Weekend Study Session – May 16, 2026
Read the transcript HEREKey Takeaways
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Entries Dictate Psychology: A poor entry puts you underwater immediately, causing you to trade from a mindset of fear and hope. A proper entry provides a profit cushion, allowing you to view normal market oscillations objectively as “healthy steps” in a staircase.
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The “Unusual Zone” Stop: Stops should be placed where the price action would behave abnormally (e.g., just below a major moving average or prior resistance floor). If a rubber ball stops bouncing in the driveway, the trade is broken and you exit.
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The “SMART” Process Hierarchy: You cannot have an actionable trade without defining your strategy and assessing the market first. Strategy defines how you intend to capture value, while market context determines if the environment supports the execution.
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Marry Actions to Rules: The ultimate trading failure is knowing the rule but refusing to execute it. Follow the “Dwight Schrute” principle: look at what an impulsive trader would do, and deliberately execute the opposite.
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The “House Money” Advantage: When an entry is clean and the position moves into a 2R or 3R multiple, you are effectively trading with the house’s money. This allows you to scale or “average up” on shallow pullbacks with absolute objectivity.
The Entry Matrix—Why Where You Buy Changes Everything
The Illusion of Stock Selection
Most retail investors spend 90% of their time scratching their heads over what stock to buy. They look for the perfect AI story, the hottest semiconductor headline, or the glitz of a new space ETF like NASA. But the professionals know a secret: The entry point matters more than the ticker symbol. You can take a chart that looks like toothpicks tossed on graph paper, and if you execute a low-risk entry, you can extract consistent capital while protecting your floor.
The Architecture of the Staircase
Markets do not ascend to “Mars” in a straight line. They move in waves—surging, pulling back, building a base, and surging again. These consolidation phases are the steps of a staircase. If you buy a breakout that is extended 30% above its 50-day moving average, you have zero profit cushion. The slightest downward oscillation leaves you weak psychologically and monetarily. You aren’t trading to win anymore; you’re simply hoping you don’t lose too much.
The “Adam’s Couch” Factor
Dan Fitzpatrick often speaks about the psychological fear of blowing up an account—the internal panic that forces traders to choke off their profits too early or ignore their stops entirely. The antidote to this fear is Tactical Flexibility. When you buy the bounce off a key support vector, your stop is tight and logical. If the trade works, you quickly move to a position of strength where you are playing with the house’s money. Now, you can let the stock breathe.
The Mercenary Discipline
Tomorrow morning, the opening bell will unleash millions of shares of volatility in names like Google and NVIDIA. As mercenaries of the tape, we don’t try to outsmart the institutions; we look for their footprints. If a breakout in a stock like Curtis Wright ($CW) fails, we take our disciplined 5% lick and move on. We would rather follow our rules and take a loss than break our rules to make a profit. In the grand matrix of trading, discipline is the only asset that compounds forever.
Strategy Session