2. SMB FUNDAMENTALS

3.  SMB believes that all successful traders follow certain fundamental principles and practices which if carefully applied will result ultimately in a successful trading track record.  Every trading practice is a game of percentages where a certain number of winning and losing trades invariably will happen. Trading success is not determined by any one winning trade, nor is failure defined by any one losing trade.  We focus not on results of individual trades, but rather whether our traders are following each of these fundamentals in the midst of each trade. Regardless of the financial results of any individual trade, if the fundamentals are followed, then we consider that trade “one good trade”.  Over time, if you follow one good trade with one good trade and then one good trade, your trading performance will ultimately improve and with perseverance, success should follow.

4.  Proper Preparation  Hard Work  Patience  Detailed Plan  Discipline  Communication  Replaying Important Trades

5.  Awareness of futures by 8:30 AM EST each day.  Awareness of all economic events each day. through earnings.com or other websites—a look ahead to the next week or even further ahead is advisable for smart trade planning purposes.  Awareness of earning dates and major news dates for individual stocks.  Alerts set on all trades through online broker.  Contingency orders on all trades.  Breathing exercises.  Visualizations exercises.

6.  All strategies employed with real capital should be back tested for a minimum of three years before conclusions can be reached about expected returns. Also strategies can be fine-tuned through backtesting experience.  All new strategies will be paper traded for at least one month to build “muscle memory” on top of backtesting process.

7.  Letting the market come to you upon trade initiation.  Allow theta to do its magic— do not over- adjust.  Waiting for ideal conditions for trade initiation.

8.  Each Trade will have a detailed plan based on experience and extensive backtesting.  Plan the trade then trade the plan.  Avoid tendency to alter the plan mid-trade because you are uncomfortable—often that is exactly when the market turns.  “A foolish consistency is the hobgoblin of little minds”—Ralph Waldo Emerson—there is no trade plan that should trump common sense. (I had to look hobgoblin up too, when I first read that quote—it means an imaginary monster fabricated to frighten children)

9.  Don’t jump the gun on adjustment points.  Waiting for fills at proper price.  Not over adjusting-follow your plan,intelligently.  Not trading during opening drive.  Always taking max loss.  Never taking gains too early unless big event is coming.

10.  Weekly Group Meetings—time will be set aside in each weekly group meeting for members to share what has worked well for them in their recent trading. It is important to participate in the community—no one person has all the answers, but collectively we can arrive at some pretty smart conclusions.  Member Chat: Active participation in the member chat room is strongly encouraged.

11.  Attendance of at least one session per day of fellow trainee’s mentoring session is highly advisable.  Complete trader analysis sheet on each trade, each month.  Retrade any trades through backtrader that were not traded according to plan to demonstrate the effect of planned adjustments versus “emotional” adjustments.

12.  Read the first two chapters of “One Good Trade: Inside the Highly Competitive World of Proprietary Trading”.  Extra Credit: Read the remaining chapters of “One Good Trade Inside the Highly Competitive World of Proprietary Trading”