How We Use The One Good Trade Framework
Friday, September 3, 2010 at 8:07AM
I just started reading One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Amazon affiliate link). This is a great book. In fact, it’s more than great—it’s fantastic!
One of the big ideas the author, Mike Bellafiore (Bella), utilizes is to trade one good trade, then trade another one, and then continue this process. Bella’s firm, SMB Capital, employs many top-notch traders to execute the firm’s trading strategy as a process.
At Bigger Capital, we use a similar process. We have a one-good-trade framework based on our own recipes and we use technology to multiply the do-another-good-trade-and-another-one-etc. model.
So the idea here is to find that one-good-trade framework that works for you. We are all different, so your framework will be different from mine, and mine is different from what Bella and his colleagues have developed.
Developing your framework is where the creative part comes into play. Shape that framework as if you were sculpting until it is perfect for you. If you are stuck, just break down the task and iterate until you get to the desired outcome. For more information, read Break Down Your Algorithm Plan into Smaller Parts.
Once you have a solid framework in place, then it is about applying the processes consistently, neurotically, and obsessively. While you’re at it, reduce the friction in the process as much as possible.
Good luck with it, and let me know how it goes.
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Reader Comments (2)
"Once you have a solid framework in place, then it is about applying the processes consistently, neurotically, and obsessively. While you’re at it, reduce the friction in the process as much as possible." You ought to say "reevaluate" as well. In my (relatively very short) experience, no system works 100% and few, if any, will work over a long period of time because the markets change so much. What do you think about that? Do you believe that it is possible to come up with a 'perfect' framework?
Ayush,
You are correct. I learn every day. Thank you.
About perfect framework: As long as I achieve good returns, I am satisfied but I always work on improving the processes and the returns. A life long pursuit. The people who invest money in a strategy are the customers and the results should delight them.
My best investment was a 600 X over a 6 years period. That will most likely never happen again but I get a kick working on all that stuff. I guess the imperfection makes it challenging and worth pursuing. Art is never perfect. It is what it is.