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One Good Trade: Inside the Highly Competitive World of Proprietary Trading Hardcover – August 2, 2010
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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.
From the Back Cover
Praise for One Good Trade
"Bellafiore is a committed and dedicated trader and teacher of the profession. His book shows the same attention to detail and the finer points of making a career in trading."
—Howard Lindzon, cofounder and CEO, StockTwits
"A terrific book for traders who desire to gain a complete understanding of the inner workings of proprietary trading and what it takes to become a consistently successful trader."
—Charles E. Kirk, The Kirk Report
"If you've ever desired to journey into the professional world of a leading proprietary trading firm—how they organize their strategies, train new traders, select stocks in play, and even fight the mental game of trading, then One Good Trade is certainly the book for you."
—Corey Rosenbloom, CMT, President, Afraid to Trade
"One Good Trade is the only book I know that truly takes readers inside the proprietary trading world and explains what it takes to achieve career-long success."
—Brett N. Steenbarger, PhD, author, TradeFeed blog and The Daily Trading Coach
"With One Good Trade, Mike Bellafiore gives you a front-row seat to see what it takes to become a successful trader in today's volatile markets. The stories and examples of how some traders achieve incredible wealth and how others crash and burn are great lessons for any aspiring trader."
—Tim Bourquin, cofounder, www.TraderInterviews.com
"One Good Trade provides an insider view to the world of proprietary trading. If you are new to trading, you will learn that successful trading requires a lot of hard work, resiliency, discipline, continuous introspection, and a courageousness to challenge yourself and adapt."
—Jason Gardner, Managing Director, Head of Trading, Kershner Trading Group
"Exceptional care coupled with a standard of excellence and attention to detail is the mantra that is at the foundation of SMB. Mike and Steve have created a unique and insightful angle to the development of new traders."
—Nadav Sapeika, Chief Operating Officer, T3 Live, LLC / T3 Capital Management, LLC
"This book is a must-read for all developing traders and those who are interested in a good read about the behind-the-scenes goings on of a successful trading business."
—Brian Shannon, author of Technical Analysis Using Multiple Timeframes
Top customer reviews
There is a lot to learn reading this book. While there are only relatively marginal teachings about how to practically trade, there are many advices on how to succeed in this tough world. This is because if you want to know exactly what they do you have to purchase their expensive training programs. I think they are worthy every penny anyway.
Reading this book I learned that tape reading is a key skill to make money, even though no one talks about it. It is really a forgotten skill and it is very hard to find who can teach you. There is also an entire chapter devoted to maximizing your profits that is very helpful.
There are many concepts you will find only in the best books on trading. Mike explains very well why and how traders succeed and how traders fail, with many many anecdotes about him and his traders.
Frankly, I did not expect Mike and Steve, the founder at SMB to be so patient. They really care about the traders they train and would do whatever it takes to make you succeed. Also I did not know how much money prop firms invest on the traders before they become profitable. They think a trader is a very valuable resource and are willing to invest a lot of time and money on the worthy candidates.
SMB is really a top notch firm and I know many people would kill to be there, including me.
The book is well written and very funny to read. I laughed hard many times. There are some typos that need to be corrected.
To give full disclosure, I worked on Wall Street on a prop desk during one of the greatest times in history ( Late 1990s- Early 2000s) and I enjoyed great success where I was able to quickly become a CPT ( Consistently Profitable Trader). Similar to the experience the author describes in the book, I never received the in-depth training that could have given me a better chance of success. I succeeded through hard work, asking a lot of questions, improving daily, and being surrounded by other talented individuals. I am sure there was some luck involved, but my point is that this book provides valuable insight into not only the job of a professional trader but the experiences, thought process and most importantly challenges that will surface if one chooses to embark on the challenging career of a prop trader.
I found the anecdotes to be poignant and at times amusing. I found One Good Trade to be enjoyable and more importantly educational. I was shocked how much I learned about trading that I either forgot or never knew. The author does a nice job of explaining things in layman's terms while still challenging experienced traders. I read the book in a few days and enjoyed it so much that I had my wife purchase The Playbook which I read the following week. Since I won't be writing a second review, I will tell you that as helpful as One Good Trade was, The Playbook was even better. The Playbook provided an updated and even more relevant insight into the discipline, patience and work ethic required to succeed in the highly competitive world of proprietary trading.
Lastly, I will say that the author comes across as more of a coach than a critic. It seems that he really does want to help people and see them succeed. It is a shame that some people couldn't find something positive to enhance their trading or understanding of a prop desk from the book. I highly recommend it for anyone with a positive attitude that is looking to improve himself/herself. If you are a novice you will learn a ton. If you are an experienced and successful trader then hopefully you will take away one concept that will make you even better. Enjoy.
"One good trade" as I gather from the book, is a philosophy within SMB capital that is meant to focus a trader's mind on the process of finding and executing good reward-to-risk trades. The point of the philosophy is to focus on the process, not the outcome of individual trades. So even a losing trade can still be considered "One good trade" as long as that trade was properly executed within a long-term profitable trading system. In other words focus on executing your plan well and focus on long term results. He breaks the philosophy into 7 fundamentals that are detailed in the book.
This book is unique in that the author uses several real life experiences of various traders, both successful and unsuccessful, to help teach the lessons of the book. I found this very enjoyable. Although some would say it is anecdotal, I personally believe these stories are examples of things the author sees on a regular and repeated basis. I can identify with many of the people profiled in the book.
Above all, for those who are passionate about trading or even investing. I think it is very interesting to get the thoughts of a successful proprietary trading firm owner/manager. Many insights I have not seen before in other books.
This book is also very helpful for those who are interested in working for a trading desk (a prop desk, hedge fund or bank) because it gives a good look at what it is like on a trading desk, how to get hired to one and how to behave.
The book will not teach you exact strategies; there are many more books for that. However it will teach you more of a guiding philosophy.
Overall this book was very good.