How this Senior Trader Became a Consistently Profitable Trader (so you can too)

in this video learn how a senior trader from our trading firm became a consistently profitable trader so you can too hi i'm mike bella fury co-founder of sme capital and we're a proprietary trading firm located in midtown manhattan and i'm also the author of the trading classic one good trade and the playbook click our subscribe button so you don't miss any of the videos they're producing for you in the trading community in this video learn the path and now senior trader took to become a consistently profitable trader let's get to work on sharing these important trading lessons they're as good as gold so you can grow your trading account good afternoon everyone so i'm ryan a senior trade at smb ktg and in this presentation we're going to go the step-by-step really how i became a consistently profitable trader so from the beginning to when i just started to some challenges that i faced um to when things started to uptick and then when finally i achieved um consistency and profitability so the reason why and how this presentation came about is i tweeted just over a week ago after i received a lot of questions regarding consistency and the learning curve and you can see my tweet there i said the following i said it took me over a year until i was consistently profitable then came sizing up and refining no huge home runs just improving and growing one percent each day and allowing things to compound and this is my equity curve which i was happy to share and you can see up until july 17 through to august august october there wasn't much going on that was experimenting that was the learning curve trading with small size and then finally one finds their niche as i did and that's when i placed most emphasis and focus on what showed me promise in the beginning and that's when i started to refine adapt further my knowledge in that niche and size up and you know later on and especially this year this is when things have really started to compound and i also wanted to include this because it just really summarizes um what i'm going to be speaking about in three small paragraphs number one where did it start i hate losing and that's why i don't necessarily go for those huge home runs and those big drawdowns and early in my career i decided i wanted to cut out everything that wasn't working and only trade what was and once i was consistently profitable only then did i focus on expanding my stock selection and playbook two there's no shortcut to trading you have to put in your ten thousand hours and tree trading like it's your own mini business you want to achieve consistency with certain strategy type of stocks and then only then look to add another strategy to your business another stream of income and revenue that leverages your current skills and it's a process and it takes time and lastly collaborate and learn from people who are doing what you aim to do be open-minded twitter's a really great resource and and for those of you at the firm who are lucky to be there don't be afraid to ask questions um you're surrounded by people that want to do um that are doing what you want to do so take advantage of that and twitter again it's flooded with successful traders and coaches who share free valuable advice and lessons so take advantage of that and lastly if i hadn't received the mentoring and been open-minded and asked questions i wouldn't be trading today you mentioned that you hate losing so there's different ways to interpret that you might there are some traders who really don't like having too many negative days and they need to craft their trading so they don't have many negative days there are people that are just super competitive and what they mean by i hate losing means they really just don't like losing at anything can you clarify what you mean by you hate losing so in the beginning i i hated losing because i was competing with myself and so whenever i would have a bad day it was because i i i hadn't prepared well enough in order to manage my risk or my loss or i didn't know how to trade what i was trading um the best that i could be and so that's why i decided to focus on only on what showed me some success glimpses of success in the beginning and take out some of the other plays and potential playbooks that i was working on at the time because i was competing with myself and i didn't like trading the unknown if i could if i could put it that way if you want to learn three real world setups that our traders use including the simple setup that we teach all of our new traders and the setup that turned one of our traders into a seven figure big money earner check out the free webinar that we're currently running just go ahead and click the link that should be appearing right now at the top right hand corner of your screen that's going to open up this free registration page in the new window so don't worry you're not going to lose this video you're going to learn more in a couple of hours from this trading workshop than from years of online education in the beginning when i first joined the firm and and the trading world full-time i came in to the firm on day one and i assumed i knew nothing um i wanted to learn from those who were already doing it and had achieved what what i was what i was looking to do um the reason i did that is because i didn't want to come with you know pre-assumptions and and come with the strategy um and and look to expand on that i wanted to rather take snippets from xyz trader um who was already doing it and had had the right habits and processes and disciplines um and i wanted to start fresh and and get each step correct along the way failure wasn't an option if someone else was doing it then so could i that's what i told myself every day especially during the tough days and and the downs as you experience in your first year just hang in there because if someone else has done it then so could you and so could i you have to be determined resilient and persistent i noticed that those who assumed they knew everything in the beginning were the ones that often did not make it um you have to be open-minded i think that's um i mean i i couldn't be more more um place more emphasis on that open open-mindedness is a trait that i see all of the great traders at the firm um they place so much emphasis on that in their trading and their processes manage expectations it's very easy when you first start trading and especially with the trading community and seeing large numbers out there to want to be the one that comes in and and hits the ball out the park in your first year um that's not managing expectations rather you want to understand that there's a learning curve and the learning curve is real it's not a nine to five job you need to put in the hours just like an athlete would if you want to make it and be part of the you know 10 that make it as successful traders and so managing expectations is super important and it's in fact the one of the first things that my mentor said when i joined his team develop the right habits process and routine that in itself could be a full presentation it is super important and i know dr s and bella have a lot of material online where you can dig a little bit deeper into that focus on laying the groundwork for a solid foundation that is everything i've already mentioned above as well as technicals and fundamentals and the tape and recording your screen and putting in the hours so that you have a solid foundation and don't be afraid to ask questions often when you're starting out it can be quite intimidating to get in touch with um successful traders that have been around for a long time but they're also once junior traders or or new traders just starting out and they did the same thing so don't be afraid to ask questions it's the best way to learn it's the quickest way to learn and definitely pick brain the brains of traders that are doing what you want to do ryan can i dig deeper on one important point you made here so you're very close with shark and wrath two huge traders now how do you as you're coming up the curve you're a competitive person you want to be a terrific trader when you're seeing them have huge days when you were seeing them have bigger days than you how do you get yourself to focus on what you need to do to develop for your career and not lament that you're not making as much as them it's a great question what i do and and i'd say what i did two years ago when when when i really started to get a bit closer with both of them is when we would trade the same stock and of course trade it differently because we're all different traders i would first want to understand why they got as big as they did in certain spots what they saw that i perhaps didn't and that was step one is is their thought process behind a trade because i may have seen that trade as a b trade they saw it as an a trade for reasons that i did not even think of at the time and so first step was understanding their thought process and then understanding how they manage their size and their trade going forward and in order to to get closer to their size and the success they have in these trades for example it's speaking to them and speaking to yourself and dr s and coming up with a process that suits me as a person and a trader to responsibly size up and so that's something i'm working on now and something i've spoken with shock and rap about is differentiating between your b traits that show up each day and your a plus trades and so that looks something like identifying trade xyz and those three trades of the month were the standout trades and on those trades one um should be risking 30 or 40 more risk for example than you were on your b plus trades and it's it's going over that it's visualizing it and it's just it's really just knocking it into your head and you know the first two times uh you you'll experience some speed bumps um but it's repetition and it's training your mind to think that way so that when you see it on the screen when you're anticipating a trade for one or two or three days you're able to to hit the button and hit the size when that trade plays out and that's something that they do extremely well they've trained themselves to do it and it's something that i'm beginning to do and and showing some promise in but it it takes time and so it's that it's that mindset and that mind shift um and that's something that they've achieved um and i think all traders would like to achieve that and to go into some challenges that i experienced when i first started ready the first year and a half two years first of all you know it goes without saying but if trading was easy everyone everyone would be doing it um so you need to understand that it is tough and that like i already mentioned it requires a lot of time and perseverance and dedication it's like learning to work to walk first you crawl then you fall it's like learning a new language and a challenge that i experienced is when you spend hours days weeks weekends working on a strategy that shows promise only you find that there is no edge it can be quite disheartening and so when you first do that when you start trading you may find a particular setup that you like you may back test it you may forward test it only to find that it just worked for that week and you got lucky for lack of a a better better word um it's very important to to to put your ego aside immediately and get back to work and try something else you don't want to dwell on failures with trading everyone's going to fail you just want to get up and move on losses are part of the game don't let them discourage you let them motivate you i struggled with that too in the beginning uh i i was in a sense afraid of losses it would discourage me and it's about training yourself and your inner coach to let them rather motivate you and that's the next point train your inner voice to be your inner coach how you talk to yourself matters and it matters immensely when you're in a trade that does not work well are you going to beat yourself up with that little voice in your head are you rather going to be proactive and say well you know next time perhaps i shouldn't do x i should do y or next time i should go in with half the size until i get further confirmation and it's about being constructive and proactive in real time that in itself will speed up the learning curve you want to set realistic goals in the beginning you'd only set yourself up for failure again the learning curve is real and you will likely need to make sacrifices while you are in the development phase so that may mean less recreational time on the weekends you want to spend more time behind the screens and in the office to speed up the learning curve and you can't copy a successful trader that kind of goes in with the trading were easy everyone would do it everyone is is unique in their own way and i think so is trading and you really need to find your own niche as we all are different um guys at the firm we all trade the same stocks but we all trade them quite differently in terms of time frames hold time entries and exits how we take profits and that's because we're all different people and we see it a little bit differently sizing up is a challenge when you see bigger numbers bigger winners bigger losers on a screen it is challenging especially when you get comfortable with a certain size what it takes is for you to coach yourself with that inner voice as well as good mentoring a good coach a good mentor to remind you and and what helped for me specifically was to remind me why i'm doing this i'm doing it to be successful i know i can be to have a growth mindset trading definitely can consume your thoughts especially if you're performing poorly it's easy to beat yourself up over it and so that's why it's so important to devote some time towards your friends relationships your health hobbies and interests and this is something can i follow up on one thing you said which i find fascinating so and it relates back to how close you are to wrath and to shark and raph and shark are either have either surpassed eight figures this year or are knocking on the door of it and if anyone's knocking on the door of it certainly they're gonna do it so you have these two eight figure traders uh in a year and you are as close to them as anyone and you can see their trades in real time and you can talk to them in real time what do you mean you just can't copy them and when you explain that all right so why you can't copy them but but what can you extract from them that's super important for example i think it's super important for someone like yourself to see the setups and the trades that these guys are taking and for you to be able to understand the variables that go into them for example i think it's super important for you to be able to see that it's possible to make as much money as they do i think it's important for you to be able to talk to them about why they're getting into trades and why they're managing the trades the way that they are and then you take that information and you figure out the type of trading that you can do and you craft it into the type of trading that you're going to be successful with for example you may be able to get in the same trade as wrath but you may not be able to hold it as long as he does but you could create some trades that really really work for you for example you may not want to trade a short setup the same way that shark does but you may want to take the same trade you may want to take the same direction you just may want to get in and get out differently but i'd love to hear how that experience being around those two guys was for you well it's actually interesting and it's something i've spoken to them about quite a bit um and in term in terms of copying them it's it's and and the size that they put on again it goes back to the point of it's all a process and when i speak to to wrath and and shagai i was reminiscing with them quite a bit um and i was talking to them about how when i joined four and a half years ago what i was seeing uh them doing the numbers that they put up versus what they're achieving now um and they they both you know said to me obviously you want to have that growth mindset and keep pushing yourself but it's very easy to see someone put up these big numbers and and focus on that um especially if you're someone from from the outside and you're not you know close with them but you often one can often forget the the last four and a half years that they've had and how each year progressively and incrementally they've improved each day and so that's what they and swang too really reiterate all the time is focus each day each month each quarter each half each year on improving on the previous year and if you keep showing that consistency and profitability you will achieve what we have this year but in two three four five years time just as we did because it took it took them time too and so they they and it's amazing because at the level that they're at they still discuss and place emphasis on on the basics and that's the process and the habits and the rules to have each day and naturally you will size up over time next point understand what sets you off what may put you on told for example if i got a per night's sleep if i was um competitive in a friendly manner with someone else for example and and they perhaps did better than me and i felt like i had a point to prove now on on a particular trade if i missed a meal if i had an argument with a girlfriend understand what sets you off and and and identify and understand the feeling that comes within when you're kind of going on tilt or a little bit on edge behind the screens and and and try and and try and cut that off before it affects how you train in your trade management for the day trading is not about being right or wrong put your ego aside and focus only on positive risk reward setups if you're going through a slump size down and put up some green days rebuild your confidence it's so important to do that don't look to bounce back after a slump if a slump for you is one per week or one per month or three bad days everyone's different but people want to bounce back immediately and they want to make it all back it's very important to size down put up some green days and rebuild your confidence in the beginning don't focus on the money focus only on developing the right habits processes rules and disciplines and the money will come later so when i first started trading first step is you need to and i needed to discover who i was as a trader was i going to be a swing trader a scalper a momo trader higher time frame short time frame i just didn't know i had no idea i wanted the stats to and specifically using trader view to objectively answer this for me so in the beginning when i just started and just went live i traded large caps earnings breaking news i traded small caps on press releases in play names low orval high arvol otc stocks i traded everything long short but i traded with very very small size and the reason i did this is um you know great coaching and mentoring from shock he said look in the beginning you're going to lose money you're then going to lose less you'll then break even you'll make a little bit and then you'll grow and things will compound so when you first start trading experiment but trade with small small size because you don't know what you're doing and i really respected that because in a sense he was looking out for me and he knew that when i finally got it i didn't want to start off in a big hole and so during during that time i would say around you know that six month experimenting trying everything phase i would just record my screen every day and every afternoon every evening every weekend without fail i would play it back i would watch the tape to of course speed up the learning curve and and deepen my understanding and also to pick up on small nuances pockets of liquidity what what it looked like the stock looked like up there why it failed up there could i could i identify a refresher on the offer i would also journal every day still do um it back then first i would say two years definitely more in depth in terms of playbooking every single evening identifying the best traits i took and the deskshock weekly reviews monthly reviews i also wanted to understand the importance of multiple time frames and how the five six best traders at the time incorporated that into their trading a lot of traders bold built stories behind a trade and they want multiple time frames to align the one minute the five minute the 15 the hourly the daily chart i also wanted to understand different trading indicators that were being used on the desk again when i started i knew of the fibonacci i knew of the moving averages simple ema um but i joined the desk and i noticed that v-op really stood out and the understanding and thought behind it just made total sense and so that's what i stuck that's what i stuck with i also wanted to know how traders incorporated technology into their trading they're hybrid traders they are fully automated traders and then they'll traders that use technology just to really complement what they're doing and so seeing and understanding other people's niche and trading personalities was a big thing and then i wanted to see what i resonated with what what felt right and felt natural to me and and and suited my personality and so after six months of training and experimenting i looked through all of my stats and i discovered my strengths and weaknesses as a trader and so after pouring through all of those stats early on they told me again objectively that i was showing promise trading lower price stocks and in particular these were low floats with higher orbital on the short side i then went a little bit deep and i wanted to know what time of day i was performing the best and now was during the open the first hour and a half and the last 30 minutes of the day the close so this information along with some other insights was enough to go on in the beginning so i said to myself for the next six months i'm only going to focus on getting consistent and getting developing a deeper understanding for these stocks the psychology behind the moves what moves them up what moves them down how v up can be used as a trading indicator just for trading these stocks sec filings the float the short interest and the mechanics and so that's all i spent my time on for the following six months i also then leverage some of the technology at the firm to supplement and complement my focus for the next six months i bought some market screeners filters watch lists identified the setups which i perform best in and look to expand on those playbooks in more detail i use technology as well every day pre-market during the day to alert me to more of those specific setups and i ensured i was using the best auto routes and hotkeys the layout for speed rebates and falls so really after discovering what showed promise early on i then wanted to arm myself and give myself the best possible chance to get consistent and create that first stream of income as a trader and so the goal i said was you know the next six months that's that that's what i wanted to achieve hey ryan let me get your feedback on something what i'm hearing from you for a path to being consistently profitable is hey let's build a foundation second let's experiment with different types of setups and trades third let's try and be consistent in our niche and so i would imagine there are some who eventually will watch this that will say all right it's going to take me some time got it when i'm building my foundation since it's going to take me some time to make money i can coast when i'm experimenting with different setups since i don't know which ones i'm actually going to be good at i can coast then when i start to work on my consistency in my niche i can still coast because i'm not really going to be trading that much size yet but i'll be a little bit more intense having watched you grow i would suggest that you weren't very intense during each of those stages absolutely very very intense no no is more important than than the other they're all equally important and and they have to be um you you just can't slack at all because with trading really what you put in is what you're going to get out and so if you do coast if you if you take some time off and and and it's just it's going to take time so i'll just kind of roll with it then it's it's it just won't work if you put in all the time and all the effort maybe there are a few exceptions around the world and if you put in as much time as i did then it's one year one and a half years but that is going all in uh you need you need to be all in so to carry on with that and i included this showing something because it has to or you think it will go lower is different than shorting when you have confirmation for example lower high break below view up and and the has to or you think is is you know those are words and and language that that you want to be careful of in your trading early on um a stock doesn't have to do do anything and it's just important to remember that and if you have no edge one day or you don't see your setups um in a day then you don't need to trade again you treating you got to treat trading like it's your business your small business hopefully a large business one day and so you want to treat it with that respect and so when that would happen to me um i would either size down if i thought it was a subpar b ish setup or i just wouldn't trade i would focus on technology i would focus on building out more in-depth playbooks just as examples risk management risk management risk management if a trade wouldn't work if my gut told me it would not work um then i would get out because i could always get back in and sometimes you don't have to wait to get stopped out and so that's something that i saw some of the senior traders doing um in kind of the my first year um you know they would say i'm wrong at um three dollars i'm shorting it at 275 but they would see something on the tape or the the trade didn't work as quickly as they thought they it should have and so they would just get out because you can always get back in um listen to the stock respect the price action price action is king and if you pick up on a small nuance then you don't always have to get stopped out because you can always get back in and and if you listen to your gut which is usually right it could save you quite a bit of money i would initially enter with more size and this is something i did in order to size up a little bit quicker as it was a challenge for me initially i sized entered with more size and as the trade worked i would take that extra size off so in doing so i would cover some risk and lock in some profit and i'd hold the rest as planned really until i had a reason to exit or the target was reached and so entering with more size than perhaps you're comfortable with could be a strategy that may help and come to fruition and pay fruition in the future just something to think about that's something that worked for me i only wanted to make superior risk world trades in the beginning so now that i have more stats sometimes i'll take one and a half to one rescore trades because i know that that trade has a higher probability of working for example uh 80 plus percent probability of working but in the beginning i didn't have those stats to back it up and so i would only look for the three to one um really minimum risk reward i also collaborated collaborated with traders at the firm who were successful in trading these stocks that alone will speed up the learning code i followed people on twitter who were successful and had knowledge of these stocks i asked them questions i looked at all major runners in the last two years and i studied their moves the technicals and the fundamentals of each one and then i began sizing up and the goal was now to make a living from trading low floats again my first stream of income as a trader so achieving consistency so by the end of 17 i was conceiving i was achieving consistency in my trading and that's when when when my mentor said to me all right now we can really size you up because you've earned it you've proved that you know how to trade it's no longer gambling or experimenting you are running a successful mini business and now we can size you up so each day i would ask myself um and i would review in real time at the end of the day while i was trying to size up where could i have made more where could i have been bigger and sizing up is challenging for some so i decided the way i would do it is i would risk a percent of my stop on particular trades and therefore as my size as my risk increased the percent of risk would always stay the same so if you go from um for example a thousand dollars of risk to two thousand dollars of risk but you're risking the same percent then it just stays the same percent and and things really happen naturally and and that's just a little mind game i play with myself but it helps i also removed pnl from my screen and i replaced it with cents per share up or down in the trade um therefore i just you know i don't trade my p l um of course you can work it out it's another little trick to play with yourself but it works for me and i see a lot of other traders do this too collaborate with other traders they have already been through everything that you are going through they have experienced the challenges the ups and the downs and so collaborate with them if you have ideas contribute with those traders and they'll be happy to share even more information with you again while i was achieving my consistency then i began expanding my playbooks which now include long setups short swing setups and through 18 to now i constantly bold review and explain my my playbooks which really now includes all types of stocks and strategies from short or long small caps to otc long or short to large caps earnings breaking news breakouts on in terms of technical breakouts imbalances marketplace just to name a few but again you want to focus in the beginning on i wouldn't say perfecting because as a trader you're always adapting and changing but focusing on one niche and use those skills developed on that one niche leverage them to something that applies so from from shorting low floats to shorting over extended ipos and leverage those skills and shorting reading the tape and constantly add a new stream over time just to end off some of the books that that i already loved and still read um in the beginning it helped a lot these are them one that was actually gifted to me by bella which probably one of my favorite books now if not my favorite is atomic habits by james clear reminiscences of a stock operator it's just brilliant market wizards one good trade in the playbook shots can help you in the stock market great book just for identifying different child setups bull flags bear flags etc all of dr steinbarger's books must read chat with traders podcasts trading in the zone and think and grow rich when you begin finding your consistency in profitability that's a book that can really help you coach yourself your inner voice your mindset to think bigger and and really visualize yourself as that successful trader so you've been through it all now in terms of going from new trader to consistently profitable trader and sizing up from there what was i'm sure you had some preconceived notions about how long it would take and how hard it might be looking back at your start now and your journey now what was the most surprising thing to you that was the hardest thing for you and becoming consistently profitable well that's a tough question and and one i haven't thought too much about in the past um to start off with i did not think trading was going to be as challenging as and difficult as it was in the beginning um i had no idea and i also didn't i would say the biggest challenges and something that's turned into a strength is how important psychology is in trading with yourself with what moves stocks that was something i underestimated completely and the third one i'd say is sizing up that that has been my biggest challenge sizing up i never thought it would be as difficult as it was um again psychology plays into that but that was definitely a big challenge and still is because you know as traders we're always growing and we always want to be bigger and more successful um but certainly in the beginning that was the biggest challenge do you ever think about why sizing is particularly challenging for you do you ever think about maybe your childhood your earlier years just some innate skills about yourself some innate personality traits that causes sizing up to be a touch more difficult for you definitely i think naturally i'm quite a conservative person when it comes to risk and so i mean that's why with my p l curve it's it's kind of straight up because i manage my risk very well but on the flip side of that comes taking larger risk and with that obviously could come larger losses and so in terms of my you know growing up i don't know how where that stems from but um definitely has something quite important to do with it um you know there's there's obviously fear involved of going in big on a particular trade it's not working and seeing that three four five times larger than usual loss on the screen which is just you know a scary thought but having been through it um and and it's it's part of growth and it's part of consistency um you have to feel that pain um but coming into into trading i was very conservative and i think that is why it took quite some time for me to size up until i had experienced those three or four or five big losses come to terms with it felt the pain you're like like you said to me the one day you know it's about two years ago you experienced that loss it's good when you wake up the world's still gonna be here you're still gonna be here you're still going to be able to trade because i was just scared of taking those big losses um but it was vital um in order to grow and become the trader that i am now i remember that i also would i also appreciate that i i would suggest that you're also very diligent and responsible and that is that is a those are positives on your personality which lend to you being careful and responsible with firm capital uh and not everybody at the firm is like that we had a conversation with the trainer the other day who carlton and i had a chat with our floor manager and i had a chat with who had run into an unfortunate six-figure loss and it was unfortunate and it wasn't the trade was was fine maybe the sizing was a little bit big but the trader part of the strength maybe to the trader was he wasn't in any way frazzled by the loss at all um and that was a little surprising to me but the negative side maybe to that is that you know maybe he could have been more diligent and choosing a sizing which would have kept them out of that that situation so good for us to recognize what our personality traits are and where we come from i was just saying it's interesting because for that trade and i'm pretty sure i i know he's speaking up but that's besides the point well that trade of that loss has almost become um like when you first start out and you take a big loss five low five figure loss and and that's probably what it feels like for him now where it's it's fine i'll tomorrow i'll bounce i'll bounce back or you know it's i will i will actually say it isn't the trader that you're thinking of and it's a different trader that trader can handle those losses exactly one year thinking of that trader is fine taking those type of losses this was somebody perhaps in a in a different income bracket than the trade you're thinking of yeah you can but but the point i was making is that you know two years ago the the lost that for example when we had that discussion about um is now just a regular if i have a red day in a week that's sort of the regular red day that i'll have and it's you almost become numb to those numbers over time as you continue to grow um and so it's just it's quite fascinating how that how that all works from a psychological standpoint hey go ahead and click our subscribe button so you don't miss any of the videos they're producing for you and the trading community and please take the time to add your feedback in the comments section for what videos you'd like for us to produce next and what you found helpful from this video from all of us at smb train and trade well

Channel: SMB Capital

Views: 54,771

Rating: 4.9396987 out of 5

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, consistent trading results, consistent trading, trading consistent, profitable trading, how to be profitable trading stocks

Id: A6-5xHx1blI

Length: 43min 27sec (2607 seconds)

Published: Mon Jul 27 2020