How to Make Big Money While Minimizing Trading Risk (Prop Firm Advice)

Let me share with you the essential trading truth. If you don't know how to manage risk, you'll never make it as a trader. In this video, our trading floors risk manager breaks down how to manage your trading risk like elite traders do. I'm Mike Belafury and we're one of the top proprietary trading firms located in New York City since 2005 and now Miami as well and proud to have developed numerous seven and even eight figure per year. Traders watch, take notes and learn from our prop firm and so you can grow your trading account.

What's the most essential part of trading? Let's ask that question. What do you think is the most essential part of trading? Risk management. Right. No matter what time frame you're trading, what product. I spoke to someone, I was trading fx, I spoke to someone that was trading options, I spoke to someone that's trading equities. No matter what product you're trading, what tool you're trading, always has to be risk management, right? Always. Most important, and if you don't incorporate that into your plan and into your trade plan, what do you think is going to happen?

You're going to blow up your account, you're going to take outsized losses? Has anyone here blown up account before? Has anyone here taken an outsized loss before.

Unplanned loss before? Right. That you didn't account for? How does that make you feel?

Shitty. Right. Excuse my language, I don't like to, you know, curse but does you don't feel well. Right. Doesn't make you feel good. And that's one of the things that you want to avoid and that's why you want to make sure that risk management is a part of your trading. That's one thing. I'm a focus, I trade also, but I'm going to focus, it's really, really on risk management and how do you approach it and how you incorporate it into your trading. So that's really important.

You know, some of you may attack the markets each day not necessarily having a trade plan. Who here makes sure that they have a trade plan? Let's be honest. Every day when you attack the market, be honest. Okay. All right. And what do you think is going to happen? What do you think your chances of success are if you don't have necessarily a trade plan, risk management in place?

I'll tell you what's going to happen because I did that previous before. You're going to have some really highs, some really high highs and some really low lows when you take those losses. And again, I'VE been with the firm since 2009 for a long time. And I've seen a lot. I've seen traders go through struggles. And what it really comes down to is just the process really, of incorporating risk management into your trading. That's extremely important. It has to be there. To me, it's like, so, for example, if you're not approaching the market with some type of risk management plan, it's just like having a crack in a dam. After a while it's just a small leak, right. A few days, Right. Then what happens later gets bigger. Right. And then what happens is sometimes you may get into a wrong trade at the wrong time, at the wrong moment. If you don't have a plan in place, what's going to happen.

It'S okay to call out what's going to happen.

Right? Exactly the same thing. Same thing has happened to leak in the roof. Starts with a small leak, you see a little spot, then it gets a little bit bigger, then it gets a little bit bigger until the water is just coming right through the roof right into your living room, dining room, bedroom, wherever it is. Right. So that's why it's really important for everyone to make sure that you incorporate risk management into your trading. Okay. And I'm going to talk about and go through just principles, different ways, best practices to attack the market and be there and make sure that you can have.

Longevity in your careers. I believe someone asked, what's the typical career length or time for traders? Is that person in here? You did? What's your name?

Okay. Where are you traveling from? Massachusetts. Okay. And risk management is going to determine that. So it could be as short as you want it to be or as long as you want it to be. So if you don't have that risk management in place, and I believe Jeff was speaking about one of the famous traders that we had where literally to be stopped out by 902.

And this is before the market even opens. The market hasn't opened yet, where by 9 o' clock he's putting the trade on because he doesn't have the plan. 9:02, I'm literally walking by. You know what? Already had it. My plan. Like, okay, 9:01, I'm already walking over to him because I already know at 9:02, because I know he's gonna be stopped out regardless. So, you know, you want to stay away from that type of trading. You want to make sure you're present, you want to make sure you're aware, you want to make sure that you're Embracing a risk management plan at all times with your trading. Okay.

And what do you see how I have there? 95% of all intraday traders fail at trading, right? 95%. That's huge number. So 95% of the people who are trying to attack the markets fail at trading. Why do you think they fail at trading? What are some of the reasons? Not just the risk management, but what are some of the reasons why you think they fail at trading?

No system, no edge over trading. Well, that's a big one. And usually overtrading. That tends to happen when you naturally don't have a plan and you get into sometimes these invented trades. Right. And Jeff and I have talked about this before, these invented trades and what invented trades are. Does anyone guess what an invented trade is?

Yeah, just on the fly, right? And usually when you take these invented trades, do you think that's just an average loss, small loss, or what type of losses usually come from invented trades? The largest losses come from invented trades. So you want to make sure that again, you have a clear trade plan, playbook, the setup that you're taking, understanding the time of day, understanding the theme in the market, and you're aware of it. Okay, so that's one of the biggest things that you want to do. But I'll go through a few things that I have here. Lack of risk management limits. Who here has a daily stop? Okay, good. Part of graph. Who here has a weekly stop?

Big problem. Who here has a monthly stop? Okay, that's so one thing that you guys are. Or everyone, I should say. Sorry about that. Everyone, I should say, from this meeting, you're going to, before you get home, before wherever you're going or you're traveling back home, you're going to set a weekly stop. You're going to set a monthly stop. Okay, Weekly stop, monthly stop for yourself and what we want to do and the purpose of this reason why I'm talking to you, not to talk about trading, not to talk about the setups, but to make sure that you're staying in the game. You're that 5% that's able to stay in the game that's most important. So that's what the goal of here for me today, talking to you is, making sure you stay in the game and you're part of that 5% not having an established playbook. Who here has setups that they take, that is structured, a structured system of setups that they're taking every day when they approach the market, when they're able to trade? I know Some people trade part time, weekly based on economic events. Who here has established trades that they're taking every day? Setups. Okay. All right.

So you want to make sure that you start to think through and start to look through your stats, start to look through your trade plan of the best setups that you're taking, the trades that are working for you, go through your list, go through your brokerage account, look at the trades, all the trades that you're losing, look at all those outside losses that you're taking. Study them, see what the variables are. Because at the end of the day, goal is not necessarily to make money right now for you, it's to stop losing money. Right. Because if you continue to lose money, what's going to happen?

The account's going to be blown up, it's going to be to zero. Right. So that's what we want to do is making sure that you're doing that. Okay. Another reason why traders fail is they took an invented trade previous day or a few days ago. Right. And they're trying to compensate that for that. Right. I have a trader who just necessarily again, just put on a trade, lost 10k in a trade, on the minted trade. Right. And then what he's going to try to do, if he doesn't have this risk plan, he doesn't have the trade plan, he doesn't have that risk management, what is he going to try to do even and he doesn't have that structure, he or she. Sorry.

Right. He's going to invent a trade, he's going to try to compensate and try to make back the money he lost. But what's so funny about the market, what happens every day in the market? Is each day created equally? No. Right. Some days the market's moving, some days market's trending. And is the market trending or non trending, which happens as far as a portion of days or we spend more time non trending than trending. What happens? Non trending. Right. Non trending. And if you think about it, for us equities and just the equities market and actually I think Lance. Where's Lance? Or he's somewhere around here. We were talking about this yesterday, right there. About 220 trading days in the year. About 220 trading days in the year. Right. And most of those days, what is the market doing?

Ranging. Right? It's ranging. So that's why it's important to be looking at stocks in play and also understand that more than likely every day you approach the market is going to Be an average day. And this is something I'll talk about also later into the meeting. What's also going to happen is if you're going to have an average day. Right. Should you approach the market with the same daily stop that you would for B plus setups. A setups. A plus setups. You shouldn't. Right. And what I mean by that is. So for example, some of you talk about Shark. We can talk about Swing. We're going to talk about Dan G. We're going to talk about Graham, we're going to talk about Brian Dow. We're going to talk about someone on my team back there. More Molly.

Say hello. Everyone say hi to Molly. He's actually someone on my team that I trade with as well. One of the new guys, young and hungry. He's in a younger cohort within our group, like a subgroup. But one thing I love in just working with we are able to and why it's important to also have a community and people that you trade with and we're able to bounce ideas off each other. And I remember on Wednesday or Thursday, which day I travel, I think it was Wednesday and Molly wanted to take a trade and other guys were like, I don't think about that. I'm not seeing it clearly. Do you remember what trade it was? And you know, again, just bouncing ideas back, you know, back and forth between each other. So that's one thing you want to do. You want to before you put the trade on, who makes the puts the trade plan together before they put a trade on, who does that?

Okay. Like half. All right. We're going to try to get this after we leave here on Monday or whatever, Tuesday, Wednesday, whenever you get back to trading, because I know some of you are trading full time, part time before you put any other trade on again, is you're going to make that plan before you put the trade on. Before you hit that button to send that order, you're going to have your entry right price that you're fighting for. One thing Bello always teaches about is fighting for price. Fighting for to be the get the right price. Okay. You're also going to put down there as far as what you should be seeing within the stock volume wise, the arvol. What's happening while you're in there? Is the volume dying out? Is it continue to uptrend? Is it following the moving averages? You're gonna clearly label and go through all the characteristics that you need to see for your trades. Okay. So we're gonna go through that. Another thing why traders fail. And it's part of not, you know, this all comes back to not having a trading plan. Right? Poor position sizing. Who has an issue with position sizing? It's okay to be honest. Okay. So in that trade plan, you're always going to understand.

And before you execute the trade, you're always going to make sure and understand what size can you use. You're going to calculate your risk, you see what size can you use based on the amount of risk that you allotted for this trade. So that's what you're going to make sure you do. Another one, unrealistic expectations. I've come into contact with a lot of traders, a lot of trainees especially, I'm not talking about Molly, but, but a lot of traders who approach the market and they feel that they're going to knock it out the park. Within two months, a month, they're gonna be one of the best traders on the desk. I would love to see that happen. I wanna see that happen. But to do that, you have to make sure that you have all the processes in place to be successful. Okay? So it's really important to make sure that again, you definitely have to have large goals, large dreams to help push you to do what you want to do. You have a motivation, whether it's your family, you want to make money or whatever it is, whatever that motivates you to love the market. You can't trade. If you don't love trading, you're not going to have the drive for it. Okay, so we'll go with there not having a risk manager. Hopefully once you leave this meeting, some takeaways will help you be your own risk manager. We'll go back just really quickly. Isolation and not trading within a community. I know some of you are trading alone. I think what's so really important about trading is having a community being able to bounce ideas off of people or someone have an accountability partner, someone to an extra set of eyes to talk to. And why I think we're so successful as a group is, is as far as in the structure that we have, we're bouncing ideas off each other. We have eight eyes looking at a screen instead of two sets of eyes. And also for everyone that came today, hopefully you can meet other people again because everyone in this room is, what are you trying to do? You're trying to get better, right? You're trying to find either the best way to trade that golden nugget, but what you need to do is try to form a group and work together and that's one thing that we've excelled at in the last couple years is teams, right? And joint accounts where we have multiple people trading within one account.

And again, what does that do? If you have multiple people instead of one person trading account, if you have two or three people or four people trading in one account, what do you think the selection process is going to be? It was higher, right? It's going to be quality over quantity. And that's one thing that one of the things that we want to preach and, you know, teach everyone what I want to talk about just really quickly. There's two traders. Okay, here's our first trader, Tiffany, right? Tiffany tags all over trades in trade review.

Tiffany always hits out of her trades, right? She follows her risk plan, always hits out, always hits out.

Has a detailed playbook, knows how much the percentage of her stop is and she hits out. That's it. Exit to trade. And a lot of trading is discipline. It comes down to is discipline. And that's one of the things that we. One of the parts of the process is not as far as being able to, you know, the first things that we want to is not as far as being able to what Jeff is doing a great job teaching as far as with scalping and what Bella's done a great job with and Steve has done a great job with. One thing we really focus on here is understanding to be detailed and disciplined and always having a plan in our processes. And you do that by having your checks in your favor. Any pilots in here?

All right.

Brian. We met last night, right? Yes, sir. Okay, before you take off, what do you do? You're in your plane, what do you do? Checklist. Checklist, right.

Don't you think that would be wise? Not to say you don't do that. To do that before you put a trade on.

Right, you have to have your checklist, right? So pre fight checklist. So pre trade checklist, same thing you want to do. Are my variables there? Is this part of my playbook. Is it the right time of the day? Is there enough volume there? Is this part of the theme that's in the market. Is this part of the AI theme that's in the market. So these things that you want to go through before you place a trade, A plus trades, are clearly defined. You want to delineate between your A plus trades, your A plus plus trades, your B trades, B minuses C trades, and then also try to work with someone again. One reason why we brought everyone here is to network and try to find accountability partner from Groups. This is why we have the discord. This is why Jeff is working so hard on the training program and really helping to build that out and helping people to grow. We have people like Norlan.

Say, hi, Norlan. This is actually my second hire for the Miami office, and he's come through the training program. So.

So, you know, what we really try to do is give you the resources, give you the tools, give you the foundation, give you the structure to be able to succeed and for you to incorporate that into your trading. And it's up to you. It's not up to us. It's up to you. Who's stopping you from becoming successful? Who's stopping you from becoming consistent.

Yourself, Right? So just be mindful of that. Rob, the second trader that we have. Right, Rob. Apologies for anyone named Rob. Anyone named Rob in here? All right, Rob. All right. Sorry about that, Rob.

But his expected value is the same as playing Russian roulette, pretty much taking out the revolver, putting two bullets in, loading it up and bank, seeing what happens. Trades at the seat of his pants. Doesn't have a detailed playbook, doesn't know the best variables for your trade. So if I approach you or if you talk to anyone, one of the goals that you want to take with you when you leave here today, you want to start to work on is understanding the variables for your trade. Why does your breakout trade work? Why does that support and resistance trade work? Is it time of day? Is it volume? Is it catalyst? Why is it actually going further than what I've seen in previous trades? These are the things that you want to understand. You want to break it down to the granular details and understand the variables of the trade. Okay? And sometimes with Rob, someone like Rob, they trade alone. So that's what I think it's. And that's to say that if you trade alone, you're not going to be successful. No, not at all. You just have to be extremely disciplined. Extremely disciplined. Like a samurai, almost. So which trader do you want to be? Do you want to be Tiffany or do you want to be Rob?

Tiffany, you're ready, Tiffany. What?

All right, there we go. Work in progress. Trading is all about work in progress. So even going back to that, we were just talking about Shark, right? You as a trader, you're always improving. You've conquered one mountain, and then now it's time to move to the next mountain. You're always trying to improve as a trader. And that's the one thing about trading and trying to master the markets. You're always Trying to prove and even talking to Shark. So Shark, what's the next thing that you want to do? You know what? I want to be able to manage more positions. I want to be able to manage more of a portfolio. I want to see things on the longer timeframe again. So you're always trying to improve and to be able to do that you have to have the processing in place, processes in place. Okay, so important takeaway here is that Rob of course always risks too much trades at the seat of his pants. I have one trader specific that I can't say his name. And Jeff is laughing back there also because we had a phone call with this trader on Friday, Friday actually, in Bella's office. Was it Friday or Thursday? No, it was Thursday. It was Thursday. It was Thursday. So he went in there, we called the chair, I was like, I pulled Jeff and I was like, I was like, Jeff, listen, like this guy, we gotta shut him down. That's it, he's done. And the reason why we have to shut him down, he had a great start to the, I mean he had a phenomenal start to the month. Phenomenal start to the month. Phenomenal. What happens if you don't have a trade plan? What happens if you don't incorporate risk management? What happens if you don't categorize your trades? What's gonna happen?

So exactly everything that I went through in there checks off on the list.

I mean he went back, he traded, try to trade SMCI every day.

He tried to trade Nvidia every day.

Those trades stopped working around March 11th.

What day is it? The 23rd today.

So he's trying to go back to the well and he hasn't adapted to the market yet. So that's why it's important for you to be self aware, have a journal in place, write down what's taking place in the market. And I'll give you an example what we did really well with in January, February, one of the trades, we did really well with continuation trades. What sector was really moving the market beginning this year? Semis. Right? Nvidia. This is like the, that's pretty much like the bellwether, right? You saw some crazy stuff in smci, you saw some crazy stuff in some other AI related like low float stocks just moved in sympathy with it. Right. And that we haven't seen anything like that since probably when 2020, 2021. Right. So now if you have all these trade set up. So as I was saying, we had these continued trades that we were taking this continuation where again have them have the stocks that have a strong trend, good volume, good arval, close at highs, upper 20, 10% of this range, it closes at more than likely in this type of market, sector's gonna gap, market's gonna gap it close at highs as well, which is a check in the favor. We're gonna have that continuation and probably the trade is, you know, gonna open up. We walk in some of the guys, and that's what's so good about having a team. We have guys like Molly, we have guys like Yee, we have guys that are waking up at 4 o' clock in the morning to help manage these trades. And again, more than likely when we had that market, we would have that continuation, the gap up. We able to get that continuation going into the next day as well. So these are things that you want to do is make sure that you are very intimate with your trading journal and just being obsessive with the market, being obsessive with what the theme is. And as soon as this trade stopped working, there was one negative trade. We pulled back, we assessed, we walked through and we looked at why did this stop working? We looked at the stocks in the rest of the sector. Why does it stop working?

And I think, matter of fact, Steve and I were talking, I think yesterday, Steve or the day before, about AMD how it was one of the last ones to break out and it had one of the weakest follow throughs to the upside, right? So, you know, these are things that you want to be aware of. You want to see those changes in the market, the nuances in the market, and you have to study. And as soon as you have a consistent trade that's working, stops working, you have to be very intimate. That's why it's very important to be very intimate in your trading journal, taking stats, taking notes of why the trade's not working. This quote I have here is from my high school math teacher, Mr. Bernhauer.

What does this mean to everyone or anyone? Anyone.

Want to take a stab at it?

Paying tuition.

Paying tuition. All right, so not even that, paying tuition. You say either you pay now or you pay later. And when you pay later, you'll pay 10 times more, right? Meaning by you pay now, dedicate the time to building out that trade plan, building out that risk management, right? Building out your playbook, building out those trade setups that you're looking for, understanding what the theme is in the market, doing all the hard work. Everyone wants to be the best trader, but do you want to put in the hard work that it's necessary to be the best trader.

You want to put in the hard work. Okay, so ask yourself, what am I doing special every day? What is my process? Okay, so put the time because what's going to happen if you don't have the risk management plan, George? What's going to happen if you don't have the risk management plan, George? You'll blow out your account. All right? Exactly. So if you don't. So one thing he said to me, my math teacher said, just put in the time now. Or if you don't put in the time now, when you get later into the year, you're not going to understand everything. So if you don't have the foundation, how are you going to expand when we get to pre Cal or calculus? If you don't have that foundation, Know thyself. This is a quote I put in. This is from Socrates, this shortened version of it. But know thyself, right? So know thyself techniques to assist with risk management. So you want to create a self awareness journal in your DRC and your pre market game plan. So your DRC is your daily report card. Anyone familiar with that? Something we stole pretty much from Lance, but we did have a version of it. But we stole it from Lance.

You reinvented it. There you go. We're even. We're even. So basically what you're doing is making sure that you're self aware of what's taking place in the market after the market's closed. You're doing your review. Why did my trades work, what didn't work, what trades did work today and what's a best practice also is just a good exercise. So see what trades were and again just for even basic stuff, if you have basic filters, highest all volume stocks, see how they close for the day, what were the patterns, see if any of those would fit something that you would trade. Steve does a really good job as far as with the game plan that he puts out and as far as with trade ideas and stocks to play. So what you should do every day is probably go through that list and see how the stocks traded. Rip up those charts, mark up the charts and go through those charts. Okay? It's a really good exercise and that's how you prove, improve.

Do that day in, day out, day in, day out and improves that muscle memory. Another know thyself technique. Establish if you're prepared for trading that day. And that's what I mean by that. You do that in the pre market. Also you go through that checklist that Brian does before he Takes flight. Right. As far as what you're looking for and in that checklist, you want to go through another aspect. Have you been trading well lately? If you're not, if you haven't been trading well lately, what should you be approaching the market with your regular daily stop. Shouldn't. Right. So that's what you want to make sure that you're doing and aware of. So you have that self awareness journal. And one thing that Lance helped us with was the sleep score and Bella is the best at it. He has the highest sleep score and most consistent in the firm as far as with that sleep score. When you think you operate the best, when you've had four hours of sleep or seven hours of sleep. Well, some people are just machines and they can do four hours of sleep. But usually if you don't have the appropriate amount of sleep, you're not going to perform well. So that's really something important to track market themes, you want to be understanding of what the market themes are and what's taking place. And you want to make sure like for example, if you're trading.

A stock in the regional bank sector or if you're trading something that's outside of the market theme, is it really worth it or should that you actually probably should allocate less risk to that. But something a stock that's within your setups and within one of the market themes, that's something that you should be focusing on and deserves more risk more than likely.

Another thing that you should be a part of your self awareness journal that you're taking note of in the aftermarket, in the pre market.

Are there any external issues that's taking place? For example, I know if I had argument, I can't even call it argument, a disagreement with my wife the night before, it's probably still going to affect me. So I'm probably not going to approach the risk the same way. If you know, again, if you're trading part time, also if you had something that was due or a big meeting they have to worry about, probably shouldn't be trading using your full size should be reduced. So these are things that you want to think about when you come to each trading day.

And just making sure at the end of the day you want to come to some type of conclusion. How ready am I to really take advantage of the opportunity in the market? Okay, so self awareness journal should complete that before you even place the trades or before you even start trading each day in the market. Okay. And another thing that you want to do, good exercise as Far as risk management is understanding if this is a active day or a non active day. Right. And as it goes back to before, I'm talking about risk management and how we approach it. More than likely, what is the market doing most of the days.

Ranging. Right. And then also further than that and what we do and what we focus on, S and P is looking at stocks in play, themes in play. Right. That's what we want to focus on, what we highlight. So if we're not seeing a great deal of that, of those stocks that's coming up on the filter, not seeing that same type of follow through, more than likely this is a non active day. That means that you're not trading. You're probably going to go to what Jeff was talking about as far as with scalping. Right. When we saw that shift in the market where stocks weren't necessarily moving, more scalping, more move to move and adjusting with the market. And on those type of days, are we approaching the market with the same amount of risk? So for example, if my stop is $1,000, right. Just use that number for.

Probably on that type of day you should be approaching the market with probably $100 worth of risk.

And that's what one of our, not one of our traders but most of our senior traders, most of our established traders, most of our consistent traders are traders like Dan G. Traders like Swing Shark, Graham Nano, Armand traders come around the corner. Steven Hajar, I think you met Steven last night also, right? Met Steven last night. Right. And if you're again, Steven's been with us for a year and a half. Year and a half. And again because he's built his processes in place. What did he tell you where his daily stop was? Now you want me to share it? He shared. He's open with it. Where is it? 17,000. He's been with us a year and a half. Right. But also he's definitely a nice guy. But you have to remember he has his processes in place. He's one of the first guys in the office. If I'm leaving the office and I've taken pictures of him being the last guy in the office and shared it with the entire desk just to make sure, you know, are you putting in those hours? Are you doing everything that you need? Are you following your processes? Do you have the trade plan? Do you have the playbook?

You have to literally be a maniac, have OCD to look at all the details in the market. Doing it the right way, doing it the right way. Building a playbook with edge. How do you build a playbook? Databasing and chart work, Qualitative review.

Backtested. If you have the ability to, or being able to network with someone that has those type of quantitative background to help you with back testing for those ideas. If you find someone like Brian, who's able to do that. Right. One of our trainees also Cameron. Where's Cameron? He's somewhere around here. He's good. That and what's good about having a team? What's good about having a network? And that's probably why you should connect and make sure not just talk to us, talk to each other. What's really good is to put people on your team together that have different strengths and you leverage each other's strengths. So for example, Cameron, you, he's on one of the teams, a young up and coming group where they have a really good trade setup, a 4am trade setup, what they have with low floats that they're following. Literally, again, they're up at 4am as soon as market opens. But they're doing it together and working together. So you want to make sure that you have people within your group or if you don't have the ability to do that, finding a way to track the stats. Okay. And then what you do from going through some of the AM game plan stocks and some of the meetings that Steve has talked about in the AM meeting where Bella's posted or what Lance has posted in one of his Twitter wars, see how these stocks are trading, right? Study them, set alerts for them. And if you see a consistent pattern taking the place in the market, why wouldn't you build a filter for it? Because we have what, thousands of stocks that we're following every day, right in the market. What you want to drill down to it is just build a filter and so you can zoom in on those particular stocks that meet the criteria that you're looking for, the setups that you're looking for. Okay, that's extremely important. Another thing that you do, peer review. You share those trades with people within your group, within your cohort. If you have a chat group or whatever it is, bounce ideas off of them. Watching the highlight reel.

Where is he? Justin, where are you?

Which he does really well. Jeff does that well as well. I want to make sure you're doing that.

And in order for a trade setup to become part of your playbook, you need to have 20 reps or 20 examples of this before it can even become a part of your playbook. And from that, once it's put into your playbook then you can delineate whether it's A, A plus trade, an A trade, B plus trade, B trade, and C trade. And then now I'm going to go to trade setup risk percentages. Okay. Going to A trades. These are trades that probably happen once a year. For example, regional banking crisis, for example, most recently smci, which Lance covered as well in one of his Twitter wars as well.

Really well.

So definitely want to go on his Twitter feed. You'll see some funny stuff on there, but definitely has a lot of information on there, a lot of things that traders should be paying attention to. Steve has a really good Twitter feed as well. Same thing as Bella, highlighting important things that everyone should be looking at. But on these A setups probably happen once a year, as I told you, SMCI this year, hopefully even a better year. And we're going into election year, things might get a little crazy. These are things we might maybe see more than one A trade this year and usually on those type of events. And again, this is more for an advanced trader. So I would say this is more for advanced traders. And we're probably risking more than 100% because these are events that probably make up a good 70%, 75%, 80% of our, you know, big traders or most of our traders, P and L throughout the year, these outsized events. And we'll show a chart of one of them before. And it's really quickly and with our, the traders in our desk. What's so good about this? We're actually talking about these trades before we even days before they even take place. We start to see them set up. You start to see, you know, especially we'll talk about.

The banking crisis or SMCI again.

Start to move higher, starts to move higher, starts to move higher. Continue to move away, continue to get overextended. Right? But we're not stepping in front of that freight train who's, I think Jawa, right? You trade reversals, right? You trade reversals. And you know, one of those things that you have to be extremely careful about is you're stepping in front of a train, right? So you want to make sure you at the right side of the V, which Lance always talks about. You want to make sure that all the checks in your favor for you to place that trade, okay, that's something you definitely want to do. But again, this is more advanced. I'm not really focused on that too much. But these are the things that we start to do and when, for example, with Shark and the regional banking crisis last year, even With SMCI days before that trade goes on, we're talking through it, we're looking for the variables. This is what I'm seeing. I'm not doing any amount of risk until I see X, Y and Z. Anything beside that, I'm probably just scalping for cash flow or whatever else. And we're doing that day in, day out, day in, day out. We have a morning check in before the market even opens. We walk through what we're seeing, walk through what he wants to see, what to be careful of and just trying to stay within, making sure we stay within those guardrails. So just want to go through that really quickly. So I'm sorry, I've been up here a little bit too long.

A plus trade takes place approximately four instances per year. A trades 25% of risk. That's probably once per month that you'll see those type of trades take place. B plus should be, again, as I told you, 20% of your daily stop and probably once per week. B trades once per day. And just for just, for example, one of our traders, Max, who you'll see later today, you talk with, really great guy. And as I said, we just had a meeting on Friday. Really praise Max. He's such an aggressive trader. I mean, he can flip the switch, meaning that he goes days without losing any money or risking very little couple thousand or whatever it is. And he can easily flip the switch, get big in a trade, six figures, really easily. And that's all about being very disciplined, knowing what you're looking for, having that playbook and being ready to flip that switch as soon as you see it. Ctrades, we're not even talking about that. I already put that this is done with no C trades. So for everyone in here, want to make sure you walk away, eliminate those BS trades, those Q trades that you just put on just to jump in. Okay. You just have to be very disciplined. You want to make sure you eliminate those because those will probably be the biggest losses that you take examples to study. This was the SMCI trade. You know, a lot of our traders did well on this one. In itself, a lot of teams did well on this one. They walked, talked together. We walked through this trade for multiple days before it happened. And then, you know, also not just we were looking for the reversal in the trade, we were taking advantage also of the long side of the trade. So again, when you're looking at this, in this example, this goes back to the trades we're looking with those continuation trades based on how it was closing and the market was so strong, the sector was so strong and the market theme was so strong where we would have that continuation to the upside each day and but what I want to highlight here is that reversal trade. And someone else will talk about that probably later.

Nvidia Daily breakout trade. This is an A plus trade. Okay, probably see something like this maybe four times a year. Four times a year. Apple breaking news play that we saw recently. So maybe something like this once a month.

Holo intraday trade. This is a low flow trade that traded right before the breakout probably 20 times its float. And I believe someone asked earlier had a question about trap buyers and trap sellers. An example like this where you have someone or have people that are trapped short the stock like this. And what you can see that is what you notice at the bottom of the screen here is how much volume is actually traded prior to that resistance level. And you can see that they have not been able to reverse the stock at all. And it's just holding there, holding there, holding there. And some people say, you know, it's traded too much, it's one too high. The stock opened up at $3, it's now at 550. There's a lot of resistance. It's probably going to should be a short but you don't understand the mechanics. The float's probably locked because it's a low float traded already. So much arval hasn't broken down. Sellers haven't been able to move the stock lower at all. You can see getting tighter, tighter, tighter, tighter to that breaking level and then seeing that continuation. So you know, this is an example of a B plus trade. I'm sorry B trade back through open trading February 2nd.

How to be your own risk manager. Have a risk management plan for each trade. Have a conversation with yourself before you trade.

Position sizing we spoke about already understanding the risk to reward scenario adaptability for your playbooks, for the nuances. So that's one thing that's really important. A lot of the trades that you take, a lot of the setups that you take, there's different nuances. The volume may not be the same. The arval might not necessarily be the same. You, the market might not necessarily be the same. If we have a trending day, non trending day. So these are the things that you want to be aware of when you're making your risk management plan. Emotional discipline and I think emotional discipline is the most important part. How to bump your risk again. So I have here how to bump your risk. So you have a 10 day bump rule, bi weekly and 20 day bump rule, monthly.

Rule that we have. And with that rule in itself, basically how you approach it is after 10 days, which is 10 trading days, look at where your P and L is, right? And if you're up 2x of your daily stop, then you can bump by 25%. And then at the end of the month, if you're up, you look at the 20 day bump rule. If you're up four times your daily stop, then you can bump by 25% as well. Well, okay. And what you also want to do is set loss limits to your trade plan. As we spoke before about daily, weekly and monthly, weekly loss limits should be roughly around one and a half times to two times whatever your daily stop is. Monthly stops should be maybe 2 1/2 to 3x of what your daily stop is. And this helps prevent you from losing money, okay? And when you hit that weekly stop, you're cutting your risk back 50%, okay? Until you make back what you lost, all right? And then if you hit that monthly stop, then you're cutting it off again. You really need to shut down QA and go back. And what I'm showing here, because most of the time we're non trending market taking B trades, right? More B trades than A plus trades, A trades. This shows you if we started $100 stop right after 12, talking about if you have $1,000 stop, right? And the B trade should be 10% of your risk, right? So if you're risking $100 by your first bump, by the 12th bump, you're risking about $1,500. Means your daily stop is about $15,000, right? So there's things to think about and the power of compounding. And this goes to say, as far as someone asked, I believe you asked what makes the difference between a five figure trader, six trader, seven trader, position, sizing.

Scaling, that's all it is. Once you have the strategy and it's consistent, all you have to do is scale. Okay? How to reduce risk, I just went through that with you. Hit that weekly stop, reduce by 50%, hit that monthly stop, reduce again by another 50%. You cannot bump yourself back up until you make back whatever you've lost. And this prevents you from taking those outside losses and those deep drawdowns in your account, okay. Really quickly. Trade management risk quotes from Shark. When in doubt, hit out, okay? And we'll take that again. When you're in doubt of a trade, you can always get back into a trade, right? Always in doubt, hit out also with Dan G. I'm not worried about consistency. I want to take advantage of the extremes of positive tail risk and make sure I'm controlling the extremes of negative tail risk. What he's saying there is that on those high opportunity trades, he wants to make sure that he's taking advantage of it, able to jump in those trades, be a part of it, and take everything he can from that trade. On the other side, as far as with the negative tail risk to him on the days, those non trending days, low opportunity days, he's not losing too much. He's most concerned about not losing too much. Okay, and that's it. I have to wrap up. Thank you everyone.

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