+969% Return in 1 Year: The Pullback Strategy of a Trading Champion

Trading Journey and Initial Success 00:00

"I started trading in October 2020 with $3,300, around 10,000 Hong Kong dollars, and then I tripled my account in the first four months."

• The speaker began their trading journey in October 2020 with an account balance of $3,300.

• They experienced significant early success, tripling their account within the initial four months, likely benefiting from a bullish market environment.

Transition to Challenging Market Conditions 07:31

"In 2021, things started to get worse... I got a death by a thousand cuts."

• In 2021, the initial success reversed as market conditions shifted, leading to a challenging trading environment.

• The speaker faced multiple consecutive losing months, resulting in a nearly 50% drawdown, which was psychologically tough after an impressive start to their trading career.

Learning from Experience and Mentorship 08:39

"I still continued to learn new things... I came across Christian Kulamei in late 2021."

• Despite facing difficulties, the speaker remained committed to learning and evolving their trading strategy.

• They encountered a mentor, Christian Kulamei, who significantly influenced their trading approach during this tough period.

Strategic Development and Market Adaptation 10:13

"In 2023, I finally made my P&L curve reach an all-time high."

• Through further learning and adjustments, the speaker marked a notable turning point in their career in 2023 by achieving a new peak in their profit and loss (P&L) curve.

• This development not only reflects financial success but also indicates a deeper understanding of market feedback and personal trading strategies.

Trading Journey and Epic Comeback 10:46

"I kept trading and learning, and I finally made back the 50% drawdown since early 2021."

• The trader emphasizes resilience in the face of challenges and acknowledges that the year 2022 was particularly difficult, leading to a modest single-digit gain.

• Despite setbacks, their dedication to trading and learning paid off, leading to a significant recovery of losses by mid-2023, marking a pivotal moment in their trading career.

• By joining USIC in 2024, the trader sought to challenge and hold themselves accountable, resulting in an impressive return of over 280%.

Trading Style and Strategy Evolution 13:03

"I am a swing trader and mostly a trend follower who traded breakouts extensively until recently."

• The trader identifies as primarily a swing trader focused on following market trends and trading breakout strategies, particularly in the earlier years.

• Recently, there has been a noticeable shift in the effectiveness of breakout strategies, prompting the trader to explore pullbacks as a viable alternative entry point.

• They observed that many stocks were bouncing back from support levels, prompting a deeper investigation into trading pullbacks, which they initially studied from the short side.

Adjusted Risk Management Techniques 16:09

"I want to limit my stops to less than 3% or even 2.5%."

• The trader's strategy involves managing risk by limiting portfolio risk per trade to about 0.5%, with a flexible approach to position sizing based on market conditions.

• For smaller or micro-cap stocks, the trader reduces position size further due to higher gap-down risks.

• They emphasize the importance of trading faster-moving stocks, which they believe offer a higher potential return, while also maintaining tight stop losses to control risk effectively.

The Importance of Pullbacks in Trading 22:20

"Pullbacks give me a lot of potential tight risk entries that I could take."

• The speaker emphasizes that trading pullbacks provides excellent opportunities for entering positions with tight risk. This strategy allows for flexibility, as they are not limited to only trading breakouts or earnings per share (EPS) events.

• The speaker notes the occurrence of significant pullbacks within a strong market trend, particularly referencing last year when the market was trending upwards. They mention consistently watching for pullbacks to rising exponential moving averages (EMAs) as an entry point.

• Learning how to trade pullbacks contributes to an increase in the number of trades taken, enhancing trading activity and potential profitability.

Managing Losses and Tightening Stops 23:12

"I really limit the loss because in 2024, one of the areas of improvement is to fully respect my stop."

• The speaker reflects on their loss management, indicating that their average loss is smaller compared to wins due to tighter stop-losses. They acknowledge instances from the previous year where stops were ignored, leading to higher drawdowns.

• In 2024, they plan to implement stricter adherence to stop-loss rules to further decrease average losses. This includes avoiding trades where the stock price is significantly above the ideal entry point, specifically avoiding entering if it is up more than 3% from the low of the day.

Trading Style and Win Rates 25:00

"My win rate further decreased to 22%, but I don't really look at my win rate that closely."

• The speaker has noted a decrease in their win rate, which currently sits between 20% and 25%. Despite the low win rate, they maintain that this number is not a major focus for their trading strategy.

• The average holding period for winning trades has become shorter, likely due to an increased focus on shorting, which involves taking profits more aggressively. They commonly hold short positions for only two to three days.

Indicators and Trading Conditions 26:05

"I use three indicators: the EMAs, the 9, 21, and 50, and I also include the 150."

• The speaker integrates several EMAs into their trading strategy, applying them across all time frames. They also incorporate dollar volume metrics rather than just share volume to gauge trading conditions effectively.

• The speaker emphasizes how market conditions significantly influence their trading decisions, noting that they tend to focus on which strategies are currently yielding better results—pullbacks or breakouts—depending on the prevailing market environment.

Risk Management and Position Sizing 33:13

"I set my stop really tight, mostly under 2.5%."

• The speaker advocates for using tight stop-loss orders, indicating that this approach allows for better risk management and greater potential profitability. Tighter stops can enable larger position sizes while still keeping overall risk within manageable limits.

• They explain the mathematical advantage of maintaining tight stops, noting that even with a significant number of losing trades, a strong overall return can still be achieved through a disciplined approach to sizing and stop-loss strategies.

Sizing Trades and Stop Loss Strategy 33:47

"So that's probably how I size my trades."

• The trader discusses their approach to sizing trades based on the percentage of their portfolio they are willing to risk. For example, when risking 5% of their account, they might set a stop loss of 1.5% and size their trades at about 20% of the portfolio.

• At times, they choose tighter stops of 1.2% or even 1% to increase the size of their positions to 25% or 30% of the portfolio. The emphasis is on a calculated risk management strategy that adapts as the trader gains experience.

• Early in their trading journey, the trader did not set tight stops, often using stops of 5-7%. However, after learning from a mentor, they started to tighten their stops, aligning them with breakout levels or earnings per share (EPS) announcements to minimize potential losses.

The Importance of Adjusting Trading Strategies 36:51

"As you progress, as you trade more, you should adjust it a little bit to make it more suitable for you and develop your own style."

• The trader explains the necessity of evolving one’s trading methodology based on personal experiences and results. New traders are encouraged to emulate successful traders as they start but should gradually adjust strategies to better suit their own trading personality and propensity for risk.

• The process of optimizing one's trading style is essential for long-term success. The trader illustrates this by sharing their experience of tightening stop losses from 5% to less than 2.5%, indicating a deliberate effort to adapt their approach.

Risk Management and Equity Curve Volatility 37:41

"You're risking very little with tight stops, allowing you to get upside when the trade works in your favor."

• A discussion on the psychology of trading reveals that using tight stops helps alleviate fear when entering new trades. By managing risk effectively, traders can take new positions without the anxiety of substantial potential loss.

• Despite the impressive performance metrics, with returns exceeding 900%, the trader emphasizes that the key is in minimizing risk per trade rather than taking large risks. This proactive management leads to a more stable equity curve, avoiding large drawdowns that could destabilize a trader's confidence.

Managing Margin in Trading 40:40

"I am like maybe 280% long last year at most, but I wasn't sizing into all positions at once."

• The trader reflects on their use of margin, explaining that they historically used a margin of up to 280% long. They note that the decision to increase their margin depended heavily on market conditions and how well their existing trades were performing.

• The trader emphasizes that a disciplined approach involves monitoring existing positions and adjusting margin usage based on their performance. They argue that limiting risk per trade is more important than setting strict caps on the maximum margin size used.

Position Management During Trades 43:59

"Normally, I would enter three to four positions in a day."

• The trader mentions that they typically hold between three to four positions under stable market conditions but may increase this to six or seven if the market is strongly trending.

• They share an example from the previous year where they had as many as eleven positions at one point, illustrating a responsive trading style that adapts to opportunities as they arise.

• The trader also notes that they often enter new positions quickly when favorable conditions present themselves and tend to manage positions actively by cutting losses and scaling in for potential gains.

Trade Management and Drawdown Reflection 45:34

"December was particularly disappointing. I experienced a 26% drawdown due to mistakes I plan to discuss later."

• The speaker reflects on their trading performance in December, highlighting a significant drawdown that affected the overall success of the year. The goal was to limit drawdowns below 15%, but the trading strategy faltered in challenging market conditions.

• They acknowledge that while they performed well for the first eleven months, a poor December can overshadow previous successes, leading to feelings of starting over from zero.

Overtrading and Poor Decision-Making 49:10

"In December, I took around 70 to 80 trades, and I believe 46% of those were poor trades that should not have been executed."

• The speaker emphasizes the negative impact of overtrading during the chaotic market of December, noting that many trades lacked proper analysis or adherence to their usual trading rules.

• They mention the problem of switching frequently between long and short positions, which created a cycle of losses and frustration. This behavior led to taking on unnecessary risks without sufficient follow-through from trades.

Lessons for Future Trading 52:50

"I want to trade less and specifically take fewer shorts. It's important to avoid making overly bearish assumptions in a market that is still demonstrating strength."

• Moving forward, the speaker expresses a desire to reduce the number of trades executed, particularly on the short side, in order to manage risk more effectively.

• They also reflect on their tendency to be overly negative regarding certain market sectors, acknowledging that while some stocks may decline, others can continue performing well. This realization emphasizes the need for a balanced perspective and awareness of market dynamics when making trading decisions.

Reflecting on Trading Adjustments 57:18

"Yeah, I did size down. The equity curve is getting shallower and shallower with pullbacks."

• The trader discusses the impact of sizing down their trades, noting that while the equity curve is stabilizing, it represents a trend of diminishing returns with pullbacks becoming less pronounced.

• They mention that initially switching between short and long positions caused significant damage, highlighting the importance of consistent strategy application.

Observations on Pullbacks in Trading 57:58

"I observed especially in the first 30 to 60 minutes after the market opens, stocks that are higher pre-market tend to get slammed."

• The trader has noted a pattern where stocks that gap up at market opening often face severe pullbacks, taking out the day's low before finding support and reversing direction.

• They have identified common chart formations that illustrate this behavior, suggesting many stocks exhibit the same pullback and recovery patterns.

The Strategy of Trading Pullbacks 59:16

"I think pullbacks generally provide more low-risk entry points, and the stop is tighter too."

• Pullbacks are favored as they typically offer better entry prices than breakouts, allowing traders to buy into support levels rather than entering at higher breakout prices.

• This approach not only improves average entry prices but also reduces the risk associated with trading, as pullbacks commonly revert to established support or moving averages.

Market Conditions Influence Trading Strategies 01:02:42

"I think I'm going to keep trading the same way... but the entry points or the setup could change based on market conditions."

• The trader emphasizes the need to adapt to market conditions while maintaining their current trading methodology, particularly in setting tight stops and focusing on lower win rate trades.

• They plan to adjust their strategies based on whether stocks are exhibiting clean pullbacks or are choppy around support levels, indicating a responsive trading style.

Utilizing Indicators for Pullback Identification 01:06:00

"I think I also wanted to introduce the angle VWAP because I use it a lot when buying pullbacks."

• The trader highlights the significance of using the anchored VWAP as an effective indicator for identifying support and resistance levels during pullbacks.

• They express a strong reliance on this tool, suggesting that it enhances their ability to make informed trading decisions, particularly as they integrate it into both daily and intraday analyses.

Analyzing Support and Resistance Levels 01:08:52

"When these support levels are lining up, those are the key levels that I wanted to engage in."

• Traders can identify key entry points by observing where multiple support levels, such as the angle VWAP and 9 EMA, align. These points have a higher probability of leading to successful trades.

• It's noted that on certain days, like specific pullbacks, engaging with the stock at these critical support levels can offer a significant edge.

Pullback Strategies and Indicators 01:09:40

"If a trader buys at the anchor VWAP, at the 9 EMA, or at previous highs or support levels, there would be the highest probability points that the stock will find support."

• The anchor VWAP is highlighted as a valuable tool for identifying potential support and resistance levels. It collects price and volume data from a specific period, helping traders see whether buyers or sellers are currently in control.

• Successful trades often occur during the first pullback into these defined support levels, which may include various EMAs.

Effective Use of the Anchor VWAP 01:12:50

"The most important part is whether the price is reacting and whether it really works."

• The anchor VWAP is effective not just for long positions but can also be applied strategically for short trades. It provides traders with reliable support and resistance levels when assessing market conditions.

• Traders can leverage the anchor VWAP in both bullish and bearish scenarios, enhancing their ability to spot high-probability entries.

Historical Examples of Pullback Patterns 01:17:15

"Pullbacks and breakouts are not completely opposite sides of trading; they can work together."

• Historical patterns demonstrate how the anchor VWAP can be used effectively to call both bullish and bearish setups, especially during volatile market environments.

• Using past instances, such as notable price action around the anchor VWAP during significant market corrections, reinforces the indicator's reliability in various trading scenarios.

Adjusting the Anchor VWAP for Optimal Entry 01:19:38

"Sometimes I'm going to adjust it a little bit to find the best candle."

• The approach to setting the anchor VWAP may vary; traders should be prepared to fine-tune it based on price action to maximize entry points.

• It's essential to assess how the price reacts to the anchor VWAP throughout market trends, allowing for strategic adjustments to better capture potential trades.

Adjusting Entry Points for Effective Trading 01:20:05

"You just can't get a very tight entry, and if you're trading pullbacks, then you may catch an uptrend on this pullback here."

• When trading breakouts, it can be difficult to find a precise entry point, particularly during volatile market conditions.

• However, focusing on pullbacks can provide opportunities to enter stocks that are currently in an uptrend.

• Pullbacks can create more favorable entry points in strong stocks, allowing traders to better capitalize on market movements.

Understanding Breakouts and Pullbacks 01:23:02

"I’m not going to randomly buy any pullbacks or any pullbacks into the anchor VWAP or any EMAs."

• Successful trading involves more than simply jumping on any pullback; it requires a strategy based on careful analysis.

• Recognizing significant price movements can help traders identify stocks that might be changing direction.

• A favorable setup often includes observing the stock pulling back and establishing higher lows, especially when aligned with key moving averages like the 9 and 21 EMA.

Using EMAs for Timing Entries 01:25:01

"If it’s starting a new uptrend, then it’s probably a good level where I can find an entry."

• EMAs can act as crucial support levels during an uptrend, guiding traders on where to consider entering positions.

• It’s important to wait for a stock to confirm support at these moving averages, indicating a potential for upward movement.

• If a stock fails to maintain above these levels and is rejected by a declining EMA, it could signal a reversal or further decline.

Analyzing Price Actions and Chart Patterns 01:28:54

"Sometimes I’m just trying to plot the anchor VWAP anywhere to see whether it works or not."

• Traders should experiment with plotting technical indicators like the anchor VWAP to see how they interact with price movements.

• Observing whether the stock respects the VWAP can provide insights into its current trend and potential entry points.

• If a stock is establishing resistance below key indicators (like EMAs), it may not be the best scenario for initiating long positions.

Analyzing SNDK: Support and Indicators 01:31:37

"There's an opportunity for a pullback buy here near the 21 EMA, and the angle shows multiple touches on the angle below the EMAs."

• The speaker identifies a potential buying opportunity in SNDK, specifically around the 21 EMA level, suggesting that the stock is demonstrating constructive movement with several touches at key angles indicating support.

• Despite recognizing the opportunity, the speaker expresses hesitance in pursuing a long trade, as SNDK is currently in a consolidation phase.

Weekly Chart Perspective 01:34:24

"When the stock is basing, especially in consolidation areas, I love to look at the weekly chart."

• The weekly chart reveals that the nine EMA remains above the 21 EMA, indicating a potential upward trend despite poor daily performance.

• The speaker emphasizes the importance of analyzing longer time frames as they often provide a clearer picture of the stock's overall trend, which may not be evident in the daily chart.

Importance of Multi-Time Frame Analysis 01:34:24

"The weekly can really give you a clearer picture compared to the daily chart."

• The speaker discusses how the daily metrics can sometimes mislead traders, especially when the stock appears weak, yet the weekly indicators suggest a more bullish trend.

• They highlight the significance of switching between daily and weekly charts to confirm trends and ensure that traders do not become overly bearish based on short-term fluctuations.

Breaking Down Entry Points 01:38:25

"Once you spot an opportunity where it broke above the anchor VWAP, that's when you shift over to the intraday chart."

• The speaker notes the importance of confirming setups with lower time frame charts after identifying strong signals on higher time frames.

• They discuss their preference for a V-shaped recovery during intraday trading, indicating strong buyer interest when the stock rebounds sharply after tests of support.

Evaluating Pullback Opportunities 01:39:31

"This is also a very good pullback opportunity when the stock finds support above the EMAs and the angle VWAP."

• When analyzing pullbacks, the speaker emphasizes the need to monitor how the stock reacts to crucial support levels, particularly around EMAs and angled VWAP.

• They also mention the strategic value of catching pullbacks to gaps, which may serve as key levels of interest for traders looking to re-enter positions.

Adjusting the Angle VWAP for Better Accuracy 01:43:30

"It's really an art to find the best angle that the price reacts to the most and respects."

• The speaker discusses the importance of adjusting the angle of the Volume Weighted Average Price (VWAP) to align with significant reaction points in the price chart.

• This adjustment can improve the accuracy of the VWAP in predicting price movements.

• The speaker suggests positioning the VWAP at key reaction points rather than at the beginning of the daily chart, where the price may not show respect.

Identifying Key Swing Points in Intraday Trading 01:45:20

"If you're putting it into the swing low in the intraday, you can find the price reacts better."

• The importance of correctly identifying swing lows in intraday trading is emphasized.

• By aligning the VWAP with swing lows, traders can identify potential entry points where the price may react more favorably.

• The speaker mentions that using anchor VWAP in conjunction with moving averages, such as the 50 EMA, can help define strong support levels.

Recognizing Reversal Patterns for Strategic Entries 01:46:40

"This huge reversal from the downside shows good support and is a really important candle to determine whether the stock is finding support."

• The conversation transitions to the identification of reversal patterns in candlestick charts, particularly highlighting huge green candles that signify support.

• Such candlestick formations can indicate the start of an uptrend, thereby providing strategic entry opportunities for traders.

• The speaker notes that pricing consolidating near key VWAP levels and EMAs indicates strong market sentiment and potential for upward movement.

Learning from Losing Trades to Improve Trading Strategy 01:52:45

"The losers give you more benefits than the winners in improving your trading."

• The speaker reflects on a losing trade involving UPS, admitting that the entry point was too aggressive.

• Hindsight shows that buying in an overly extended market can lead to poor outcomes, stressing the importance of maintaining conservative entry strategies.

• There is an emphasis on the need for traders to adapt their strategies based on market conditions to avoid aggressive positions that are more prone to failure.

Pullback Strategy and Entry Points 01:55:46

"I bought it at this candle. It's right after the two tight candles, an inside bar, and then I bought, which I believe is a pullback."

• The speaker discusses an entry point for a stock, indicating that they initiated their position after observing two tight candles followed by an inside bar. This suggests a potential reversal or continuation pattern.

• They emphasize the importance of looking at intraday charts, particularly the one-minute and five-minute charts, to identify the breakout point above the previous bar's high.

• The focus is on looking for a fast flush to the downside that hits support levels identified through the hourly nine and 21 EMA (Exponential Moving Average) before considering entry.

Setting Stops Strategically 01:58:19

"Normally, I would set my stop at the low of the day, but sometimes the stop may be too wide."

• The speaker explains their approach to setting stop-loss orders, noting that while they typically set stops at the low of the day, they adjust this based on market conditions and price action.

• They highlight the importance of assessing the width of the recent candle, indicating that sometimes they find it more beneficial to set stops at the low of the breakout bar or the previous bar instead.

• Achieving a balance between risk management and ensuring enough room for the trade to develop is crucial in their strategy.

Risk Management and Learning from Losses 02:03:24

"If you're taking one, two, three, four, five trades, then you start getting added small losses."

• The speaker reflects on the impact of multiple small losses that can accumulate over time, underscoring the importance of carefully evaluating each trade's timing and placement.

• They acknowledge that entering trades at the wrong time, especially during pullbacks that don't show signs of strengthening, can lead to a series of unsuccessful attempts.

• This serves as a reminder that continuously learning from both winning and losing trades is essential in developing a successful trading strategy.

Characteristics of Weak Stocks 02:02:18

"Buying purely into the nine EMA definitely isn't a good strategy when the stock is in a strong downtrend."

• The speaker discusses the characteristics of a failing stock that is trending downwards, suggesting caution when considering buys based purely on brief pullbacks into the nine EMA.

• They note that when a stock does not close strongly or establish higher lows during potential bounce attempts, the probability of the trade succeeding diminishes.

• The significance of analyzing broader market trends and resistance levels becomes evident, as weak stocks often fail to perform as anticipated despite favorable entry points.

Evaluating Short Trades Based on EMA and Market Context 02:07:20

"I took away that sometimes I shouldn't just purely short a pullback into a declining 9 or 21, especially when the weekly is looking good."

• The trader discusses a short position based on the stock being above the 50-day moving average and using declining EMAs for entry.

• They recognize that their risk-reward ratio was not favorable, especially since the stock was likely to find support around the 50-day and 9-week EMA.

• The analysis highlights the importance of assessing the weekly chart context before making trade decisions, drawing lessons from the experience.

Mistakes in Aggressive Entry during Pullbacks 02:09:01

"I think this entry is really bad; I was just being too aggressive on the intraday."

• A trade in SoFi is examined where the trader bought during a pullback into the hourly 21 EMA without consideration of the daily structure, which was extended.

• They express regret about missing the initial bounce and being eager to enter, leading to poor trading decisions.

• The closing price action confirmed that the setup was not favorable, reflecting on the need for patience and better assessment before entering.

Learning from Long Trade Attempts 02:11:19

"I see the first huge green candle which closed above the 50, and I thought it would be a character change."

• The trader reflects on a long position in AO based on a perceived breakout after a consolidation phase and the expectation of support from the EMAs.

• They employed a tighter stop loss to minimize loss margin but were unsuccessful as the trade ultimately failed.

• This trade emphasizes the ongoing challenge of ensuring that the overall market structure aligns with the chosen strategy, and the importance of recognizing when reversals do not materialize.

Poor Trade Choices and Market Conditions 02:14:01

"I bought it at the resistance; it should have been a short because it's rallying into the declining EMAs."

• The trader identifies a bad trade on an unnamed stock where they entered at resistance levels instead of opting for a short position against declining EMAs.

• They illustrate the difficulty of trading in choppy market conditions, where whipsaws and lack of follow-through on trades led to multiple stop-outs.

• The trader realizes the need for a more disciplined approach to avoid making impulsive decisions in insecure market environments.

Struggles with Market Dynamics and Choppy Conditions 02:16:33

"I keep getting stopped out, and the next day or the next day the stock starts to move in my original direction."

• The trader shares their experiences with trading Nvidia, where they attempted to capitalize on short positions without waiting for proper pullback confirmations to the EMAs.

• They notice a pattern of being stopped out, only for the stock to behave as initially anticipated the following day, indicating potential internal conflicts regarding timing and trading strategies.

• The frustrations underline a vital lesson about remaining patient and adapting strategies to avoid overtrading in turbulent markets.

Struggles with Short Selling in December 02:19:10

"This is really hard in December for me; the short follow-through has been very limited."

• The speaker expresses frustration over their trading experience in December, describing the market conditions as challenging with many false signals. They attempt to short Nvidia but find that their trades keep resulting in losses after brief moments of movement.

• They highlight a specific trade on QBTS, where they aimed to short at the 50 EMA during a pullback, but the market moved too quickly, and their stop-loss was wide, leading them to miss the ideal breakdown.

• This pattern of missed opportunities is underlined by comments about the market's volatility, causing them to oscillate between shorting and longing without successful trades.

Recurring Theme of Frustration and Losses 02:21:41

"Most of them are really death by a thousand cuts."

• The speaker notes that they did not experience any singularly significant losses in December but rather a series of small losses that cumulatively impacted their performance.

• They reference having given back profits gained from successful trades in November, emphasizing how these losses compounded the drawdown for December.

• The speaker mentions switching strategies between long and short positions, which resulted in further losses and increased the overall negative impact on their trading results.

Reflections on Largest Losses 02:23:52

"The largest loss in last year would be this gap down, a 35% gap down."

• When discussing their largest losses from the previous year, the speaker cites a gap down that resulted in a significant loss of 35%.

• They reminisce about another substantial gap down and suggest that these large moves highlight the volatility of the stocks they were trading.

• The speaker suggests that larger losses often arise from gaps and sudden changes in momentum, emphasizing the unpredictability of the market.

Importance of Analyzing Past Trades 02:25:26

"It's important to study your past trades to find patterns in your trading results."

• The speaker stresses the value of reviewing past trades to derive insights that can inform future decisions.

• They note that their most successful trades often involve optimal timing, where they entered the market at the right moment rather than making impulsive decisions.

• This analysis underscores the significance of having a disciplined approach and the ability to recognize successful trading patterns, which can lead to better trading outcomes.

Identifying Trading Themes and Stocks 02:30:50

"I go through all the watchlists and do scans to identify stocks and themes in real-time."

• The speaker emphasizes the importance of themes in trading and highlights the process of scanning through multiple watchlists regularly. This helps in identifying stocks that fit these themes.

• They utilize predefined scans, particularly during pre-market hours, to spot potential stocks exhibiting significant movements, especially gap-ups.

• The approach includes looking for stocks within the same industry that are showing strength, allowing the trader to discern possible emerging trends. For example, if mining stocks show strength during a down day for the overall market, it signals the existence of a resilient sector.

Monitoring Watchlists and Adjusting Stock Selections 02:33:15

"I frequently upgrade or downgrade stocks in my watchlist based on their performance."

• The speaker mentions the dynamic nature of their watchlist, allowing them to adjust stock selections based on recent activity and performance trends they observe.

• They are attentive to themes that emerge from this watchlist, particularly when several stocks demonstrate strength simultaneously, raising their interest for potential trades over the coming days or weeks.

Analyzing Individual Stock Performances 02:33:30

"I track individual stocks for signs of strength, such as higher lows, to determine the right time to enter a trade."

• The analysis focuses on specific stocks, for instance, BBAI, where the speaker notes a breakout from a previously weak performance range. This breakout leads to notable observations of strength and the formation of higher lows, indicating potential for further upward movement.

• There is a recognition of the importance of timing and the need for stocks to show strong rebounds above critical moving averages to confirm their strength and avoid potential declines.

The Importance of Strong Entry Points 02:35:08

"I look for potential entry points, considering the overall market structure and specific stock strength."

• The speaker discusses a specific trade on BBAI, noting how initial weakness was followed by strength as the stock closed strong, suggesting a buying opportunity.

• They indicate that while waiting for ideal setups is crucial, stocks can also sometimes break out quickly without forming a tightly defined setup, necessitating a flexible trading approach.

Parabolic Longs and Timing the Market 02:38:18

"I recognized the market was in panic mode, and I identified an opportunity to enter at a parabola low."

• In another example, the focus shifts to a trade involving the Triple Qs, where the market showed significant downward movement.

• The trader was keenly aware of the market conditions, waiting for a moment to capture long opportunities after panic sell-offs, which they view as temporary.

Selling Strategy and Managing Profits 02:41:30

"I locked in profits near resistance levels, knowing the volatility was significant during this period."

• The speaker describes their selling strategy, which involved selling near key resistance points while being cautious of the market's volatility.

• They aimed to balance between riding upward trends and securing profits, demonstrating an understanding of trading risks during tumultuous market conditions.

The Pullback Strategy and Its Execution 02:42:04

"I really planned this trade beforehand, thinking it would be a good idea after the first or second huge red candle."

• The trader emphasizes the importance of advance planning in executing trades, particularly after observing significant downward movements in stock prices.

• They noted that they executed their plan effectively, entering and exiting the trade at favorable levels while maintaining profits.

• The strategy discussed involves identifying rare opportunities that can arise after sharp sell-offs, which can occur infrequently—perhaps only once a decade.

Reflecting on Past Trades and Learning from Mistakes 02:43:23

"You can actually improve by constantly learning and finding your own mistakes to prevent them from happening again."

• The trader reflects on their journey from past experiences, comparing their current strategy to earlier trades, such as those made with GameStop (GME).

• The discussion highlights how traders can evolve, learning to make more informed decisions, such as shifting from buying at parabolic tops to identifying entry points during pullbacks at parabolic bottoms.

• The essence of this learning process is to continually assess and refine strategies based on past mistakes and market behavior.

Trade Analysis of "Hood" after the April Correction 02:44:41

"I bought the breakouts on this small little base, believing it would perform strongly."

• The trader details the decision-making process behind trading the stock "Hood" after recognizing it as a market leader following a correction in April.

• They leveraged technical indicators, such as the angled VWAP and EMAs, to decide on entry points, noting that the stock showed strong price action and support.

• The trader acknowledges the importance of observing price action and identifying the right moments to enter trades in a fundamentally bullish environment.

Selling Strategy and Areas for Improvement 02:46:53

"If I'm just following my sell rules, I could actually hold my winners longer."

• Reflecting on their selling tactics, the trader admits to not adhering strictly to their sell rules and opting to liquidate positions during strengths, rather than trailing stops effectively.

• They recognize that controlling downside risk is crucial, yet there is a need to enhance their selling strategies to maximize profits on successful trades.

• Setting clear rules for exits based on indicators such as the 9 EMA can improve overall performance and prevent premature selling.

Hindsight Analysis of Trade Decisions with "Aqua" 02:49:20

"In hindsight, the technical setup for this breakout wasn't very strong."

• The trader evaluates their trade on "Aqua," acknowledging that the initial setup indicated potential weaknesses, particularly with the stock positioned below the 50 EMA.

• They highlight the importance of learning from each trade, noting that a pullback could have presented a better entry point and that maintaining awareness of market trends is crucial.

• Despite initial doubts, the trade was ultimately successful, leading to further reflection on the choice to enter and exit positions based on evolving market dynamics.

Reassessing Trading Strategies 02:54:23

"I think I took it too aggressively... maybe the market is extended and I should sell my shares more aggressively."

• The trader reflects on their previous trading decisions, acknowledging that they entered a position too aggressively. They express concern that the overall market may be too extended, given that it has been rallying for three consecutive months without a significant pullback.

• They identify their approach to selling as being flexible, stating, "if I'm feeling skeptical about the market, I often take profits early." This indicates that they adjust their strategy based on their market sentiment.

Position Sizing and Exiting Trades 02:56:11

"Your first sell into strength is usually 15 to 20% of your position."

• The trader discusses their strategy for selling into strength, noting that the initial sell often represents 15 to 20% of their position. This approach is conservative, particularly when entering new trades or establishing positions.

• As they gain confidence in the market's uptrend, they may adjust their selling strategy, opting to hold onto more of their position instead of selling into strength, allowing them to trail their stop losses with EMAs.

Entry and Stop Loss Techniques 02:57:15

"Looking backwards, the best strategy would be pullbacks into the 21 EMA."

• The trader analyzes a specific trade, admitting that while they entered on a breakout, there could have been better entry points, specifically during the pullbacks to a notable moving average (EMA).

• They emphasize the importance of setting stop-loss orders at strategic levels, adjusting their stops based on market behavior and breakout candle formations.

Calculating Position Sizes 03:02:53

"If I have a $10,000 account and I'm risking 0.5% of my account, it would be $50."

• When determining position sizes, the trader measures the range of the breakout candle in relation to their stop level to assess risk. They provide a formula for calculating position size based on their account size and risk tolerance.

• An example is given where they risk 0.5% of a $10,000 account, leading to a calculated position size that ranges approximately around 20% of their account. This systematic approach helps maintain consistency in their trading strategies.

Mindset on Position Size Adjustments 03:05:10

"A lot of traders don't trade successfully because they don't size up."

• The trader shares insights on developing the right mindset for position sizing, suggesting that many traders fail to achieve success because they do not adjust their position sizes as their account increases.

• They mentor on the importance of thinking in percentages and scaling accordingly with account growth, encouraging maintaining a disciplined approach to sizing trades for consistent results.

Importance of Percentage Thinking in Trading 03:06:08

"I learned this knowledge really early in my career to think in percentage terms rather than absolute dollar amounts."

• The speaker emphasizes the significance of focusing on percentage gains and losses instead of absolute dollar values. This approach allows traders to assess their performance based on risk and potential return, making their overall strategy more effective.

Trade Analysis: The INQ Setup 03:06:37

"I caught this really strong uptrend at the right at the beginning of the move."

• The speaker describes the trade involving the stock INQ, noting its strong uptrend and favorable setup on the weekly chart. While the daily chart appeared messy with fluctuations, the weekly chart showcased a cleaner, stronger setup highlighted by key patterns such as a pin bar and an inside week.

Trade Management: Tight Stops and Loss Compensation 03:08:54

"A good trade could give you more than 20 or even 30 hours, which compensates for your previous losing trades."

• The conversation shifts to trade management, emphasizing the importance of setting tight stops. This strategy allows traders to manage their risk effectively, as one successful trade can potentially offset multiple losses, reinforcing the need for disciplined entry and exit points.

Selling Strategies: Strength and Weakness 03:10:08

"I sold the remaining position into weakness to lock in decent profits."

• The speaker discusses their decision-making process when selling a portion of their position. They opted to sell into weakness, which indicates their cautious approach in a volatile market. This strategy helps secure profits while mitigating the risks associated with holding.

Relative Strength Analysis Among Stocks 03:16:38

"The most important factor is the relative strength among all stocks in the same theme."

• In discussing multiple stocks within the same sector, the speaker highlights the method of prioritizing trades based on relative strength. They suggest that the strongest stock will typically offer the best opportunity, which is critical for maximizing returns in a competitive trading environment.

Picking Stocks: Analyzing Relative Strength and Candlestick Patterns 03:17:37

"I would like to look at the relative strength in the days leading up to the breakout day."

• The speaker emphasizes the importance of analyzing relative strength one to three days before a significant breakout. This analysis helps in selecting the right stocks to trade.

• They refer to specific candlestick patterns, noting that an inside bar indicates a tightening volatility which can signal a potential entry point.

• They mention prioritizing stocks with the highest dollar volume for increased liquidity, which reduces slippage and generally enhances the likelihood of a successful trade.

Momentum Trading with Pullbacks: Strategy Insights 03:19:11

"I bought at the pullback on the daily 9 EMA."

• The speaker shares their experience of trading Tesla during a pullback to the daily 9 EMA, acknowledging it was a riskier entry point but excited about the stock's potential.

• They explain that while entering at the 9 EMA typically has a lower win rate, it was crucial to gauge overall market strength and take calculated risks.

• They describe looking for confirmation of higher lows and tighter ranges which often lead to stronger moves, reiterating the importance of back-testing various entry strategies.

Analyzing Trade Execution Techniques 03:22:01

"I bought the one-minute breakout after identifying support levels."

• Discussing trade execution, the speaker explains their decision to buy a one-minute breakout upon observing pullbacks to key support levels such as the 21 EMA.

• They highlight the significance of identifying entry points based on expected market behavior, notably looking for opportunities after gap-ups during market openings.

• The mention of setting stop losses is particularly relevant in maintaining risk management and protecting against extended drawdowns.

Reflections on Trades and Market Behavior 03:26:43

"The first breakouts after a long base provide the best risk-reward."

• The trader reflects on the importance of targeting breakouts after longer bases, which historically yield better risk-reward ratios compared to shorter or intermediate pullbacks.

• They note how market conditions, such as September's trends, influenced their decision-making process, including a cautious approach leading to early exit from some trades.

• The idea of unexpected moves, such as gap ups, is emphasized as a key factor in trading, reinforcing the need for flexibility and attentiveness to market dynamics.

Analyzing Breakout Trades 03:29:19

"This inside bar breakout is significant, and I like to sell into strength while being cautious not to sell all at once."

• The speaker discusses an inside bar breakout trade, considering it significant although it's close to the prior low. They prefer to hold positions longer, even when feeling skeptical about extension.

• They emphasize the strategy of selling into strength rather than liquidating the entire position at once, which allows for capturing potential additional gains.

The Importance of EMA Convergence 03:30:50

"The EMAs converging signal a strong potential reversal, suggesting a good entry point."

• The speaker identifies a strong reversal characterized by the nine and twenty-one EMAs converging after a gap down. This convergence indicates bullish signals.

• They highlight the tight range of the past two days but remain optimistic about a breakout due to the strong support, noting the importance of EMAs in determining market conditions.

Trading Gold Miners ETF as a Strategy 03:33:25

"I decided to short the gold miners instead of trading gold directly, believing they move faster."

• The speaker shares their decision to short the gold miners ETF rather than gold directly, citing that commodities can be tricky with 24-hour trading.

• They consider the recent market conditions and acknowledge their luck in avoiding a significant gap down after taking their position in the ETF.

Managing Short Positions and Taking Profits 03:36:37

"I prefer to take profits quicker on shorts, typically within the first two to three days after establishing my position."

• The speaker explains their strategy of closing short positions into strength much sooner than long positions, which they may hold for a longer time.

• They illustrate this by discussing their recent experience with short positions, including the mathematical edge of shorting compared to going long.

Navigating Market Conditions for Entry 03:38:44

"An unfavorable market can turn even ideal entries into losers, so market conditions heavily influence my trades."

• The speaker reflects on how market conditions significantly impact trade outcomes, noting that a good market can yield favorable results from less-than-ideal entries.

• They share their insights on entry criteria based on hourly trends and market reversals, stressing the importance of setting stops and managing risk effectively, even when breaking personal rules.

Pullback Trading Insights 03:41:33

"I think this is just a pullback to the nine, but it's also a little bit close to the 50 EMA and the previous highs."

• The speaker discusses their approach to trading pullbacks, particularly referencing the use of the 9 EMA and 50 EMA as key indicators for potential shorting opportunities.

• They mention shorting a stock after it approached the declining 9 EMA, pointing out that even with significant downward movement indicated by a red candle, the situation can still present a favorable risk-reward ratio.

• There's an acknowledgment that the current market conditions may require a more cautious approach towards shorting, especially in an uptrending market.

Ideal Short Setups 03:43:44

"The picture-perfect setup would be the first breakdown of the 50 EMA followed by a pullback into the 50 EMA."

• An ideal short setup involves a stock breaking below the 50 EMA, with a subsequent pullback towards that EMA.

• The speaker notes that effective setups might involve the stock also approaching the 21 or 9 EMAs while demonstrating a curling action downward.

• Specific price levels are highlighted as potential points for short entries, indicating that the conditions for ideal trading setups need to be tightly defined.

Situational Awareness in Trading 03:46:40

"Your own trade feedback is the most important factor when determining market direction."

• The speaker emphasizes the importance of analyzing their own trading feedback to gauge whether to focus on long or short positions.

• They monitor key market indices regularly, citing the cues and the IWM as major indicators of overall market strength or weakness.

• The analysis of market pullbacks and movements directly influences their strategy, illustrating the need for flexibility and responsiveness to changing market conditions.

Pre-Market Routine 03:52:16

"I will start my pre-market routine maybe 45 minutes to one hour before the market opens."

• The speaker begins their trading day with a structured pre-market routine that includes scanning for opportunities across various stocks.

• This preparation is essential for entering the market with the right mindset and being ready for potential trading actions as the market opens.

• The emphasis is on being aware and prepared, highlighting the connection between routine and successful trading outcomes.

Analyzing Market Conditions and Trading Strategies 03:52:53

"I'm just going through all of them and see whether there are any good setup, good entry points, or are there any huge gap downs or gap ups that are really worth my attention."

• The speaker discusses reviewing their watchlist and existing positions to identify potential trading setups and entry points. They emphasize the importance of paying attention to significant market movements, including gap downs or ups.

• They notice concerning signs, such as ugly price reversals in stocks like Joby, which lead them to suspect that overall market breath may be declining and that the market could be losing momentum.

• The speaker recognizes the need to remain prepared for potential further downsides or corrections, particularly in light of previous market experiences from December. The discussion highlights the significance of technical indicators like EMAs (Exponential Moving Averages) in assessing stock weaknesses.

Daily Trading Practice and Study Habits 03:54:20

"Honestly, for the past one to two years, I mainly did my study within the trading hours... I'm just randomly scrolling charts and finding potential entries."

• The speaker outlines their approach to daily practice, which predominantly occurs during market hours, usually one to two hours after the market opens when market activity is slower. This is focused on finding potential entries and reinforcing existing trading knowledge.

• They admit to avoiding looking at charts outside of market hours, as they believe it does not contribute significantly to their trading performance or knowledge retention. This strategy helps them prevent feeling overwhelmed and minimizes the risk of overtrading.

• Despite initially spending more time studying outside market hours, they have shifted towards using that post-open period to refine their strategies and assess market conditions.

Identifying Structural Market Trades 03:57:11

"One thing that I wanted to dig a little bit deeper is whether the IWM or the Q's are above certain, maybe 50 MA, and whether it would significantly affect the momentum of shorts or longs."

• The speaker shares their current focus on analyzing the relative strength of different market indices, specifically the IWM (Russell 2000) and Q's (Nasdaq), to determine their trading behavior and impacts on short and long positions.

• They discuss how their findings from past market corrections suggest that the dynamics between these indices can inform their trading decisions. A strong IWM suggests a lower probability of deeper pullbacks and impacts their inclination to initiate short positions.

• Emphasizing the importance of historical data, they reference their research on drawdowns over the past two decades, highlighting the behavioral patterns observed before significant market corrections.

Insights on Missing Trading Opportunities 04:01:41

"It's okay to miss the opportunities. It's okay to get stopped out and the trade goes into your original direction without you."

• The speaker concludes with valuable insights on managing trading emotions and accepting missed opportunities. They stress that new traders often struggle with the psychological impact of missing trades but clarify that it is a normal part of the trading journey.

• They recall experiences of getting overly aggressive after missing key market recoveries, leading to poor trading decisions and increased drawdowns. Such behaviors can negatively impact both mental and financial capital.

• The speaker encourages traders to adopt a patient mindset, reminding them that they can still achieve successful trading years even if they occasionally miss opportunities presented by leading stocks.

Learning from Great Traders 04:04:06

"If you don't know whether to take this setup or not, ask yourself: what would the great traders do?"

• It's crucial to have mentors or role models in trading to help guide decision-making. By reflecting on the actions of successful traders, you can eliminate uncertainty in your trading decisions.

• This approach can significantly reduce random trades, leading to more disciplined and confident trading practices.

The Importance of Personal Experience in Trading 04:05:34

"The lessons or challenges you truly face and overcome through your own efforts are the most meaningful."

• While learning from others is valuable, firsthand experience in navigating the ups and downs of trading is vital for growth. The real-life challenges faced in trading provide insights that theoretical knowledge cannot offer.

• Setbacks and obstacles are generally part of the trading journey, and it's essential to view them as opportunities for improvement rather than failures.

Handling Setbacks and Drawdowns 04:08:00

"How you react and improve from your drawdowns and setbacks is the most important part of your trading journey."

• It's natural to feel frustrated or upset during tough trading phases, but the key is to focus on your response. Treat each setback as a learning opportunity that can help you identify weaknesses and enhance your trading strategy.

• Gradually working through personal challenges in trading is crucial for developing resilience and improving overall performance.