The 6 Trading Rules I Learned From 1 Year of Losses

meet a professional Trader who went from an entire year of consistent losing to a Season Pro at our trading firm in this video you'll discover the six crucial trading rules that transformed this Trader's career I'm Mike Bella Fury and we're one of the top proprietary trading firms located in New York City and proud to develop number seven and even eight figure perior Traders watch take notes and learn so you can potentially experience the excitement of becom consistently profitable we've all been there right that moment in your trading Journey when you feel like you've hit rock bottom well I want to share a little story with you that many of us could probably relate to it was my first year trading full-time and guess what I was consistently losing so picture this one gloomy day after yet another heart-wrenching daily stop was hit I found myself on a long walk down Lexington Avenue the sun was hiding behind the clouds much like my my hopes of making it as a successful day trader as I walked further and further I couldn't shake off the feeling of Despair I was at my wits end wondering if this was the end of my trading dream but you know what they say sometimes it's in those darkest moments that you find the flicker of inspiration that you need as I strolled closer to Central Park something clicked in my mind I knew something had to change or else I was doomed to be just another statistic in the unforgiving world of trading once I cleared my head I went back to the office and started studying months worth of stats and all of the losing trades that haunted me I had an epiphany I realized that I'd been approaching trading all wrong instead of desperately trying to make money I needed to shift my focus to ensuring I didn't lose money and that's where the magic happened on that very day I met a mental note to myself it was more than that I made a promise to craft a set of rules and safeguards that would become my Guiding Light those weren't just random rules these were rules born out of months of painful losses or rather my tuition fees in the school of trading now you might be wondering what are these rules well don't worry I'm about to Spill the Beans stick around because what happened next was a turning point in my trading Journey these rules Transform Me From A desperate loss prone Trader to someone who's much more in control so let's dive into some of these rules that have shaped my trading career first using the correct stop when it comes to day trading one of the Cardinal rules is setting the correct stop think of it as your safety net your insurance policy in case a trade goes south but it's not just about randomly picking a number and hoping for the best you got to be strategic about it day trading is all about precision and risk management and setting the Stop and accepting the risk to that stop is an essal itial piece of the puzzle to give you an idea of how this works let's take the example of a breakout from a bull flag a classic scenario in trading in such situations you'll often find two critical places where you should consider setting your stop the first option is to place your stop just below the breakout bar of that flag this is the moment when the Stock's price surpasses that resistance on increased volume often signaling a potential upward move move by setting your stop below the breakout bar you're protecting your capital in case the trade goes south quickly and the breakout is then invalidated the second option is to set your stop below the flag itself the flag in this context represents a period of consolidation before the breakout placing your stop below the flag ensures that you're giving the trade a bit more room to breathe allowing for some natural price fluctuations while the breakout is confirmed if the stock trades below the flag well you know you're wrong and the idea that bull flag is just invalidated now the key logic here is simple you want your stop to be positioned at a level where if the price touches it your initial trade idea is invalidated this means that you're not just cutting your losses short but also protecting your capital and mental Capital which is fundamental in the world of day trading always accept the risk to where your idea is completely wrong now we'll talk about avoiding death by a, Cuts via what I came up with the three strikes rule this next concept is all about avoiding a painful situation known as Death By A Thousand Cuts it's a vivid way of describing what happens when Traders take too many small losses that add up over time chipping away at their Capital this is where the three strikes rule comes into play picture like a baseball game game if you try a trade idea and you're in and out three times for a loss it's time to step away this might be a sign that you're not seeing the stock correctly or that it's not behaving as you expected by stepping away You're preventing further losses and giving yourself time to reassess and clear your head so this is where that three strikes rule comes into play this rule is your safety net and day trading as a new Trader and a great way to avoid that death by a thousand cut situation it's like a reality check mechanism that prevents you from going too deep into the rabbit hole we all have those moments where we believe a stock is going to Skyrocket and we stubbornly hold on even though the idea is not playing out as we expected but if you're in and out of a trade three times for a loss consider it a sign that the stock might not be in your favor it's a clear signal that either you're not reading the stock correctly or it's not behaving as expected so you're limited to three trades for each ticker so you you need to make them count you should never be inventing trades or strategies or setups on the Fly you need to know the exact Playbook setup you're taking otherwise there's just not a trade let me say that again we cannot invent strategies or setups on the fly with that three trades three chances doesn't seem so harsh so just like in baseball three strikes and you're out of the game for that inning or trading session in that particular stock now we'll talk about trading midday trading midday is a common Pitfall especially for new Traders between 12: and 2 pm the stock market is typically experiencing a notable slowdown in trading volume it's like the Comm before the storm or rather the storm's like halftime show the midday lull is a phenomenon known to many Traders and it's a crucial to understand why it's a common Pitfall and why you should avoid it now here's the thing institutions often referred to as the big players are the big money in the market tend to step away from their desk during midday these institutions are the ones who make the waves in the market the kind of waves that day Traders like us love to ride picture yourself as a surfer on a giant wave you want to ride the wave but it needs to be substantial one to give you that momentum in the context of day trading these waves are the significant price movements caused by the large players like funds and institutions so why do institutions often stay away during midday well they have their reasons but typically during this time they might be in meetings working on models or simply taking a break for lunch this leaves the market with less action less liquidity and less significant price movements to capitalize on in day trading we thrive on these waves created by the institutions these waves can be your ticket to profitable trades when Institution make their moves it creates volatility and opportunity for us day Traders and this is where the no trading midday rule comes into play to get the most out of your day trading strategy it's crucial to be in sync with these big players they usually make their most significant moves during the first two hours and the last two hours of the trading day these are the times when the markets offer the most liquidity and that's precisely when you want to be in the game the one exception to this rule would be significant breaking news Catalyst that forces these big players and institutions to trade next we'll get into trading in the direction of vwap Imagine vwap as your trusty compass in the world of day trading it's like having a reliable GPS for the stock you're trading vwap helps us understand the average price of a stock over a specific time frame taking into account the trading volume so what's one of the rules that we can put into place place to use vwap to our advantage picture this scenario you're contemplating a short position or you're in a short position because the stock has been trading below vwap during the first hour and it has a negative Catalyst and it has an opening drive lower but then something interesting happens after 10:30 the stock reclaims vwap this is not just a random event it's a strong signal that deserves your attention so here's why it matters when the Bears were initially pushing the stock price below vwap and holding it there they seemed to have the upper hand when the stock reclaims vwap after 1030 it's like a plot twist in a movie the Bulls step up to the plate and absorb that selling pressure pushing the stock back Above vwap This Moment is more than just a mere blimp on the radar it's a potential turning point it's like the stock telling you you know hey something's changed here this is when you need to be flexible with your strategy it's a crucial moment for day Traders you have two choices either go with the new trend in flip which now might be in favor of the bulls or be prepared to abandon your initial short thesis the key takeaway here is that vwap is a dynamic indicator it gives you insights into how the market perceives a Stock's value during a specific time frame therefore when a stock reclaims vwap after 10 30 it's a sign that the balance of power might be shifting in the market this is where your adaptability as a day trader comes into play you need to be open to recognizing these turning points and be willing to adjust your strategy accordingly after all in day trading it's not about being stubborn it's about being smart and quickly adapting as new information comes in often times we're hopeful when we should be fearful and we're fearful when we should be hopeful so Embrace vwap as your trading companion and after 10:30 pay close attention to those stocks that make a U-turn and reclaim vwap or fall below after holding up that means that the stock is not as weak or as strong as you thought and you need to adjust next we'll talk about something simple setting price alerts don't underestimate the power of setting price alerts in day trading every second counts and by setting alerts at key levels you ensure that you'll be notified as soon as the stock reaches that price point that you're watching this allows you to react promptly making informed decisions and adjust your strategies as needed incorporating these strategies into your day trading routine can significantly improve your chances of success and help you manage risk effectively so many times developing Traders will just move away from their original trade plans and switch their charts on their screen screen just because um their game plan is not working out right away only to come back to that chart later on to see that their trade played out exactly as expected this is something that would always frustrate me and happened to me many many times as a new Trader so really simple rule here always set alerts at key levels that would get you interested in a trade before moving on to a new ticket last rule maybe the most important only trade stocks in play so what EX exactly are the right stocks to trade well you know at SNB we call them stocks in play these are stocks that have a combination of specific characteristics like a strong Catalyst news technical price related they have high liquidity a substantial price range or ATR an arval of three or better these characteristics make these stocks stand out as excellent choices for day Traders let's dive into the Catalyst that could make a stock worth trading these could be news catalysts like exceptional earnings reports or new product announcements technical analysis catalysts such as a breakout and price Catalyst where stock significantly gaps up or down in the pre-market these are things that get Big Money traders interested and can lead to substantial price movements next is liquidity liquidity is a GameChanger in day trading it's all about how easily you can buy and sell a stock at your desired price if you can't get in and out of a trade at the right prices it could be a costly mistake so it's crucial to ensure that the stock you're trading has good liquidity allowing you to control risk effectively now we'll briefly discuss range to make money as a day trader you need stocks that move and the average true range or ATR helps us gauge that we look for stocks with an at R of at least one because that means they move about a dollar on average during a trading session but we're not just looking for movement we want a catalyst that's likely to make the stock move at least two atrs during a trading session that's what we call having the right range you might be asking yourself well what about low floats we found over the years that those are just not the best stocks for struggling day traders to focus on they're complex and you need to consider many different factors low floats are sort of In A League of Their Own finally arval confirmation so you found a stock with a catalyst and it meets all the criteria we discussed how do you know if it's truly in play well that's where relative volume comes in or arval we look for stocks with an arval over three this means that the stock is trading at least three times its average daily volume which tells us that market participants and big money are particularly interested in the stock that day that increased volume leads to more significant price movements and better opportunities for us as day traders in order to put on a trade the stock must meet all of the criteria I just mentioned if you're eager to dive in deeper into stocks and play and how to find them I recently created an in-depth video discussing this very topic you can watch it by clicking on the following Link in the video I provide even more insights and practical tips to help you become a better Trader so make sure to check it out with that I wish you the best of luck in your trading Endeavors keep learning keep adapting and happy Trading My Hope Is that you'll Implement some of these rules so you're an active Trader not doing as well as you want not doing as well as you deserve and you just can't figure out why you can't become profitable no matter how hard you try well let me show you why this is your competition the traders in this room this room right here is full of elite Traders some of whom are making seven and even eight figures a year in fact our top guys have made nearly 20 million each in net trading profits in a single year let's head to my office so I can share more so you're probably used to seeing videos of lavish Trader Lifestyles trading gurus trading off of the laptop for an hour a day heck maybe even 15 minutes a day and then them relaxing on some secluded beach for the rest of the day well all I can tell you is that our Traders train like pro athletes they live and breathe the markets and are continually working on their trading skills because at our firm that's what we found it really takes to make it in this game I'm Mike bfury co-founder and managing partner of S&B Capital One of the world's top proprietary trading firms located in Midtown Manhattan and we're always looking for trading talent to hire and develop and not just to trade inhouse on our desk but also to trade from their own home entirely using our firm's capital and we have numerous Traders doing just that allowing them to make upwards of seven figures trading the firm's Capital without risking their own money but to even get a shot at something like that you need to have the right training that's why we're doing a new free online presentation in which we share how you can get an interview with SMB to become an in-house a remote Trader trading firm Capital without risking yours and getting access to all of our firms coaching and resources and the best part you don't have to be a profitable Trader yet in fact we prefer to mold profitable Traders with our methods and our techniques that's why we have just three simple criteria that can earn anyone an interview we're looking for highly ambitious and determined traders who fit our culture first and foremost so if you believe that could be you sign up for the free 1hour online presentation by clicking the link that's in your top right corner of your screen now

Channel: SMB Capital

Views: 96,064

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, trading losses, how to make money in trading, trading stocks, how to start trading, stock trading lessons, stock market trading course

Id: 5qxUyakEQPc

Length: 18min 28sec (1108 seconds)

Published: Tue Nov 14 2023