading career. How many times I have wondered if this was the end for me. Sometimes, I actually go home, sit on my couch, and wonder if I am capable of continuing as a trader. And I would say I have done this at least twice a year for the past 12 years. This is a healthy process, as long as these thoughts are then replaced by solutions.
My personal disgust with my trading and inability to accept failure fuels an internal need to improve immediately. It forces you to focus on what you do best as a trader and then execute. You either get better or go home. Just like a pro athlete.
⇒Lower the tier size, stick with your best setups, and visualize a positive day.

Having a slump is all part of the learning process. It is not supposed to be easy. Did you ever wonder why so few get to trade for a living? It is like joining this fancy golf club. They don’t let everyone in. And to stay in, you must follow all the rules.

I have found that people have trouble shifting from struggling to making what they should because they undervalue the importance of confidence.
You often just need to remind yourself that, yes, you can do it. You need to remind yourself of why you are a good trader.
You must return to making only the trades that work best for you. Sure, the size of your winning trades may not be as big as they were in previous, better months. But you’re winning again. Back to the sum of your best trades, the best of your trading.

The way out is always the same. I lower my tier size. I stick to my best trading setups. And I just try to put up a number. I focus on the trading patterns that are working best for me for that market. I do this for a few days. And after the second positive trading day, I have regained my confidence.
And then the next day I try to make just a little more. And then the next a little more. Before I know it, I have run three weeks in a row of profitable days, with a touch of overconfidence that I must censor.

It always amazes me how difficult new traders make trading. Go back to the basics.
What trades work best for you? Make a list.
Just make those trades for the next week. Makes these trades with small size.
What stocks are best for you?

Traders, like athletes, should watch a lot of trading tape.
⇒The best athletes and teams watch film of themselves to see what they’re doing right and wrong, and how to improve.

💵「Developing traders need experience watching the markets trade. Watching their tape multiplies their trading experience and shortens their learning curve.」

You must believe that you are worthy of making chops before you can.

If you want to be great at anything, you must practice.

💭”I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live by the light that I have.” — Abraham Lincoln

Consistently profitable traders constantly evaluate their trading system.
They make adjustments every month, every day, and even intraday.

A new trader must start by learning the basics. Architecture students do not start by designing skyscrapers. New traders must focus on developing trading skills, discipline, and controlling their emotions. They must develop a foundation from which they can build. They should start with straightforward trading setups. Simply, they should first learn how to trade.

💭”There is no best system, any more than there is a best car. There might, however, be a best car for you.” — Ed Seykota

Developing traders who wish to make more ought to become better at the setups that are working for them, make more of them, and learn to add size in these trades incrementally.
They also need to eliminate their mental weaknesses. Contemporaneously but slowly, they should add new setups to their quiver.
This is the path to improving profits.

💎🔥Embrace the value of doing something well for the sake of doing something well.
If you are asked to do something, then do it as well as you can.

To be a disciplined trader, you must first in fact be disciplined in your life.

What works one month may not the next.

As prop traders, our job is to recognize present patterns and exploit them.
But we also must have the humility to accept that these patterns might change at any moment. And when they do we must find new patterns. We must adapt.

💵You only take on huge positions after the market has stopped going down and and the stocks and market has held higher. Don’t be a hero and try to be the first one to catch the bottom. There is more money in loading up after the stocks hold higher.
⇒💵You will make the most money in a bounce after the market or a stock has stabilized and held higher.

💵The money trading a bounce is in waiting for the stock to bottom, seeing the stock hold higher, and then getting long. Also, if the stock is going to bounce, let the stock breathe when it first starts to trade higher.
This is where the easy money is. This is where your win rate is 60-70 percent with an upside of at least 5 and a downside of 1. This is a play where you will consistently make money.
Even for an experienced trader, I would suggest following trends. There is more money to be made. And your results will be more consistent trading.
Let the stock stabilze and hold higher. Then, and only then, should the new trader get long. And then let the stock run. Do not sell at the first sign of weakness. Play for a bigger chop than normal.

Bad relationships can ruin your trading results. Cut out negative personal influences. If the dynamics of a romantic relationship turn sour, so too can your P/L.

We do not let new traders fade when they first begin trading with SMB. If you are a new trader, learn this trade after you have established yourself as a profitable trader in today’s momentum market. These are difficult trades. Most scouts preach that it takes 1,500 bats in the minors to develop into a major league hitter. This is kind of how I feel about fading. You need a ton of experience first. Stick with support and resistance plays first.

I only fade a stock that is at least two standard deviations from its correct temporary price.

When you fade, your upside must be 5 with a downside of 1. R/R: 1:5

I do not fade unless I conclude my win rate is 80%.

I only fade when I have determined a stock is at least two move away from its correct temporary price.

You do not want to focus on fading today. This is a momentums trader’s market.(2010)

This is a great trade to master. You are going to need this trade at times. But not when you are a new trader. And not with this market.

Always save money
I learned another valuable lesson during these difficult trading years. Save! Whenever you have a great stretch as a trader, save! Save for difficult times.

Today, I have a very modest budget. I do not spend more than $3k a month, ever, which is no easy task in New York City.

A trader sees a big bid and steps in front. This is my definition of scalping.
This is a play that ought to be in your playbook. But it should not be your entire playbook.

Buying on pullbacks can be difficult to do. But this is a skill that every trader needs to learn to take his game to a new level. Like any other skill, the more you do it, the better you get at it.

To last in this business you must reinvent yourself, tweak your profitable setups, and embrace the mindset of change. If you do this, your reward will be improved trading skills, and a larger bank ready to risk on the best of markets.

I have been continually developing the trading system that we teach at SMB Capital. We trade the Stocks In Play.
💵We trade off of levels that we spot intraday, prices where sellers and buyers exchange the most stock.
💵We search for epic battles between the bulls and bears.
💵We want to see a lot of volume done at a price. Once it is, then we have a level. We are long above this level and short below.
💵When the market is quiet, I recommend scalping the crap out of it.
💵During earnings season and active trading periods, we emphasize finding important intraday levels and building positions around them. We hold these positions until the stock’s trend is broken intraday. These are our Trades2Hold.

Even after becoming a consistently profitable trader, you will have to tweak your system. You will have to adjust your trading plays weekly, daily, and even intraday. This is the life of a trader.

Trading is about skill development and discipline as we learned from studying those who failed.