Fly Fishing the Stock Market: How to Search for, Catch, and Net the Market's Best Trades

CONCLUSION

From these examples, we begin to understand how our strategy-based analysis is implemented in an actual trade. Trade management—in the form of entry and exit—reminds us of the importance of each respectively and their influence on the overall return.

You may have noticed that three of the trades involved the same stock. In each instance, the trade set-up met my trade criterion, leading to successful outcomes. I don’t mind catching the same trophy trout repeatedly, and I don’t mind doing the equivalent in trading if the same stock repeatedly presents opportunities for profit.

By recapping trades according to the examples in this chapter, we improve all aspects of our trading behavior. I am convinced that these vivid details eventually seep into our trader DNA, which begins to gradually change and positively mold our mind and methodology.

When we return from a long day of fishing, our friends don’t ask us who had the best cast or the best strike. They don’t ask who did the best job landing a fish. They simply want to see pictures—trophies, if you will—of who caught the biggest fish. Similarly, many important steps combine to produce a “trophy trade”: the stock selection, analysis, write-up, entry, trade management, and profit exit. All are vital and important steps. You can do well in nearly all of them and err in just one, such as reeling in the profit, and it will hurt the trade return. To ultimately have a trophy hanging on the wall requires careful attention and execution ...