How to Destroy any Trading Methodology

Posted on Feb 26 2016 - 1:28pm by Dan

How can you destroy your trading account?

It’s quite simple actually.

Trade without a process, and make highly emotional decisions, or decisions based on a ‘gut feel’.  I can nearly guarantee that you will reach your goal of burning through your account and destroying any long-term edge that you may have possessed.

I had an interesting interchange in the stocktwits stream earlier today.

As you you know, I had been bearish on both Apple (AAPL) and Disney (DIS) from the middle of December.  I said this repeatedly here at Sharpe Trade, as well as the stocktwits stream.

Pretty profitable ideas.  They followed my personal process.

Disney (DIS) – 4 Hour Chart
(via tradingview.com)

Disney_DIS_from-December

Apple (APPL) – 4 Hour Chart
(via tradingview.com)

Apple_AAPL_From December

Big deal.  They were only two thoughts on two trades, in what should be a career of taking on thousands and thousands of trades.  And may I add, they were also highly correlated, which is also a negative to me trying to claim a “genius win” here.  And I will ignore all of the trash talk I received for daring to be bearish on people’s darling stocks; such as Apple (AAPL) and Disney (DIS).  

I guess I’m just a brute.

Regardless, recently I somewhat revised my stance on these two individual names.  I stated regarding both Apple (AAPL) and Disney (DIS) …

Stocktwits-emotion-001

We even wrote an article about it

Stocktwits-emotion-002

So let’s be clear here.  I was throwing out a couple of thoughts.  For free.  I’m not going to give away my exact process.  But for the sake of idea velocity, I will throw out a couple of ideas.  And I was saying at this time, that it might be time, to possibly be thinking about how to get long both names.  Possibly.  And I was also quite clear that one would need a developed approach to trade management.  Which again, I offered …

Stocktwits-emotion-003

However, this morning, I dared to suggest that we were not seeing a close above $98.00 on either name …

Stocktwits-emotion-004

And at that point … it was on.

Now, I’m going to ‘blank out’ the names of the individuals involved.  Because I’m not interested in drama.  I’m not interested in some sort of ‘flame-war’.  I’m not interested in ridiculing individuals.  

I am interested in helping with an expert opinion, after professionally managing portfolios and nearly 20 years in this business.  And I am telling you, that if you want to blow up your trading account?  Be this emotional about your trades …

Stocktwits-emotion-005

Are you kidding me?  While I was talking about how to possibly be long your darling stock, I get blocked for daring to suggest something that was not happening?  Namely, consistent closes above $98.00?

Apple (AAPL) – 1 Minute Chart

Apple_AAPL_From December 001

So, while I was talking about how to be long this name, after a profitable short, someone’s feelings were so hurt by stating what actually happening on the tape, I receive a ‘block’.  Interesting.  

And it only continued …

Stocktwits-emotion-006

Wrong?  Wrong about what?  I never said that Apple would not close above $98.00.  I was laying out parameters for a possible thought on how to be long.  So I tried to explain the thought process …


Stocktwits-emotion-006a

To which I received …

Stocktwits-emotion-007

No … no.  That’s not what I said at all …

Stocktwits-emotion-008

Listen.  I’m not here to be a smart-alec, or start a flame war.  I am the expert here.  I have nearly 20 years in these markets, and I am willing to help with thought processes and how the concepts of trading plans, and trade management can be illustrated in real-time.

Have you ever wondered why more professionals do not try to help new retail traders?  You may have just read through one case example of why we choose not to speak up more often in a public venue.

Nothing I say is a trading recommendation.  I try to remain as calm and logical as Mr. Spock about any trade that I take on.  

Just please keep in mind that Mr. Spock is a really bad guy to piss off …

Leave A Response