The Playbook

1. Develop your PlayBook: A personalized archive of successful trading setups

The PlayBook will help you become a better, bigger, more profitable, increasingly efficient, well-rounded, calmer, happier, and grateful trader.

Build your trading edge. The PlayBook is a personal archive of trading setups that work best for you. It helps you:

• Identify and replicate your most successful trades
• Eliminate setups that don't work for you
• Increase your position size in high-confidence trades
• Hold trades for larger moves

To create your PlayBook:

• Archive your best trades daily
• Include detailed analysis of each setup
• Review and refine your PlayBook regularly

2. Master the five key indicators for making trading decisions

We make trading decisions based on five indicators, or checks: The Big Picture, Intraday Fundamentals, Technical Analysis, Reading the Tape, and Intuition.

Holistic decision-making. Consider all five indicators when making trading decisions:

1. The Big Picture: Overall market trends and catalysts
2. Intraday Fundamentals: Fresh news and events affecting stocks
3. Technical Analysis: Chart patterns and support/resistance levels
4. Reading the Tape: Order flow and price action
5. Intuition: Experience-based gut feelings (developed over time)

Weigh these factors differently based on the specific trade and market conditions. Continuously refine your ability to interpret and integrate these indicators.

3. Embrace a growth mindset and compete like top trader TO

TO is the ultimate competitor. If anyone reads this chapter and can honestly say you compete like TO, I would like to meet you.

Relentless improvement. TO exemplifies the ideal trader mindset:

• Constant learning and skill development
• Detailed trade reviews and preparation
• Willingness to adapt and try new strategies
• Focus on process over results

TO's daily routine includes:

• Extensive market research
• Detailed trade journaling
• Collaboration with fellow traders
• Continuous refinement of trading strategies

Adopt this competitive mindset to accelerate your trading progress and maximize your potential.

4. Follow Pippen's path to consistent profitability

Pippen is not the best trader on the Street. He is not the best trader on our desk. He was not even the best trader from his class. He is now.

Steady progress. Pippen's journey illustrates the path to consistent profitability:

1. Start with small losses
2. Reduce losses over time
3. Achieve breakeven results
4. Become slightly profitable
5. Develop consistent profitability
6. Expand your PlayBook and increase position sizes

Key lessons from Pippen:

• Focus on gradual improvement, not instant success
• Learn from mentors and fellow traders
• Adapt to changing market conditions
• Maintain a strong work ethic and passion for trading

5. Learn from Prep's mistakes to avoid common trading pitfalls

Simply put, Prep is the most frustrating trader I have ever mentored!

Avoid common errors. Prep's story highlights several pitfalls to avoid:

1. Blaming others for poor performance
2. Overtrading and lack of focus
3. Failing to follow risk management rules
4. Trading on tilt (emotionally-driven decisions)
5. Lack of preparation and big picture awareness

To overcome these challenges:

• Take responsibility for your results
• Develop and stick to a disciplined trading plan
• Implement strict risk management rules
• Practice emotional control and self-awareness
• Continuously educate yourself on market dynamics

6. Cultivate the work ethic and mindset of successful traders like Shark

Shark is the example of how you can sit down without experience, work your tail off, get better every day, and become a successful intraday trader without previous screen time.

Dedication to improvement. Shark's success stems from his exceptional work ethic:

• Detailed daily trade reviews
• Continuous learning and skill development
• Willingness to take constructive feedback
• Focus on process over results

Shark's daily routine includes:

• Extensive pre-market preparation
• In-depth analysis of market trends
• Detailed journaling of trades and emotions
• Collaboration with fellow traders

Emulate Shark's approach to accelerate your trading progress and maximize your potential.

7. Implement a giveback rule to protect your profits

At SMB we ask our traders to close out their intraday positions if they have given back 30 percent of their trading profits for the day.

Preserve your gains. A giveback rule helps protect your profits and maintain discipline:

1. Set a maximum percentage of profits you're willing to give back (e.g., 30%)
2. Close all positions when this threshold is reached
3. Take a break or end trading for the day

Benefits of a giveback rule:

• Prevents emotional decision-making
• Locks in profits on good days
• Encourages discipline and risk management
• Helps identify areas for improvement in your trading

Customize your giveback rule based on your trading style and risk tolerance.

8. Focus on trading fewer stocks with more conviction

You are trading too many stocks.

Quality over quantity. Concentrating on fewer stocks allows for:

• Better understanding of each stock's behavior
• Increased focus and reduced mental fatigue
• Improved ability to spot high-quality setups
• Larger position sizes in your best trades

Tips for focusing on fewer stocks:

• Develop expertise in specific sectors or stock types
• Use stock scanners to identify the best opportunities
• Create a watchlist of 5-10 stocks to focus on each day
• Increase position sizes in your highest conviction trades

Remember: It's better to make significant gains in a few stocks than small gains (or losses) in many.

9. Maintain professionalism and emotional control in trading

First comes the professional trader. Only then can the trader become consistently profitable.

Emotional discipline. Professional behavior and emotional control are crucial for success:

1. Treat trading as a serious business
2. Show up prepared and focused every day
3. Avoid impulsive decisions based on emotions
4. Learn to manage stress and anxiety

Techniques for maintaining professionalism:

• Develop a consistent daily routine
• Practice mindfulness and stress-reduction techniques
• Keep a trading journal to track emotions and behaviors
• Seek mentorship or coaching to improve emotional control

Remember that consistency in your approach leads to consistency in your results.

10. Continuously improve through detailed trade reviews and preparation

Your longevity is determined by which one you choose to pursue. Some folks don't make this easy for themselves.

Constant refinement. Successful traders prioritize continuous improvement:

1. Conduct detailed post-trade and end-of-day reviews
2. Analyze both winning and losing trades
3. Identify patterns and areas for improvement
4. Prepare thoroughly for each trading day

Elements of effective trade reviews:

• Analyze entry and exit points
• Evaluate risk management decisions
• Assess emotional state during trades
• Identify missed opportunities and lessons learned

Preparation techniques:

• Review important economic events and news
• Analyze key technical levels and setups
• Develop a trading plan for the day
• Set clear goals and risk parameters

By consistently reviewing and preparing, you create a feedback loop that accelerates your trading progress and helps you adapt to changing market conditions.

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Last updated: October 28, 2024