8 Trading Lessons from a Drawdown — Full Breakdown & Transcript

[00:03] session. Gold moved $50 overnight. And if you're like most traders on Twitter right now, you're getting crushed. You're in a draw down, a painful accountthreatening draw down. You're losing money. You're losing your

[00:15] wonder if you even belong in this market. Stop. We have some good news. At SMB, we learn from these painful periods. We use them as a catalyst for

[00:27] growth. Today, we're taking you inside our desk to show you the eight specific lessons our traders learned to survive this volatility. And most importantly, we're giving you the cure to get back to green. I'm Mike Bellofury, co-founder of

[00:42] SMB Capital. We've built seven and eight figure per year traders by teaching them exactly what works when the market turns hard. And if you're serious about protecting your capital and growing your account, you're in the right place.

[00:58] Let's get started. Here are the eight lessons our traders have learned during a painful draw down. Please stay tuned until the end for the cure. Number one,

[01:12] until the end for the cure. Number one, don't miss what works best for you. Now don't miss what works best for you. Now on our desk, I'll tell you an anecdote about our best team from 2025. This is our best team hands down based on risk

[01:27] adjusted returns, based on overall P&L, based on work ethic, outperformance from other teams, number one team at S&B in 2025. And some of the traders on this team are in a painful draw down, mostly

[01:44] team are in a painful draw down, mostly from recent events. But Spencer, Steve Spencer, my partner, has been walking around the trading floor bragging about this amazing se sevenf figureure breakout trade that they just

[02:00] figureure breakout trade that they just made recently and how this was a great made recently and how this was a great example of what they do best. But this team, these group of guys, they were, you know, putts around in a new type of

[02:16] product. They were trying out how to make money in a setup that technically looked really good for them in commodities relative to stocks, but, you know, they were trying something new and they were

[02:32] were trying something new and they were getting away from what they do best. And getting away from what they do best. And so oftent times and I'm giving you an example of uh some hiccups that these guys have had in commodities. But we can

[02:46] we can replace commodities with something else. We can replace 2026 with something else. We can replace 2026 with 2027. We can replace 2026 Q1 with Q3.

[02:58] it. These drawdowns, these periods of underperformance, these disappointments are going to happen to elite traders multiple times through the year. They're going to happen to developing traders, newer traders. It happens to all of us.

[03:14] And the key during these drawdowns is to understand and learn. And so number one you're going to find whenever you're in a draw down is you gota you got to double down

[03:29] on what you do best. And you just can't miss what you do best. These guys breakout trades. They can't miss breakout trades when they're hawking a new product. You can't miss what you do best while you're

[03:44] trying to learn something new. Okay. Let's move on to number two. Commodities don't trade like equities. Crypto doesn't trade like equities. Silver, gold doesn't trade like Nvidia.

[04:01] You need a separate playbook for each. Now, look, historically, and I'll use an Now, look, historically, and I'll use an example uh in silver, we've had we've had this extreme volatility in silver defined by moves of five% or more.

[04:17] And we've we've had a cluster of them recently. Silver historically maybe moves on average 5 to 10 days per year on average 5% or more. In the last 24

[04:29] months we've had these clusters of days. And so people have been drawn to this particular opportunity of late. And 26 silver's ATR its average true range has

[04:42] tripled. And so, you know, while I'm using an example of silver, again, we can replace it with with something else. The idea is when you're trading

[04:55] something very new, per perhaps you're good in technology stocks and you're moving to a different sector in the marketplace, they don't different sectors trade differently. Certainly, commodities

[05:08] trade differently than equities. Uh certainly growth stocks trade certainly growth stocks trade differently than legacy stocks. You need different playbooks for the instrument for the stock for the product

[05:21] that you're trading. And that in that in of itself can cause the Number three, when learning a new product or a new stock,

[05:33] earn your risk. Don't trade it with the same risk as your equities playbook where you have a history of success. If you're now trading commodities for the first time, prove you can handle the new product consistently. Add risk from

[05:49] success. We had a team recently who had a draw down in crypto and Steve Spencer, my partner, made a really good point to the team that crypto doesn't trade like equities and you can't trade them like equities. And this really bright, sharp,

[06:02] smart team was learning this and didn't really understand this until talking to Spencer and learning about this through some pain. But this is an example of why, you know, even if you're an elite trader good at something else, you got

[06:16] to start small in this new product or new stock and then build from success to make sure you don't lose too much on a hard lesson. All right, number four. This is not the market to be playing for the grand slam.

[06:30] the grand slam. And I will share that recently And I will share that recently we have made two separate midi sevenf figureure trades in commodities in the past five trading sessions and we made

[06:45] another sevenf figure trade in commodities in the last five trading sessions and we didn't lock in profits. We let them ride didn't lock in profits. We let them ride and we gave almost all of it back.

[06:59] Not suggesting that we should have locked in all the profit, but we should have locked in at least half. And when we reviewed these trades with our traders, they agreed with that. Lock in half, wait for continued

[07:12] re-enter. There was a consensus that that was the right thing to do. And again, I'm talking about trading in commodities, but there's going to be times when you're playing for grand slams in what seems to be an A+

[07:27] opportunity. And the reason for your underperformance is you're playing for a grand slam as opposed to taking some really solid opposed to taking some really solid lesser gains. And you know, our guys on

[07:43] our desk were playing for a $10 million trade. And they if you if you look back on it, they could have made that they could have made that in three trades if they took their profits the way that they they do

[08:00] in a lot of other things. But they they really went for it. And you got to where that's just that's that's not really a good thing to do. There are markets for that, but this isn't one of them. Number five, don't seed your

[08:13] structural edge in the market. As active traders, we can enter and exit much more easily than bigger players. Book your profits. You can always re-enter. Number

[08:25] six, past success doesn't have to continue. Adjustments must be made in different market regimes and new products. Look, you you've got to as an elite trader, when you become an elite trader,

[08:40] profitable trader, this there's this idea that like now you can do what you want. Now you've earned the right to for more freedom. And the reality is that we have to build

[08:55] our trading business inside of market principles and rules. No matter how much money we've made in the past, we have to build our business inside of market principles and rules. And those market principles and rules are decided by

[09:09] principles and rules are decided by mother market and they they stand the mother market and they they stand the test of time. There are always the rules that the market makes us follow no matter how much money we've made in

[09:22] the past. And when we get away from them, that's when we get ourselves in trouble. And so, you know, I think the other thing that we have to recognize is that just because we've had a lot of success

[09:34] in the past doesn't earn us the right for it to continue. There are lots of traders that I know who've had periods of success,

[09:46] marketplace, and then after that period were eliminated by the market. I've seen traders who've made seven

[09:58] figures for a pretty good stretch of time and then when that time was over could never make another dime in the marketplace for the rest of time. They marketplace for the rest of time. They were just done. And

[10:11] we sort of we sort of have to understand that, you know, we should be grateful for what we can take out of the marketplace, but we have to understand if we're going to continue being good at this that we need to be humble and we

[10:24] need to be learning and we need to be adapting because market regimes change adapting because market regimes change and stocks trade differently and the and stocks trade differently and the world changes. I mean, this is a period

[10:39] of time where there is so much change around us and we can't expect everything around us and we can't expect everything to continue the way it was. And so, matter how good you are as a trader, you've got to build your trading

[10:52] business inside of market principles and rules. Number seven, being in your seat rules. Number seven, being in your seat for the easy market is how you really for the easy market is how you really get rich. Don't let hard markets or bad

[11:05] trading stocks or products keep you from being around for the easy markets. There's been some tough trading products in commodities right now. Those days don't have to continue. I think the market has been slow of late. We will

[11:21] have periods of that. Over a 10-year cycle, you're going to have 10 great trading years where you make way too much money, more money than you deserve to make relative to your skill. money that you can live on for a long period

[11:34] that you can live on for a long period of time if you're a profitable trader, years where it's just really a lot of fun to go and it it's remarkable how well you can do. And then there's going to be 18 months to two years which are

[11:50] three good years and there's going to be three very good years which are really worth being around for. But you got to make it to those. You got to make it to those years. All right. Number eight, Shark and Draen Miller.

[12:06] Shark from our desk and Ducken Miller. Legendary hedge fund trader. Probably the best performance of anyone to do it in the hedge fund space. They both push

[12:18] risk when they're trading well and making money. Your cure for getting out of a draw down is to focus only on one thing. I just

[12:33] wrote a tweet about this. I just wrote a couple of G chats to several guys on our desk reinforcing the focus. Consistency.

[12:47] That's your cure. When you're in a draw down, focus on consistency. What are your best trades? What do you trade best? What are your best entries for them? What are your best exits for them? What's the best

[13:00] time frame for them? Do that and then do that again. Focus on your strengths and focus on what's made you money in the past. And then sit there and remind

[13:13] past. And then sit there and remind yourself and remind yourself and set alerts through the day to remind yourself to do what you do best to take the setups in your playbook that you trade best to take the setups in your

[13:27] playbook that are easiest for you to take the easy money for you in the marketplace whatever that is. And we're all different and there are traders that are going through a painful period. This is not fun for many traders.

[13:41] You know, it it it sucks. It hurts. And I think that's good. I think that's good because that pain, you know, people say, "Oh, after the down, when you're going through painful periods, just go home and forget about

[13:56] periods, just go home and forget about it." You can't really do that. And I it." You can't really do that. And I think during serious draw downs, I don't think you should. I think it's good to sit in that pain.

[14:09] That pain is gonna get you to be super focused to make sure that you understand what you do best. That pain is going to get you to be super focused on make sure

[14:21] and making sure you exit and enter at the best times for you to make sure you don't let open profits just whittle away. That you take those profits that that you get in laser focused at the right time, that you're in the right

[14:36] stocks, that you're in the right setups, that you take your best trades. That pain forces you to not do anything else but do that. Markets go through periods of tough times. And I got a call

[14:50] the other day from a partner at a prop firm. I have to laugh at myself. And this person, this partner at at another firm person, this partner at at another firm wanted to talk business and partnering

[15:04] and made the mistake of first asking me how things were going. And I spent 20 needed to make at our firm and what we needed to do to help them.

[15:17] After I came up for air, I recognized that's not why this person I've called. But we're all just so consumed with getting out of holes and getting back on consistent, making sure our guys are learning and have the resources and

[15:33] support they need during periods like this. And those periods are hard. And there have been some tough trading products when playing for a grand slam.

[15:45] But but but but if you're learning a new but but but if you're learning a new product and learning from a draw down, product and learning from a draw down, this will make you a better trader. A,

[15:59] comprehensive. B, your ability to trade more products will pay dividends in the future. See, you'll reinforce the importance of building your trading business within

[16:12] building your trading business within market principles and guard rails. D. Your trading skills will improve. Often the hardest markets, the hardest markets, bad trading products, the most painful

[16:25] bad trading products, the most painful trading times propel elite traders to even new heights. We've seen that on our desk. The key is learning, making adjustments, and staying in the game. At SMB, we're looking forward to a huge

[16:43] celebratory dinner for when our traders who were in draw down reach new highs. That's going to bring a huge sense of relief for me and for Spencer and happiness and happiness that our traders grew from that pain. Here's to

[17:01] many more years of trading success for you, from all of us at SMB. Train and >> So, you're an active trader, not doing as well as you want, not doing as well as you deserve, and you just can't figure out why you can't become

[17:15] profitable no matter how hard you try. Well, let me show you why. This is your competition. The traders in this room. This room right here is full of elite traders. Some of them are making seven and even eight figures a year. In fact,

[17:29] our top guys have made nearly 20 million each in net trading profits in a single year. Let's head to my office so I can share more. So, you're probably used to seeing videos of lavish trader lifestyles, trading gurus trading off of

[17:45] a laptop for an hour a day, heck, maybe even 15 minutes a day, and then them relaxing on some secluded beach for the rest of the day. Well, all I can tell you is that our traders train like pro aletes. They live and breathe the

[18:00] markets and are continually working on their trading skills because at our firm, that's what we found it really takes to make it in this game. I'm Mike Bellofury, co-founder and managing partner of SMB Capital, one of the

[18:14] world's top proprietary trading firms located in Midtown Manhattan. And we're always looking for trading talent to hire and develop. And not just to trade in-house on our desk, but also to trade from their own home, entirely using our

[18:29] firm's capital. And we have numerous traders doing just that, allowing them to make upwards of seven figures trading the firm's capital without risking their own money. But to even get a shot at something like that, you need to have

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[19:28] presentation by clicking the link that's in your top right corner of your screen in your top right corner of your screen now.