Deconstructing A Trade: How Evil Thoughts Can Ruin A Good Trade

Posted by Brian Lund in Deconstructing A Trade, Trading

Below is a video analysis of a trade in $MCP showing how changing my reasoning for entering the trade changed my management of the trade…..to my detriment.

(Enlarge when video starts to watch in HD)

Check out more videos on the “Deconstructing A Trade” page.

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  • Lanlaire

    Brian, I’d stumbled on your “R” method some time back. It’s so mathematically and obviously simple that I can’t believe I never thought of anything like that.

    Back story: I fell in love with stocks just after college about 5 years ago. I followed different folks in different chatrooms, different styles of trading, so I was exposed to a lot of successful traders for a long period of time, but I always lost money. It wasn’t like I couldn’t spot anything – I was just used to getting everything right in life that I couldn’t cut a loser. I’d be right 9/10 times but still lose money. There have been several blowups during the years, which I just hid from people in real life, since otherwise everything was going well, working hard, etc.

    Anyway, I somehow had a revelation about just cutting losses and aiming for that R method about three weeks ago, and after months of losing a bit every month, I’m suddenly up $4800 in three weeks, with 15 of the last 16 days being a positive P/L. I feel like it’s too early to say, but I feel as though suddenly those years of paying tuition paid off, and I have to thank you immensely for your ability to explain it just in the right way for me so I can put in years of experience to work, this time along with some discipline and simple math. Thank you.

    • http://bclund.com/ bclund

      Wow, that may be one of the best comments I have ever gotten. I am glad it helped.

      The whole thing with making “R” work is to be consistent. It will protect you during bad streaks and maximize your profit during good times.

      Keep me in the loop about how it’s working. Maybe you would consider a guest post about your experiences with it in the future?

      • Lanlaire

        No prob – I’m a teacher in real life, so it’s important for me to thank people who helped out along the way.

        I definitely will keep you updated, I’d like some time to go by first to make sure it’s not a fluke, and then we’ll talk :-)

  • Terrence

    Hi Brian – what is your usual timeframe for your trading style? If your timeline is several weeks, than I think you would have been fine still being long since there’s a gap to be filled up to $15 or so. Can you comment on why you felt uncomfortable holding for longer?

    • http://bclund.com/ bclund

      Unfortunately as a someone diagnosed with ADHD a day trade is my usual time frame, the shorter the better.

      I will however , when the market conditions warrant swing for a couple days to a week or so.

  • Jim

    I did the EXACT same process. Good vid, love trade management insights.