A method for processing a video signal, comprising the steps of (A) generating a plurality of residual blocks by performing motion compensation on a current block of a video signal comprising a series of frames, where each frame comprises a plurality of blocks, (B) generating a plurality of rate-distortion costs for a plurality of bitstream segments generated for each of the residual blocks using a first transform, (C) determining a residual block having an optimal cost, and (D) transforming the selected block with the optimal cost using a second transform, where the first transform has a lower complexity than the second transform.