Lover of trading, tacos, 3D/AR/VR, cryptos, and most things Japanese

What a month! July was the month I took the next step forward in my trading journey and started SMB Capital’s “DNA of a Successful Trader” program. Trader DNA is comprised of 14 self-paced modules covering every aspect of professional trading – prep work, setups, PlayBook trades, entries, profit targets, exits, position sizing, psychology, and mentoring. I’m only a few weeks in, am halfway through Module 5, and am loving it!

Two of the big benefits I’ve experienced so far, apart from the wealth of information provided from a large swath of professional traders, are the daily morning meetings and access to SMB’s proprietary technologies. The morning meetings are done each day before the open, where co-founder Steve Spencer reviews the overall market activity and presents three or four “Stocks in Play” for the day. These stocks are the ones he’s selected that provide the greatest potential trading opportunities for the day. While my full time job doesn’t afford me the luxury of trading most of the day, a large number of moves happen within the first hour of the market open, and I’m seriously considering adjusting my work hours so that I can trade the open each day. This would mean that I’d trade 7:30-8:30am, then work 9-5, and hit the gym from 6-7. Eat, talk with Christine, and study from 9-11. I’ve been gradually adjusting my schedule to do just that, having gotten spoiled by my short commute and sleeping in until 7:30. Since joining SMB, I’ve been getting up at 6:30 to attend the morning calls, and falling asleep around 11, so it shouldn’t be too big an adjustment – though I have spent the last two years going to work early and getting done at three, so that’ll take a mindset adjustment.

Another cool thing about the Trader DNA program is access to SMB’s proprietary trading tools. These include the SMB Stock Screener and SMB Radar. The Screener allow me to set about 15 different variable criteria and then returns a list of all stocks that meet those criteria, along with relevant data. I’m still learning to use it, and often my criteria are wrong and the stock I want to explore isn’t listed. The Radar is another tool that shows what stocks are in play, by SMB’s criteria, and it is looking to be worth the price of admission alone. As traders, we need stocks to move to make money on them. These tools provide refined lists of stocks with potential. Then all I have to do is explore the charts of each one until I find one or more that set up to match my trading style. I’m digging it!

So far I’ve done three trades. As Mike Bellafiore, Managing Partner of SMB Capital, says, “Your goal is to make One Good Trade. Then One Good Trade. Then One Good Trade.” Of my three trades, I consider two of them “good”, although both could have been better. That said, the FNKO trade I did yesterday put me in the black, which is a great feeling. My studies are paying off and I’m learning how to do this stuff!

My goals for the next month are to take more trades and to get bigger in my A+ setups. Right now I’m focused on Funko ($FNKO) – my good trade from yesterday, that reports earnings this Thursday. I’m going to sell my underperforming position in PTC and add to the FNKO position Monday morning. This will bring the position up to 30% of my trading capital, which is about the limit of risk I’m willing to take on it before earnings. Since I have therapy Friday morning and won’t be able to trade the open, I’m considering taking half my position off Thursday if it continues to run up. This is because the CPI report comes out Friday and could shock the market if the numbers aren’t good. That’s one of the lessons I’ve learned from my reading – don’t be in a position where an exogenous event could wipe you out. Obviously, I wouldn’t get wiped out if there’s a big selloff on Friday, but I’m likely going to take the conservative route and lock in some profits Thursday, just in case. Besides, I think FNKO’s 3rd and 4th quarter results are going to be even better with the holiday buying. And, if there is a selloff, I’ll have more capital to put to work at lower prices. 🙂

#HowGoodCanYouBe

After establishing a position in FNKO last week, I was looking to add to it. It had already gone up several percent and I was pissed I got distracted by work during the week and missed the pullback opportunity to add more size. That said, FNKO just announced a new set of Pop! figures for the Nightmare Before Christmas would be hitting the shelves in a few weeks, just in time for Halloween, and I wanted to buy more before the news spread. And FNKO reports earnings next week, had been running up, and I wanted to get my size up.

I watched it hit an ATH first thing in the morning at 18.15 and sat back to see what developed. The previous three ATHs had been followed by big selloffs, and I was looking (hoping) history would repeat. With earnings being reported next week, it did not. Hope is not a strategy. 😉

I bought more at 17.86, just above VWAP, and it proved too eager a move again. It had been consolidating above VWAP for about 10 minutes, and I thought it was going higher. It pulled back to my adjusted buy point, before I FOMO bought, so if I had been patient I would have gotten in at a better price. Lesson still to be learned: Don’t be too eager to get into a position, wait for your moment. Also, I had given myself until 8:30 MT to see what happened, and bought right at 8:30 instead of waiting for it to show me its move. Right after I bought it dropped, showing that there’s nothing magical about 8:30 – use it as a guideline, not a rule.

After getting to work and my morning meetings, FNKO had popped up to another ATH at 18.21, and I was relieved to see my trade was in the black. FNKO kept rising through the afternoon session, finally reaching another new ATH at 18.77 before selling off into the close and closing at 18.45. This was “One Good Trade”! Of course, it could have been a few percent better, but I’m still learning and I’m calling today’s trade a win.

Practice! Practice! Practice! I’m getting better and learning with each trade, and need to see if I can find a way to do them more often going forward. Loving the process!

This morning I did three trades: two “good” ones and one “bad” one.

The first trade was the “bad” trade in AMD, where I FOMO’d in to buying near the ATH after a pretty big run whose energy was starting to wane. I tried to play the bounce, but set my stop too tight and didn’t stick to plan to buy if broke 19.2. Missed it and tried to grab on the way up from 19.68, finally bought at 19.75 and it peaked at 19.88 before trading back down and stopping me out.

The second trade was also in AMD where I got in at VWAP and was playing for a bounce that didn’t happen. I got stopped out just under VWAP, where I had set my stop too tight, and it ran up a bit over before returning to VWAP.

I set the first stop at a good point, confirmed the downtrend, but the second stop was set too close to VWAP where it pipped and popped from there. I didn’t have my indicators on when I jumped in – no VWAP, TTM, RSI – because I was too eager to get in. 🙂 The market was trending down, SPY/WIM/QQQ were all down, and I should have reversed my position and gone short. I also couldn’t trade AMD again for 4 days because I don’t have a large enough balance to be considered a pattern day trader, and TDA would have locked my account.

The third trade of the morning, NCR, was in play from the SMB Radar screen at 8.2. It had been there for an hour or so, with TTM levelling off about 8 up bars and bought at 28.49. It hit a consolidation phase, with the uptrend continuing, and I set my stop at 28.35 looking for a pop. I got a little one, with the RSI at 58 and fairly flat. The play was right, the move was right, and I was holding until Reason2Sell. NCR was trending up slowly, pulling back to higher lows and pushing up to higher highs in a tight range. TTM was staying postive, pulling back a bit but fairly flat too. I was being patient, sitting back and watching as NCR continued to stair step up. Volume decreased to less than 10k, flat chart, flat TTM. SPY at LOD at 282.75, and NCR started slowly trending down. I moved my stop to below VWAP as SPY started to turn around at 9am MT, approaching lunchtime in NYC on a summer Friday. NCR was fighting going down, with flat flat flat bars, volume under 5k, and no liquidity. SMB Radar still had it at a 7.5, #4 on top, when I stepped away to go to the bathroom.

When I got back, the dam had broken, and NCR had tanked fast, hitting my stop below VWAP. The SPY/QQQ/IWM were all up, so the move didn’t correlate with the larger market. In hindisght, I could have gotten out at with a small profit which felt like the top in my gut at the time, but I stuck with the trade to see how it developed. It was a good trade, a good exercise, and good for patience, which I still need to work on. However, I didn’t take profits when I sensed the turn in the stock, mainly because they were so small, and I need to remember that small gain is better than a loss. That said, I was working on practicing staying patient, which I did pretty well, and so I consider this a “good” trade – I set my target and stops and waited for it to develop.