Lecture Notes: Trading with the Trend by Lance Bretstein

Overview

• Presenter: Lance Bretstein
  • Ex-Trillium top trader
  • Advisor at SMB Capital
  • Focus: Trading with the trend

Key Points of the Presentation

Introduction

• Importance of aligning trades with trends across multiple timeframes.
• Avoiding being long if a stock is below VWAP unless it capitulates.

Defining Trends

• Trends should be analyzed deeply and defined clearly.
• Types of setups based on the trend (A, B, C setups).
• Understanding the implications of trends helps build effective trading rules.

Trading Rules

• Never be long if a stock is below VWAP.
• Avoid trades in range-bound or consolidating stocks.
• Size trades larger when trends align across multiple timeframes.

Causes for Trends

• Trends begin with breaking news, catalysts, or exhaustion of the opposite trend.
• Trends end with capitulation, multiple large legs, consolidation, or counter-trending news.

Importance of Trading with the Trend

• Increases win rates and rewards by being with the majority of market participants.
• Minimizes drawdowns and avoids being stopped out.

Examples and Challenges

• Real-world examples of trading setups (Tesla, Workhorse, NVIDIA, etc.).
• Challenges for traders to define trends, create trading rules, and analyze market reactions.

Personal Trading Journey

• Bretstein's career evolution from struggling to top trader status.
• Importance of analyzing past trades to optimize future strategies.

Sentiment and Market Positioning

• Understanding market sentiment and positioning to avoid common trading pitfalls.
• Creating a mental checklist for sentiment to track market conditions.

Risk Management

• Importance of having trading stops and defined risk amounts.
• Risk management strategies based on setup quality and market conditions.

Final Thoughts

• Emphasis on the trend as a key component of successful trading.
• Encouragement to create a personal trading system with rules and detailed analysis.

Conclusion

• Trading is a continuous journey of learning and optimizing strategies.
• Stay with the trend and use these principles to improve trading outcomes.

Q&A Session Highlights

• Importance of choosing the right stocks with no news for mean reversion trades.
• Managing risk by having clear stops and a structured trading system.
• Sentiment analysis as part of the trading strategy.
• Strategies for recognizing and sizing up A+ setups.