Best Quotes From The Playbook By Mike Bellafiore – Cofounder of SMB Capital:
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Even if you do become a great trader, you’ll sometimes face personal struggles and need a timeout. When you become a successful trader, this is not the end. There is no trader destination. Trades will stop working, and you will have to find new ones that do work. Seven-figure traders can walk around in a frustrated daze desperately searching for a return to just a profitable month. Trading is a sport of survival, reinvention, and perseverance, even for the successful trader.
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You do not become a great trader by being shown cookie cutter technical setups and then soon become successful. That is a myth from what I call Trader Disneyland. It would be wonderful if Trader Disneyland existed, marketed and spun by too many that it does, but it doesn’t.
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It’s how you think through a trade that is most important and sustains. If you are looking for a system to follow that will work consistently to the end of days, I have some bad news for you: It does not exist…Even automated strategies require constant reconfiguring. If you think of trading as ‘red light, sell, and green light, buy,’ you should probably find another game to try or book to read.
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Let’s do something very powerful for your trading career together. How about we learn how to think through trades comprehensively, individually, and with structure? That way, we can adapt to the always-changing markets and develop Playbooks for any market, any product, any trade, and any time. Let’s not pretend trading is easy, that there is some holy grail to your success and give this sport and you the respect it deserves.
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Look, there’s no question that you can learn from observing others. But when it comes time to trade on your own, you cannot rely on the style or techniques of other traders. Learn from how they think, prepare, review, and work at their craft, but do not copy their trading. You have to find your own way as a trader, but – and this is the key point – a way that is supported by developing tried-and-true techniques that you take and then make your own.
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Trades work and then don’t work. What is most important is for you to adapt when the market changes. Understanding how to think through your trades will help you shift to setups that are working for the changing market. This saying sums it up best: Give a man a fish (tell him a trade to make) and you feed him for the day. Teach a man to fish (how to think as a pro trader) and you feed him for a lifetime.
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We supposedly live in the information age yet receive little information about what it takes to really become a profitable trader. What we get is this: ‘Next up, someone trying to make a name for himself, who has no idea where the $SPY is headed but is going to overconfidently forecast its direction anyway, live next on [insert market show].’ Ubiquitous predictions blanketing what we will call the Financial Media Entertainment Complex distract investors and traders from the real work of real pro traders.
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Most traders overvalue the importance of the trading day – their trading. The least important part of your trading day is your actual trading. The work you do after to improve and prepare for future trading opportunities is most important.
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Many traders believe that they quicken their path to success by imitating the techniques of a star trader that they have heard about or know. Gathering around a firm’s star trader so they can become like him is a common exercise among new and developing traders. Not a chance. Trading is a journey. You climb the P&L ladder dollar by dollar, daily lesson by daily lesson, trade by trade made your own, added screen time by added screen time. You want a trader, a path, to copy? Let that circle form around that firm star trader without you.
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Most TV financial pundits exist to fill up air time, entertain, and sell advertising. You may think I’m painting with too broad a brush, but it’s only to say that our sport is not the business of entertainment, or offering up pithy one-liners, and we’re not in the business of hollering and screaming…Trading is a serious business, and to succeed at it one must not only have the developed skills, but the mindset our job is not to be right. So be careful not to become mesmerized by the Financial Media Entertainment Complex and try to understand their agenda. You are a trader, not an ads salesman.
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Skill survives. The ability to find new patterns that work in changing markets endures. Trading plays come in and out of favor like significant others in your early twenties. We all do not know that much about the markets, even after 15 years of trading, because our market’s data is always changing. For example, I had never traded against algorithms for most of my trading career, and then they just appeared without warning dominating a new trading reality. How I pulled money from the markets in 2003 or 1991 or even 2009 is distinct from how I trade today.
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Trading holds a mirror to your human flaws and requires you to fix them or be fixed. If you are an anxious person, you will be an anxious trader who overtrades. If you anger easily, you will be a trader who quickly trades on tilt. If you are scared to take chances in your personal life, you will miss many excellent risk/reward opportunities in the market. If your father never offered you a vote of confidence, you will trade with a lack of conviction. If you come to work late, you will be late to enter a good trade…If you are in a bad relationship, then getting slipped in a stock will start a day of depression, because this is your reality. I will stop here; I hope you get my point.
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There is also confusion among traders about the value coaching and mentoring can add to their game. All traders learn mostly from themselves. They review their work, they think about their trading, and they figure out things for themselves. But do not mistakenly conclude from this that a coach and mentor cannot make you better. Yes, you do most of the work to make yourself better. But it’s also a fact, borne from what I’ve experienced and witnessed over the years, that a coach and mentor can help you reach levels of greatness that you could never reach alone.
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That’s the mark of a great trader: never take anything for granted, never relax into routine, always be open to hearing new ideas and, most important of all, accept criticism. That, in a nutshell, is how you become a YBT (Your Best Trader): you have an unquenchable thirst to improve; you have the willingness to do the work – which includes considering new ideas and possibly abandoning old ones – and to take necessary instruction to elevate your game.
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So now you know the truth about the path to trading success. We all have to keep working at it. Trader Disneyland, where the uber-bright become millionaires because they are smart and where trading is only about clairvoyant market calls, does not exist. We all will have some very difficult periods that test our commitment and perseverance. It is okay to fail. Remember what Dalio taught us, ‘Weakness doesn’t matter if you find solutions’. Just be mindful of the next pivot you have to make. Keep after it.
If You’re Serious About Trading, Get Started Building Skills and Developing Your Playbook:
Most people have the wrong idea about what it takes to become a consistently profitable trader. They think learning basic candlestick patterns and cookie-cutter technical setups is their ticket to automatic success. But it’s just not that simple.
Amateur traders wrongfully assume that trading patterns are merely the shape/structure of a price chart. But there’s much more to be considered than lines and shapes. You can’t disregard context (the big picture, key levels, fresh news, order flow, etc.).
These elements that shape context can have a drastic impact on the probability of success and risk/reward available in any individual trade. Not all double bottoms/tops, for example, are created equal. Without supporting context, they’re not worth trading.
The concept of building a playbook – which is a detailed archive of trade setups that actually work and make the most sense to you – is something that all traders should be consistently working on. Doing this work really isn’t optional for serious traders – it’s mandatory.
This is your blueprint for competing, adapting, and thriving within ever-evolving markets. Labeling trades, archiving them, and reviewing them regularly is how you internalize setups that work and develop elite, real-time pattern-recognition skills.
The act of building your own playbook also helps you develop fundamental skills, confidence in your approach, and market intuition.
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
Related Pages:
- Top 25 Quotes From One Good Trade By Mike Bellafiore
- What is Trade With Profile – Best Trader Training Program?
- How to Properly Track Your Trades to Figure Out What Works
- Entertainment vs. Training in the “Trading Education” Space
- What is Asymmetric Risk-Reward in Trading and Investing?
