Mike Bellafiore

1. What Are Your Trading Rules? (SMB Training blog) — own site
   The post shows no date; it is signed by Bellafiore and quotes “The PlayBook”.
2. The Danger To Your Trading Account Of Not Risking Enough In Your Best Stock Trading Opportunities (SMB Training blog, 10 Jan 2020) — own site, 2020
   A video transcript generated automatically; figures in the example may be garbled.

• EntryExample (earnings breakout): first entry of two tiers on the break above the earnings pre-market high, stop below the opening low.
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• EntrySecond entry of two tiers on the break above the 200-day moving average on volume, with the stop below the significant pullback low of the opening consolidation.
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• EntryIf the stock consolidates at the target and breaks to a new high, add two tiers again, with the stop below that consolidation low; later targets sell about half, then a quarter, of what remains.
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• StopWhen adding, move the stop on the whole position below the new consolidation low: the closer stop keeps total risk near the planned percentage.
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• ExitAt the first target (about 50 cents above the earnings high): if the stock turns down, sell about 75% and reassess; if it keeps going, sell only about 25% and trail the stop below the target.
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• ExitReasons to sell a working position: the price target is reached, the intraday trend breaks, or breaking market news.
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• Size and risk“Rule of risk” from The PlayBook: on every A+ setup, put 30 percent of the intraday stop loss at risk.
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• Size and riskAfter each profitable month, raise the intraday stop (and with it the size on A+ setups) gradually.
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• Size and riskThink in percentages of the daily stop, not in dollars or shares: one “tier” = 10% of the daily stop; the example plan risked 40% in total.
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• DisciplineHave in advance an answer to: when to stop trading after making money, which market conditions suit your system, what you do in a losing streak, and what you do when you break your own rules.
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Often attributed to this trader, but not found in the sources above. Not listed as his or her rules.

• The criteria of what counts as an “A+” setup are in his books and were not read.

This is one worked example, not a back-tested system, and the numbers in the example (prices of a single stock) are an illustration. The risk method itself (a fixed share of the daily stop) is the transferable part.