One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Wiley Trading) [Hardcover]

Mike Bellafiore (Author)

Book Description

Publication Date: August 2, 2010 | Series: Wiley Trading (Book 454)

An inside look at what it really takes to become a better trader

A proprietary trading firm consists of a group of professionals who trade the capital of the firm. Their income and livelihood is generated solely from their ability to take profits consistently out of the markets. The world of prop trading is mentally and emotionally challenging, but offers substantial rewards to the select few who can master this craft called trading.

In One Good Trade: Inside the Highly Competitive World of Proprietary Trading, author Mike Bellafiore shares the principles and techniques that have enabled him to navigate the most challenging of markets over the past twelve years. He explains how he has imparted those techniques to an elite desk of traders at the proprietary trading firm he co-founded. In doing so, he lifts the veil on the inner workings of his firm, shedding light on the challenges of prop trading and insight on why traders succeed or fail.

An important contribution to trading literature, the book will help all traders by:

• Emphasizing the development of skills that are critical to success, such as the fundamentals of One Good Trade, Reading the Tape, and finding Stocks In Play
• Outlining the factors that really make the difference between a consistently profitable trader and one who underperforms
• Sharing entertaining, hysterical, and page turning stories of traders who have excelled or failed and why, many trained by the author, with an essential trading principle wrapped inside

Becoming a better trader takes discipline, skill development, and statistically profitable trading strategies, and this book will show you how to develop all three.

Editorial Reviews

Review

One Good Trade is filled with anecdotes of real traders facing real challenges in learning and mastering markets.

Dr. Brett N. Steenbarger --SeekingAlpha.com

The best part about the book is that it makes you want to be a better trader. For me, that is the main reason you should read it.

Steven Place --InvestingWithOptions.com

This past weekend I devoured ONE GOOD TRADE, or as I will refer to it here OGT, seeking to answer the questions I require of a book worth recommending to other traders and would be traders. --Crosshairs Trader --This text refers to the Kindle Edition edition.

From the Inside Flap

Proprietary trading firms do somewhere between 50 and 70 percent of all the equity volume in the U.S. markets on any given day. But unlike most firms on the Street, proprietary firms have no clients. They do not take other people's money and speculate it on their behalf. Proprietary trading (or 'prop trading' for short) is done for the benefit of the company's partners and employees only: the firm is the client. Their profits are generated solely from the bets they make on their traders. If they are wrong, they lose their own money. When they are right, they keep a percentage of their winnings. The world of prop trading is mentally and emotionally exhausting, but the rewards can be substantial, if you understand how to identify good trades, take profits at the right time, and limit losses.

In One Good Trade, Mike Bellafiore reveals the inner workings of the proprietary trading firm he cofounded, detailing the challenges of prop trading and explaining why traders succeed or fail. In the process, he shows how you can use the skills and strategies developed at his firm to improve your own trading success.

The author takes you inside the world of prop trading to show how the professionals trade successfully, sharing all the important market lessons he has learned over the course of his career while introducing a fascinating cast of characters, some of whom have succeeded, and too many who have failed. He offers a range of straightforward trading strategies, such as breakouts from congestion, trading off support and resistance, and identifying consolidation setups. Perhaps more importantly, he explains the importance of other, often overlooked skills critical to successful trading: developing consistency in monitoring markets and uncovering trading opportunities, discipline in executing trades, making rational risk/reward bets, and managing trading capital. He reveals those skills through illustrative stories of the growth of his trading firm and the ups and downs of traders he has trained.

Becoming a better trader requires discipline, a thick playbook of trading setups , and well-rounded trading skills, and One Good Trade will show you how to develop all three.

See all Editorial Reviews

Product Details

• Hardcover: 368 pages
• Publisher: Wiley; 1 edition (August 2, 2010)
• Language: English
• ISBN-10: 0470529407
• ISBN-13: 978-0470529409
• Product Dimensions: 6.4 x 1.2 x 9.1 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (96 customer reviews)
• Amazon Best Sellers Rank: #211,876 in Books (See Top 100 in Books)

More About the Author

Mike Bellafiore is the author of One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Wiley) and co-founder of SMB Capital, a proprietary trading firm in NYC. SMB has been recognized for its outstanding intraday equities training program.

SMB Capital regularly appears on CNBC's Fast Money. SMB's training program was first highlighted on the TV documentary "Wall Street Warriors". Every Sunday night Mr. Bellafiore hosts SMB University on StockTwits TV, where he shares what the market has taught him. Mike's trading techniques were noted by his favorite trading coach in "The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist", written by Dr. Brett Steenbarger. Mr. Bellafiore has written numerous articles for SFO Magazine, most recently about how to turn trading knowledge into skill. And he writes regularly at SMB's trading blog, where professional traders share profitable trading set ups and stories.

Mr. Bellafiore is a graduate of the University of Connecticut School of Law and a former member of the University of Connecticut Board of Trustees. He has traded his own account professionally for 12 years. Mr. Bellafiore welcomes any trading questions at [e-mail].

Most Helpful Customer Reviews

74 of 84 people found the following review helpful

1.0 out of 5 stars Poorly written, with too many anecdotes and not enough concrete material December 31, 2010

By D. Baker

Format:Hardcover|Amazon Verified Purchase

As several other reviewers have indicated, this is "not just another book on technical analysis." While that's completely fine -- there are lots of other good books out there if you want a book on any individual topic, like technical analysis or trader psychology, and I've read dozens of them -- I think this book swings too far in the opposite direction. The book fails to give any but the barest details about how an individual might go about applying the principles and methodologies that have supposedly worked so well for the author's firm. We hear over and over again about trading "stocks in play." What does that even mean? All we are told is that stocks in play are those for which there have been recent news releases, and have "good order flow" and "enough volume." Perhaps I'm part of a dumb minority for whom the meaning of these vague terms isn't completely obvious. However, my claim is that the author simply doesn't elaborate on any of his claims in enough depth to make them useful for the unwashed masses who don't already work in a prop trading firm. He has an entire chapter dedicated to describing what kind of people get hired at firms like his, and yet he somehow manages not to say anything more substantive than "firms look for people who are a good fit for their culture." Wow, what a revelation. Bottom line: I'm not looking for someone to hold my hand through every minute detail of the trading process, but I find it ridiculous that a ~$40 book with great reviews on Amazon would do nothing more than make broad generalizations about how to achieve consistent profitability. The book is reasonably consistent in reminding readers that success is derived from discipline and process rather than gut feelings or even innate trading talent, but there are plenty of other books that convey that message (and do it more concisely and/or more concretely).

My second major beef with this book, besides its lack of specificity, has to do with the writing style. The book is written in a very colloquial style, with plenty of bad grammar, irritating redundancy, and a deficiency of structure. That may not bother some people, and it may work fine if you're presenting in a trading seminar, but I find it cliched and unprofessional in a book with this topic and price point. On a related note, the author spends a lot of time giving sports analogies -- not a problem per se, though they're not terribly original and start to get old after you've read them multiple times over the course of the book -- and generally touting the skills and achievements of himself, his partner, and a subset of the traders who work at his firm. A few anecdotes about real-world traders and scenarios are great to give color to any discussion of trading topics, but I didn't buy this book just to hear about so-and-so and how he joined your firm -- particularly if you're not going to give me any useful guidance about how I can replicate that person's success.

In the end, if you want to read a lot of vague blather about SMB Capital and how a handful of its traders have done well for themselves, go ahead and buy this book. But if you want something a little more focused and relevant for the real world, I'd recommend looking elsewhere.

61 of 74 people found the following review helpful

5.0 out of 5 stars Excellent Book July 25, 2010

By A Benincasa

Format:Hardcover|Amazon Verified Purchase

I don't often write reviews, but I really liked this book. I read this book in two days. I first heard about Mike Bellafiore through Dr Brett Steenbarger's blog, "Traderfeed".

The title, "One Good Trade" refers to a process as taught by SMB Capital, a proprietary trading firm which Mr Bellafiore owns with a partner. The process entails following the seven fundamentals taught by SMB through the entry and exit of a trade and then going on to the next trade and following those fundamentals again and repeating this process for the rest of your trading life. The seven fundamentals are detailed in the book. Mr Bellafiore's emphasis is on this process. He states that making and losing money on any specific trade is not the focus, but following this process IS the focus and making one good trade after another by following these fundamentals is the essence of good trading. You can lose money on a trade, but if you follow these fundamentals and this process, your profit and loss statement will ultimately take care of itself. He compares this to sports teams and the way they practice the fundamentals over and over and then execute those fundamentals in the game. There are plenty of sports analogies here with the implication that an elite trader must go through the same kind of rigorous and disciplined training that successful athletes go through. Having played sports in high school and college and now trading full-time, I have to agree. The book begins with the explanation of this process and the principles of this process are felt throughout the book. Mr Bellafiore is not here to teach some new technical analysis technique, thank God. He basically states that his firm already knows those techniques. That's the easy part, the difficult part is training traders to FOLLOW and trade the patterns that he already knows are successful. This reminds me of the statement made by Paul Tudor Jones that you can give most people tomorrow's Wall Street Journal and they will STILL lose money. It's the difference between hitting perfect shots on the driving range and then executing those same shots in a competitive round of golf. The emphasis here is on the psychological side of trading which, for me, is really all there is. It doesn't really matter how well you can call markets if you are exiting trades with a .20 cent profit, because you are so exited about being right and making a little bit of money, when the target on the trade was a dollar, The emphasis is NOT on being right in your market forecasting skills, but on building the skills to execute each trade correctly. So Mr Bellafiore is stating that being right in and of itself is NOT enough, the trading process is MUCH more than calling markets correctly. Being right has much more to do with ego and pride than making money. So paying attention to the fundamentals and their execution rather than bragging rights about market direction is, for Mr Bellafiore, the STARTING point. And executing these fundamentals is MUCH more difficult than one anticipates and requires YEARS of dedication, sweat and hard work. No wonder there are so few elite traders or, for that matter, elite anything. It's not that correctly calling markets is not important, it is, it's just that forecasting becomes secondary to skill building and discipline.

The book is sprinkled throughout with stories of traders, both successful and unsuccessful. I found these stories very interesting and I recognize one of the successful traders from Mr Bellafiore's blog. (A blog that, in my opinion, is worth your time). In one chapter, Mike Bellafiore describes the hiring process at SMB and how difficult it is to choose a person that will succeed as a trader. A Prop firm funds traders that they train and the firm makes money based upon the success or failure of these traders.

Later on the author details some of the strategies commonly used by SMB traders. On the surface, these are similar to patterns which I think most traders are familiar with. The difference is in the application of these strategies and for that I think one may need to go through the SMB Training. I started trading before Prop firms became as popular as they are today. If I was just starting out today, I believe this is the route I would take if I was fortunate enough to be chosen. The hiring process is VERY selective. Mike Bellafiore is big on traders getting out there and sharing and exchanging ideas. As most independent traders know, this is a lonely profession. It doesn't have to be, but most traders are in a room full of screens with only their own minds and a few internet feeds. For me, I am happy Mike Bellafiore took the time to exchange his ideas with us. I am currently reading the book for the second time. This is definitely a book worth adding to your trading library.

39 of 47 people found the following review helpful

2.0 out of 5 stars Overhyped October 7, 2010

By Richie

Format:Hardcover|Amazon Verified Purchase

Naturally, after buying the book, I check out the SMB website and they are selling their training for $6000. For a mere $280 or so a month, you can watch them trade every day.
There is some good advice in this book but too many of the macho claims are off the charts. One trader has supposedly made a profit every single day for the past 2 years..and he is not their best trader. How about expanding a bit on how this was accomplished? Some detailed examples of actual trades?
In the beginning of the book we are lectured on trading "stocks in play", one or two every day that are active and volatile. Ok.
Near the end of the book, we learn about another SMB trader who can carry 30 positions at one time. Apparently, they change styles as the market changes. Sounds easy. Anything specific we should be looking for? If I don't know which style I am trading at the moment, what good is this book to me? Guess I have to subscribe to the website.