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Mike Bellafiore—co-founder of SMB Capital and veteran prop coach—sits down for a candid YouTube interview about how a modern prop desk actually builds traders. From Bitcoin runs to pot-stock manias and headline-driven selloffs, Mike explains why SMB keeps evolving, how they groom interns into pros, and why “grow or die” isn’t just a slogan but the culture. If you’ve heard of his desk or his teachings, this convo brings the on-desk reality: team structure, risk oversight, and what separates a good year from a great one.
You’ll learn a practical trader strategy for thriving in fast markets: how SMB defines “market in play” (think VIX thresholds), when they lean into SPY and high-beta names, and how to layer tech—alerts, scripts, and automation—on top of discretionary reads. Mike lays out the path from demo to seven figures, the monthly review process with hard stats, and why sampling different setups until you find your niche beats copying anyone wholesale. If you want a clear blueprint for building edge, scaling responsibly, and making tech your co-pilot, this piece gives you the map.
Mike Bellafiore Playbook & Strategy: How He Actually Trades
What He Trades and When He Presses
Mike focuses on stocks and index products when they’re “in play”—fast, liquid, catalyst-driven, and offering clean asymmetric moves. The idea is simple: select the best battlegrounds, then size up only when conditions meet strict criteria.
- Define “in play” daily: fresh catalyst, ≥2–3x average volume, wide intraday ranges, and clean tape.
- Favor SPY/QQQ and top beta names on macro data days, earnings, guidance cuts/raises, upgrades/downgrades, and sector shocks.
- Rank a daily A/B/C list premarket; trade only A/B names unless the market explodes with new information.
- If VIX is expanding and breadth is trending, increase trade frequency and scale risk caps; if compressing, do the opposite.
- Avoid names with broken liquidity (spreads > 5–10c in mid-caps, dark prints dominating) unless risk is cut in half.
Daily Prep: From Idea to Battle Plan
Preparation turns randomness into a plan. He builds context first (market regime), then maps exact if/then triggers, targets, and invalidation for each ticker.
- Pre-market checklist by 8:30 ET: read catalysts, log float/ATR/short interest, locate key HTF levels (daily/weekly), and mark premarket highs/lows.
- Write a one-line thesis for each A-list name: “If X, then I will Y, risking Z, targeting W.”
- Predefine first trade: setup, entry zone, add zone, hard stop location, and two profit-taking levels.
- Track relative strength/weakness on the open using % change vs. sector/market; trade leaders, fade laggards only with confirmation.
- If a thesis is invalidated (HTF level breaks and holds), stop trading that name for at least 30 minutes.
Core Setups That Pay the Desk
He doesn’t chase “signals”; he runs a short menu of repeatable patterns with clear risk markers. Each setup has entry rules, adds, exits, and max pain.
- Opening Drive (OD): enter on break/hold of premarket high with expansion in volume; stop below reclaim of opening range low; sell 1/3 into 1R, trail to VWAP.
- VWAP Trend Hold: buy first pullback into rising VWAP with higher low; stop 5–8c (or 0.25x ATR) below VWAP; add on reclaim and higher high.
- Reversal at Exhaustion: short lower high into prior day’s value area after a parabolic push; confirmation = failure at key level + heavy tape offers.
- Range Break and Go: enter only on the second attempt if the first failed; use the failed break low/high as your invalidation to tighten risk.
- News Pop Fade (Advanced): if news is weak/old and tape won’t lift through offers, scale in 1/3 size, cover into opening range lows, stop above the pop high.
Risk First: Sizing, Stops, and Max Loss
Edge dies without risk control. He caps daily losses, sizes by volatility, and moves stops only with fresh information—not emotions.
- Set a hard daily max loss (e.g., 0.5–0.75% of account) that cuts platform permissions if breached.
- Size via volatility: risk per trade = account_risk_per_day ÷ (max concurrent trades) ÷ (stop distance in $).
- Use structure-based stops (prior swing/VWAP/opening range) rather than fixed ticks; no “mental” stops.
- If stop distance doubles due to volatility, cut size in half; if volatility halves, allow 1.25–1.5x size (never exceed desk cap).
- After two consecutive full-stop losses in the same name, pause that symbol for 60 minutes or until a new catalyst prints.
Scaling and Trade Management
Add to winners only when the market proves you right. He scales methodically, manages partials, and trails risk behind objective levels.
- First, add only after price accepts above your entry structure (e.g., higher high + hold above broken level for 2–3 minutes).
- Take 1/3 off at +1R to remove risk; move stop to breakeven only on trend setups that hold VWAP.
- Trail under higher lows or 9/20 EMA on the timeframe you’re trading; don’t trail so tight you clip the trend.
- If tape shows absorption against you at your target, exit another 1/3 and hold a runner to the next HTF level.
- End-of-day: flatten discretionary runners into the close unless a swing thesis is explicitly documented.
Tech Edge: Tools, Alerts, and Automation
Technology amplifies discipline. He uses alerts, scripts, and dashboards to enforce rules and catch opportunities without forcing trades.
- Build a dashboard: A-list tickers, catalysts, ATR, float, % to HTF levels, and real-time relative strength vs. sector.
- Set alerts for HTF levels, VWAP touches, and ORB levels; only act when alert + tape + volume align.
- Use hotkeys for predefined orders: risk-defined entries with bracket stops and targets to remove hesitation.
- Record L2/tape snapshots around entries/exits for replay; tag each with setup code (e.g., OD, VWAP, REV).
- Auto-block entries within 2 minutes after a stop-out on the same ticker to avoid revenge trades.
Teaming and Playbook Building
He treats trading like a team sport. Shared preparation and post-mortems compress learning cycles and reduce blind spots.
- Morning huddle: each trader presents one top-ticker plan with triggers and invalidation; commit it to a shared sheet.
- During the session, post real-time levels and changes to the plan; no hindsight posts.
- Afternoon review: screen record 2–3 best trades and 1 worst; annotate decisions vs. rules in under 10 minutes each.
- Playbook one-pagers: chart, catalyst, setup, entry/exit, stats (R multiple, MAE/MFE), what to replicate, what to fix.
- Promote setups that show ≥55% win rate and ≥1.7 R expectancy over 30-sample minimum; demote others to “research.”
Statistics That Drive Improvements
Numbers beat narratives. He tracks expectancy, drawdown control, and time-of-day performance to decide where to focus risk.
- Log every trade with: setup code, planned vs. actual entry, R risked, MAE/MFE, exit reason, and adherence score (0–100).
- Weekly compute: win rate, average R, expectancy (win% × avg win – loss% × avg loss), and profit factor.
- Segment by time: opening 30 minutes vs. midday vs. power hour; boost size only in your top session.
- Kill rules: pause any setup that drops below 1.2 profit factor over 20 trades; resume only after revisions and fresh samples.
- Track slippage by setup; if average slippage > 20% of planned risk, adjust stop distance or entry style.
Swing vs. Day Trade: When He Holds Overnight
He distinguishes day momentum from developing swings. Swings require higher-quality catalysts and defined risk against the HTF structure.
- Only swing if the catalyst has multi-day implications (earnings guidance shift, regulatory change, macro trend).
- Use daily/weekly levels for risk: stop below prior day low for longs (or above prior day high for shorts) with position size cut to 1/2 intraday size.
- Scale into swings in thirds across HTF pullbacks; never add if thesis hasn’t advanced (e.g., no follow-through volume).
- Hedge index beta with index options if concentrated in high-beta names.
- Re-evaluate after each close; if the thesis weakens or the broader tape turns, reduce to a “call option” runner.
Psychological Edge and Behavior Rules
Consistency is a behavior, not a mood. He protects decision quality with simple, enforceable rules.
- First loss best loss: stop instantly when invalidated; never “see one more candle.”
- Two-strike rule per setup per day; after two misses, switch symbols or stand down.
- If tilt signals appear (impulse entries, sizing creep, chasing), enable “green time-out” for 20 minutes with no orders.
- Process score > P&L: no size increase next day unless adherence score ≥ 85% and drawdown < desk threshold.
- Pre-close reset: 60 seconds of breath work and a quick plan for the last 30 minutes or flat into the bell.
Review Cadence and Promotion Path
Progress is scheduled. He runs a weekly and monthly loop that determines where risk goes next month.
- Weekly: top three playbook trades into a shared reel; two process errors written into new rules; one experiment defined for next week.
- Monthly: promote one setup to a higher size if it shows stable expectancy across market conditions.
- Trim the tree: cut one underperforming symbol or set up each month to keep focus sharp.
- Publish a personal “edge statement”: what you trade, when you press, risk per trade/day, and the three tells that mean “go.”
- Attach next month’s risk plan to the calendar with specific size tiers and the exact metrics that will trigger a cutback.
Size Risk Like A Pro: Volatility-Synced Position Sizing Rules
Mike Bellafiore is relentless about sizing to the tape, not to hope. He teaches traders to set risk per trade first, then let volatility dictate share count—not the other way around. When ATR expands, position size shrinks; when ATR compresses, size can step up within a hard daily loss cap. Stops live at objective structure—VWAP, opening range, or swing points—so the dollar risk is planned before the first click.
He also pushes a two-strike limit per setup to prevent compounding errors when volatility gets wild. Adds are reserved for when price proves you right—higher highs with acceptance or reclaims of key levels—never to “average down.” If the stop distance doubles mid-session, he halves the size automatically to keep R constant across changing conditions. The result is steady R-multiples, less noise, and a scalable framework you can trust on fast days and slow ones alike.
Trade The Tape, Not Your Ego: Mechanics Over Market Predictions
Mike Bellafiore urges traders to let the tape set the agenda, not opinions. He wants triggers, confirmations, and invalidations defined before the open, so execution is automatic. Predictions are optional; mechanics are mandatory. If bids absorb and volume expands through a level, you act; if they stall, you stand down.
Mike Bellafiore frames each trade as an if/then with a stop tied to structure. He insists on repeatable tells—VWAP reclaims, opening range holds, higher low builds—so decisions are binary. Journal whether you followed the mechanic, not whether the market later proved you “right.” Over time, this shifts focus from fortune-telling to execution quality, which is exactly where edge compounds.
Diversify By Playbook, Underlying, Duration: Build Multiple Independent Edges
Mike Bellafiore champions diversification that actually lowers variance: multiple setups, multiple symbols, and multiple time horizons. Instead of forcing one A+ setup all day, he rotates among an opening drive play, a VWAP trend hold, and a late-day range break—each with distinct triggers and risk. He spreads focus across indices, high-beta leaders, and catalyst names so one dud won’t sink the day. The same logic extends to time: scalp the open for speed, trade trend in the middle, and position for closing range expansions into the bell.
Mike Bellafiore also stresses correlation awareness so you’re not secretly taking the same trade five times. If three longs all move with QQQ, he treats them as one risk unit and sizes accordingly. He encourages keeping a tiny swing book alongside day trades when catalysts have multi-day juice, but only with clearly defined HTF levels. Over weeks, this “edges portfolio” smooths P&L, increases sample size, and gives more chances to press when one lane heats up while another cools off.
Press When In Play, Cut Fast When Structure Breaks
Mike Bellafiore teaches traders to press only when the market is truly in play—fast, liquid, and catalyst-driven. When volume expands and levels are clean, you step on the gas with planned adds after confirmation, not before. Use acceptance above/below key levels, VWAP trends, and breadth to validate that conditions justify a bigger size. If those conditions fade, your foot comes off the pedal immediately.
The other half of the rule is ruthless defense: when structure breaks, you’re out. Lose the opening range or fail a VWAP reclaim twice, and Mike Bellafiore wants the position flat, no debate. You can always re-enter on fresh confirmation, but giving back gains while “hoping” violates the playbook. Press hard when signals align; cut faster the moment they don’t.
Choose Defined Or Undefined Risk Intentionally: Clear Rules For Each
Mike Bellafiore wants traders to pick their risk container before clicking—then honor it. Defined risk means pre-set options or tight, structural stops where max loss is known; undefined risk means wider stops and active management in exchange for more flexibility. If you run defined risk, you commit to taking profits at planned multiples and never widen the stop for “one more tick.” If you run undefined risk, you trail behind structure and volatility, and you must be willing to flatten the moment the thesis cracks.
Mike Bellafiore also emphasizes matching risk type to the setup and market regime. During noisy opens, defined risk can prevent one bad wick from wrecking the day; in clean trends, undefined risk lets you ride extensions without choking the trade. Whatever you choose, standardize your playbook language—entry, invalidation, add rules, and exit logic—so there’s no mid-trade debate. The goal is simple: know your worst case in advance, trade your plan with conviction, and let the math of your edge do the heavy lifting.
In the end, Mike Bellafiore’s blueprint is refreshingly simple: build a wide base, then press your edges with discipline. Start by sampling—lots of strategies, symbols, and timeframes—before you narrow focus. When the market is “in play,” he gets specific: VIX futures above ~15 get his attention, above ~20 he’s actively trading index products, volatility ETNs, and high-beta leaders as proxies. He leans into catalysts, clean levels, and volume, but the moment structure breaks, he’s flat and ready to re-engage only on fresh confirmation.
Risk is engineered, not guessed. Mike sizes by volatility and anchors stops to structure so the dollar risk is known before entry. He treats diversification like a risk reducer: multiple setups, multiple underlyings, and multiple durations, while watching correlation so five longs that all move with QQQ don’t masquerade as diversification. He adds to winners only after acceptance above/below key levels, takes partials methodically, and trails behind objective structure instead of emotions.
Finally, he turns the process into a machine. Automation isn’t all-or-nothing—start with alerts and scripts, then layer models if and when they’re robust. Wrap everything in a cadence of daily plans, weekly stats, and monthly team reviews with clear goals, accountability, and promotion/demotion of strategies based on real expectancy. That’s the Bellafiore edge: mechanics over prediction, pressing only when the tape proves you right, and a growth culture that compounds skill month after month.
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