I do not write a 13 page report after a loss.

Normally I would not take the time to read about someone taking a loss on a trade. I am pretty good at it, if I wasn’t, I wouldn’t survive. But when I saw it was 13 pages I figured it was a good lesson or good comedy. I am not sure why exactly it was written, I guess for empathy and advertising.

Here are things you should eliminate before you ever take a trade.  If you do not want to read the 13 pages as I have summarized it below, unless of course you want to.

  • Concentrate on what is important. The most important thing when I am trading is profit and education, to some extent.  You can get to profit many ways but your actions need to all bend towards that one objective.  Me talking about my position takes me away from analyzing the position.  Also, for me, it makes me less flexible. Now I am thinking about what the market is doing and how I look to other people.  Also, if you are going to talk your book the most effective way is to get out into it, albeit the most unethical.
  • Start with a logical thesis. For example, leave out the fact that you said the following about the company “offers a useful, attractively priced service to customers, is growing like wildfire, is very well managed, and has a strong balance sheet,” but still decided to short the company anyways.  I realize this statement does not always mean a stock price is going to rise but the next logical step does not mean the stock is going down.
  • Follow your plan. Do not make reference to your strategy as the following “outright frauds (our very favorite), industries in decline or facing major headwinds, weak or faddish business models, bad balance sheets, and incompetent,excessively promotional and/or crooked management”  and not follow it.  See above statement.
  • Do your research before you make a trade. Don’t use anything with the word “monkey” in it for research purposes and tell someone about it.  Also, 500 people is not a very big sample size.
  • And finally, don’t act like a loss is the end of the world or a win. If you are doing the right things, your best and worst days are always ahead of you. After the trade is over the next trade is the most important, once again assuming you are doing the right things.

Nothing is ever going to prevent you from losing but there are several things that can prevent you from winning over a long period of time.

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  • Alvari40

    Appropriate position sizing so that the trade can play out without undue staring at the P/L. The P/L vortex will suck you in to another reality – stay arms length from it so that the fluctuation can take place and you can stay sane and on message.

    • Eli Radke

      It starts with understand risk and knowing where you are wrong, in my humble opinion.

  • Ron

    “Follow your plan. Do not make reference to your strategy as the following “outright frauds (our very favorite), industries in decline or facing major headwinds, weak or faddish business models, bad balance sheets, and incompetent,excessively promotional and/or crooked management”  and not follow it.  See above statement.”

    I think he was stating that one, some, or all of those applied in his thesis, but since he and Reed were playing cat and mouse did not make it so obvious. I’d gather his thesis is still in tact but because he’s dealing with OPM had to cover and make an indirect apology.

    • Eli Radke

      I am not sure but judging by their recent history they are having problems with executing their thesis.

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  • Can I complain about getting out of $ICE too early here? 😉

    • Eli Radke

      YES!! I have mastered the head nod and occasional yes and really. Thanks for comment. Beers on me when I get back.

    • You can only complain about not shorting the top.

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9 Responses to I do not write a 13 page report after a loss.

  1. Alvari40 says:

    Appropriate position sizing so that the trade can play out without undue staring at the P/L. The P/L vortex will suck you in to another reality – stay arms length from it so that the fluctuation can take place and you can stay sane and on message.

    • Eli Radke says:

      It starts with understand risk and knowing where you are wrong, in my humble opinion.

  2. Ron says:

    “Follow your plan. Do not make reference to your strategy as the following “outright frauds (our very favorite), industries in decline or facing major headwinds, weak or faddish business models, bad balance sheets, and incompetent,excessively promotional and/or crooked management”  and not follow it.  See above statement.”

    I think he was stating that one, some, or all of those applied in his thesis, but since he and Reed were playing cat and mouse did not make it so obvious. I’d gather his thesis is still in tact but because he’s dealing with OPM had to cover and make an indirect apology.

    • Eli Radke says:

      I am not sure but judging by their recent history they are having problems with executing their thesis.

  3. […] Eli: I don't write 13-page reports when I take losses.  (TraderHabits) […]

  4. chicagosean says:

    Can I complain about getting out of $ICE too early here? 😉

  5. […] – Dealing with loss(es). […]

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