The screeners are just narrowing down my universe and giving me potential candidates. They're not telling me which stocks I should trade today. I'm the one who decides which stock to trade, where, and when. Going through the watchlist helps me understand what's happening in different sectors and market caps, even when I'm not trading those names. You can define simple rules, like a pullback into the EMAs, and find lots of opportunities. But is shorting every one of them profitable? I don't know. I may skip a trade because the sector or market is strong, the market is at support, or I don't like the price action. Those details are harder to define. Flipping through charts also trains pattern recognition. It's part of learning.
I think so, though I may have changed them a little. Maybe I'll try changing the dollar- volume filter to $100 million. I've also filtered out some biotech names from my potent watchlist. I think it's important to modify and improve your trading setups a little over time.
These periods are pure frustration. Sometimes it takes too many tries, and I still don't know how to avoid some of the chop. What I can do is scale down or trade less when my equity curve isn't making higher highs, or starts making lower highs and lower lows. Maybe it's time to slow down. I don't have a really good solution for this type of market.
This year, from my experience, good opportunities show up in a very narrow window, maybe two or three days. If you miss it, you may end up chasing. I've also given back profits by trading too actively after the trend has developed and become extended. Looking back, maybe the best thing was to close the shorts and wait for a stronger bounce. I'd prefer to be aggressive for two or three days, build the positions, then just manage them instead of taking new trades. Maybe it's better to sit out, spend less time at the screen, and manage what you already have.
I got stopped out too, but I re-entered on the five-minute breakdown. Not just on the one-minute close below the 9 EMA right after the overshoot, or fakeout.
Generally, I'm setting it at the high of day. Sometimes the stop is really tight, maybe 0.5%. With a stop that tight, I'm not afraid of getting stopped out.
Probably you're not doing your homework. You haven't built enough conviction and you don't know what you're doing. Or maybe you're just risking too much on a single trade.
I think 99% of the time I'm using TradingView. My setup is similar to the stream thumbnail. It's not the ten screens you see in some scammers' videos. I think the more screens I use, the more money I'll lose.
I'm only using one screen, one monitor. The layout is very simple: dollar volume, market cap, ADR, low-of-day distance, and the four EMAs. You can search for the indicators in TradingView. I think you can easily use AI to code the four EMAs for you.
Yes, I think I've done that too. For me, the root cause is usually a poor entry because I'm chasing a little. My entry isn't optimal and the stop isn't that tight, so when the stock goes against me slightly, I immediately regret it. My solution is to wait for the pullback, stop chasing, and take better entries.
Good question. I don't know the answer. I think both approaches have pros and cons. You can wait for your really good setups and high-conviction ideas, but there's also a chance you'll miss opportunities because you're not in the market testing the water. Waiting for the best environment is an approach I'd like to explore more. Most of my profits come from maybe 5–10% of my trades, so theoretically it could work. But I don't know whether I can really do it, because sometimes I rely on trade feedback.
Sometimes I sell the whole position into strength, especially when I think the market is extended. If I wait for a close below the 9 EMA, I may give back too much. That means I can miss further upside, but selling into strength helps me limit drawdowns and protect my mental capital. I'd still like to hold for at least a week or two and capture most of the move, but maybe not all of it. I always sell too early, so I'm trying a mixed approach: if I have five longs, maybe sell three and keep the strongest two. Selling is really hard. I don't have a hard rule.
Every trader has their own style, entry tactics, and timeframes. But if you're trading the small countertrend, you may be earning only part of the profit for double the effort. If you can trade the bigger trend, why bother trying to nail a 3% move instead of a 30% move, unless you have a really big edge in those countertrend trades?
I don't have a hard rule for building exposure. When I get aggressive, there are usually a lot of entries I'd like to take, and I try to take as many as possible. The best entries often come within a few minutes. Most likely, when the first one doesn't work, I won't get the second or third.
It's not a must. It may be better, because when the 9 is close to the 21, the stock has probably gone through some kind of bounce, consolidation, or base. That's different from just a quick bounce into the declining 9. But it's not a requirement.
Personally, I don't like shorting a stock when it's already extended to the downside. It feels like chasing. If that trade makes money, I might gradually become less patient about waiting for daily levels. From my experience, shorting a stronger name versus a weaker name within a weak sector doesn't affect the win rate that much. Occasionally the strongest name catches up and has a bigger move down. But I'm not sure about that; it's just my experience.
It depends on how soon earnings are coming and how good the setup looks. Generally, I won't take a stock within five days of earnings, I think 95% of the time. Even if I take it, I'll sell at least half, or exit, if I don't have enough cushion before the release. I also look at the ADR and how volatile the stock was during its last five earnings. With COIN, I might want more than 5%, or even 7–8%, of cushion. Otherwise I may sell half or all of it.
No, not really. That is part of the game. With a tight stop you will definitely have a higher chance of getting shaken out. The more important thing is whether you can identify it and find a re-entry after the shakeout. It is just unfortunate that it barely hit your stop. Taking the five-minute breakout would also have been a decent entry, a little wider than your original one but still less than 1.5%. Yours was around a 1% stop, so I don't think it is better to widen it. If you are setting a really tight stop, like 0.5%, then maybe you can widen it a little. This is also a good example to study, because technically it could have been a short: a pretty deep pullback, a first bounce into the declining 9 and 21, and then CRWD broke out to the upside today, a failed breakdown. To me the major reason is sector strength. Technically it was a really clean gap-up rally into the declining EMAs that found resistance, but it was the wrong stock in the wrong sector. It was also still above the daily 50, and the rejection at the 21 was above the weekly 9. If you keep observing failed breakdowns and breakouts like this, especially with clean entries, you will get plenty of takeaways and avoid a lot of traps.
That is a good question. If my entry were well below the current price and I were still in the trade, not stopped out, maybe I'd raise my stop to the low of the big red candle, or a little below the daily 50 EMA, to give the price a little room to undercut. But if you want to exit, the bounce is a pretty good spot: we got the bounce into the hourly 9 EMA, a pretty important potential resistance level, together with the 150. So either I sell on an hourly candle breakdown, or I set my stop at the bar low, or a little lower, below the daily 50 EMA.
If the market is really going for a quick sell-off, UVXY is a better candidate than an inverse index ETF such as SQQQ or SPXS. But it is only for the quick sell-off, when the market is trending hard to the downside. If we get chop within a downtrend, a strong bounce or a slightly longer consolidation, the inverse ETF will be better. I chose UVXY because SPY is still holding up near its highs while QQQ and the Russell are already showing weakness. To me the market still has a lot of room to the downside, so what I'm expecting is a really quick flush. That is the best case, and it is a bit of a gamble on how the downtrend plays out. UVXY is really tricky. I've stumbled quite a lot trading it: if we don't get a quick follow-through to the downside, it will just chop you up. I took so many losses going long UVXY, so I don't recommend trading it unless you clearly know what you are doing.
Mathematically I think the leveraged ETF is better because of the compounding effect, but it also depends on the liquidity of the ETF and whether it is really low-priced. I use both. If I like shorting the stock, I short the stock. If I like the leveraged ETF more, I go for the leveraged ETF.
When my account really grows bigger and bigger, maybe I'd explore some new entry types, like buying only half of my position first, splitting my entry in two. Then I can use a really small risk, maybe only 0.1% of my account per trade, but buy only a half size each time, and be a little more diversified: increase the number of decisions, the number of trades.
I'd comment on both my entry and my exit for every single trade. If it was a really good trade, I'd write down whether the exit was good, like selling into the extension on a second gap-up with an increase in volume, or a good entry, like buying after an inside day or on weekly higher lows. For the bad trades I'd also write down what I did wrong, like being oversized in a position and taking a bigger loss, or chasing the stock. There was a column for entry remarks and one for exit remarks. I also did a weekend, or even daily, market plan, writing a few paragraphs on the trade ideas for the coming days and describing my trades from the previous day. Gradually I gave that up. It was too time- consuming, because back then I still had to study, find jobs and apply for internships. I still log my trades in Excel, and if it is a huge winner I go back to the chart and look at my entries and exits, comparing them with the market, the peers, the sector and the index. If I'm in a huge or prolonged drawdown, I write a few paragraphs describing my feelings: what have I done wrong, and how could I prevent it from happening again? Back in the days there was no AI, so I had to think about all of it myself. If you use AI now, I don't recommend asking it directly for a summary or for the ways to improve. Ask it for directions, tips and guidance instead of the answer. You have to build your own thinking process first instead of relying on the AI. Maybe let the AI ask you questions instead of you asking the AI.
I focus on the big trends first, particularly the big trends, and start finding potential entries where you can define your risk clearly, in both uptrends and downtrends: where can you enter with a clear and tight risk? At the beginning, just focus on the clear trends. Then gradually you can also look at the choppy markets, to get a feel for how a choppy market behaves. Are there any signs telling you it is a choppy market? Within the choppy markets, are there entries that you also see in a trending market that could fake you out? That gives you some market sense. I start with the clear trends because I'm a trend follower, a swing trader. But if you love trading reversions, then focus on the end of the trend, where the moves start getting extended.
I don't like trading the close. I think the first hour, or the first hour and a half, is the best window for trading. Then just set your stop and forget about it.
I don't know. Just study 100 recent breakouts and see whether getting an RS new high first is really good or not. I think the market is the best teacher.
Personally I don't agree. I prefer working on the weaknesses more than the strengths. Take me as an example. If I only worked on my strengths, getting so good at the entries and at being aggressive, but got a little relaxed about overtrading, revenge trading and limiting risk per trade, I think I'd still behave like a boom-and-bust trader. To me the best approach is to keep improving on both ends but put a little more effort into the weaknesses. Most people are already good at their strengths, and working on them is comparatively effortless. That is why I think it is better to work a little harder on the weaknesses. It doesn't mean you don't need to work on your strengths; I'd just prioritise the weaknesses a little more.
That is a hard question, and honestly I don't have a really good answer. Take SNDK today: this was my fourth short attempt of the day. I took the last one mainly because QQQ was bouncing into an EMA and the unfilled gap level. Looking back, my first two entries were not really the ideal ones. I don't have a rule for a maximum number of re- entries, like three or five. An easier way may be to treat every single trade independently: forget about the losses you have taken and focus on the one you are looking at right now. Is it valid? If it is a pullback, are you shorting at a resistance level, or is the stock already breaking out? If it is really late in the day, I'm probably not going to do it, because the gap risk may be too high. Generally you won't get that many re-entries in a single day, unless the market is really choppy and a five- or fifteen-minute breakdown fails and stops you out a few times in a row. If you really want to prevent overtrading through too many re-entries, I think the best way is to focus on the daily levels: zoom out, and only look at the daily, maybe sometimes the hourly, like a gap level. If you only trade the daily levels, you won't get that many re-entries in a single day. This SNDK trade is maybe a negative example: I got too aggressive in the early morning, was stopped out twice, and then took two more attempts to nail the short.
At lunch today we talked about how to handle overtrading, especially after good periods, when your equity curve is at new highs. That is probably the moment you get relaxed and make dumb trades, poor trades, which gradually leads to overtrading and a drawdown of maybe 5 to 10%, or even more. The solution we came up with is to withdraw the money immediately and spend it. Say you usually get a 5% drawdown: every time your equity curve reaches a peak, withdraw that 5% and spend it somewhere else. I think it is a really smart solution, especially for me, because I always overtrade after a good period and give back maybe 5 to 10% every time. This time I'm going to wire some out, so I create the drawdown manually; it is a fake one, not a real drawdown. It is not about the money, it is about the habits. The numbers don't matter, but if you can prevent yourself from overtrading or getting into a big drawdown just by wiring the money out, it is a really good approach.
Mainly I use the number of stocks in my own watchlists. They are generally fast movers with a high ADR that I love to trade, and they were probably leaders at some point in the past months or quarters, because they had to be leaders for me to find them in my screens and add them to my watchlists. After they turn weak, I gradually downgrade them from leading to mediocre and then lagging. So all the stocks in my watchlist are leaders; it depends which period we are referring to. The equal-weight ETF, RSP, is not my favourite. I sometimes still look at it, but it is not the main thing.
Probably liquidity. I prefer trading liquid stocks. As my account grew, and also from experience, I think liquid stocks tend to produce better trades than illiquid ones. Most of the really super-high-ADR stocks are the lower caps and a little illiquid, and right now we are not getting many really high-ADR stocks anyway. I still trade AXTI: it is one of the highest-ADR stocks at the moment and it is pretty liquid. So the main factor is liquidity.
Probably not. A 0.1% stop is too extreme. If I've a 0.5% stop, I might still use around 25% size, depending on the stock and how fast it moves. For a normal fast-moving stock with an ADR above 4% or 5% and a stop below 1%, I'd use normal sizing, perhaps 20% to 25%, while risking only 0.15% or even 0.1% of the account. A tight stop can make a good trade, but there is always gap risk. If you size too big, a gap can really damage your account.
I traded relatively the same size. I never sized crazily, perhaps only a little larger—around 30% sizing—when the account was smaller. Logically, using larger sizing and fewer positions doesn't improve performance; it only increases variance. You have a higher chance of doubling the account, but also a higher chance of losing everything, so I don't recommend it. There is not much difference between trading a small and large account. Imagine managing a $100 million portfolio and use the same habits with a small account. Building those habits early makes fewer mistakes easier when the account becomes larger.
One trade was the turning point, the aha moment. It was a breakout that moved more than 100% in a few days. I discovered afterward that another legendary trader had entered at the same time, although I was not copying him. That created a strong positive loop: I realized I was doing something similar to a trader I respected, and it boosted my confidence. I've journaled every trade since day one. That was probably the best decision I made because it keeps me accountable and lets me revisit each trade, reflect on it, and learn from the process.
It is probably journaling and reflecting on my own trades, especially losses. I can recognize chart patterns quickly and often get a sense of an entry or exit style from only five to ten charts. But I spend much more time evaluating and manually journaling my own trades. Especially when I'm overtrading or revenge trading, I can have tens or twenty-odd consecutive losses, and I journal them.
Not putting in enough effort is a major reason traders fail. In sports or the arts, effort is the minimum requirement for success. Perseverance is also important because the early years contain many ups and downs, repeated mistakes, poor market conditions, and outside problems such as failed exams, losing loved ones, or relationship difficulties.
I've no firm recommendation. Early on, I tried to learn as much as possible rather than focusing only on swing trading. I looked at day trading, indicators such as MACD and RSI, and then gradually narrowed my focus to swing trading and asymmetric risk-reward with tight stops and a low win rate. Focusing on one thing from the beginning might have been boring for me. Learning more can help you understand the market more holistically. If you want to drill deeply into one setup or style, do that. If you think it is better to explore more, do that. There is no perfect answer, so don't overthink it.
Yes. Early on I did not use hard stops. I'd exit manually when the stock went below my stop price, and often I ignored the stop, waited for a bounce, or hoped for a miracle. Often I just ignored my stop and waited a little longer for the bounce, and it eventually led to larger losses. That is the main reason I keep using hard stops.
It is always easier to go long when the market is trending up and short when it is trending down. In extreme panic flushes, such as the tariff-war sell-off and successive gap-downs, the short side can be more powerful because extreme fear generates a faster sell-off than extreme greed. But when the market trend is generally up, shorting is difficult if you don't correctly identify the downtrend. Sometimes I feel shorting is easier because the covering point is easier to determine, and you can cover into weakness without holding for many weeks or months.
If a stock gaps down near anchored VWAPs (AVWAP), especially converging anchored VWAPs (AVWAP) such as the four-week level, I consider the gap-down tradeable. Other than that, I'm not sure. For a stock like Dell, I probably would not trade this type of gap-down or breakdown. I'd let it go.
It depends. I consider how the market is positioned, the overall situation, and the market stage. Most of my short stops are not raised to breakeven because I believe the market may be starting a downtrend. If the semis are pulling back to make a lower high, I expect more downside. The chance of an instant recovery, upside breakout, or continuation of the uptrend stopping me out seems lower than the chance of downside follow-through. In that situation, I'm more willing to sacrifice open profits to capture more downside.
I re-entered with the same size, around 22% or 23%. You are right that the second entry had a tighter stop, so my risk per trade was smaller. The re-entry risk was only about 0.15% of my account. That made it a very good trade from a risk perspective. I kept the position size the same, but because the stop was tighter, the amount I was risking was lower.
Yes. I treat every trade as an independent trade. For entries, I trade both the first lower-time-frame reversal and later retests. Sometimes I miss the one-minute or five- minute reversal, so I wait for a higher low or an anchored VWAP (AVWAP) retest. I may also use a retest of the declining 9 or 21 EMA on a lower time frame. I really want to nail the first reversal on the lower timeframe, but sometimes it moves too fast or I just miss it, and then I'll still trade the retest.
I mainly treat gaps as support or resistance. If a stock is in a downtrend, below the EMAs and anchored VWAP (AVWAP), and a gap down forms, I look for a short on a bounce back into that gap. The gap can act as resistance, especially when the EMAs confirm that the chart is weak. Conversely, if a stock is above its EMAs and in an uptrend, a gap can become support during a pullback long.
It could be luck if the sample size is small, but there are usually common factors behind losing trades. Check whether the trades were in weak sectors, whether you were taking longs or shorts, where your entries were, and whether you were shorting or buying into extensions. Review where you placed your stops. Also study the trades you passed on that later worked: why did you skip them? There will be insights beneath both the losing trades and the ones you skipped that worked. Some of it may also be luck; results have a random distribution.
The settings are important, but not because one exact configuration is universally correct. What matters is how you arrived at the setting and how you feel about it. If you use a 10 SMA and have tested it against a 9 SMA or 10 EMA, then reached the conclusion that the 10 SMA works best for you, that study is important. You should not use a moving average simply because another trader uses it.
AXTI went down a lot during the correction, but its rebound has more than doubled from the bottom and it is now back above all the EMAs. On the weekly chart, it pulled back into the rising 50 EMA, undercut and reclaimed support, and returned above the EMAs. It showed huge relative strength during the bounce compared with almost all other stocks, including the semis. Volume was also huge. I like the liquidity relative to its market cap: it traded more than $1.5 billion in volume on a roughly $6 billion market cap. That suggests many hedge funds or other large participants are focused on it.
If I understand correctly, they don't create different returns or expectancy when everything else is held constant. For example, on a CrowdStrike entry, I could use a 1.5% stop or a 3% stop below the previous candle low. The difference is simply where I place the stop. It could affect expectancy if the tighter stop gets me stopped out, but I don't have data to compare the win rates of tight and wide stops. From my experience, the risk multiples gained by using a tighter stop outweigh the reduction in win rate by a lot. I used wider stops several years ago, but gradually realized this.
I've only worked full-time as a trader for about three months, so I'm not really that eligible to answer. My thought is that you should prove yourself for at least two years, covering great and bad conditions, preferably uptrends, sideways markets, and downtrends. You need consistent performance in different market conditions. Your trading gains should be at least greater than your job income, perhaps double or even triple, because trading returns are volatile and unstable. You may earn a lot when the market is favorable and then start losing when it is not, so you need a financial cushion.
Be decisive and press the button when you see the breakout. If the breakout occurs on a five-minute candle, don't wait fifteen or twenty seconds afterward; by then the stock may already have moved higher. You also need to decide whether you will enter before the breakout actually happens. For example, after the close of the red five-minute candle, I decided that I'd enter the breakout on the next candle if it occurred. Making that decision in advance lowers your reaction time and helps you avoid entering late.
Before the open, I thought it was 50/50. But no risk means no reward. You can't become afraid of being stopped out or of taking losses, because then you will skip good entries and opportunities. The setup could fail, but losing the 9 or 21 EMA would be a major red flag. At the time I entered, price was finding support and trying to break out from a tight intraday range. It was not already down at the 50 EMA.
Probably, but the decisive factors would be the individual stocks and breadth. SPY and IWM have been showing strength, while the NASDAQ correction is mainly due to semiconductor weakness after a huge rally and extended leaders. Defensive sectors are doing well, biotechnology and healthcare are strong, and software is catching up even while the market is weak. I don't see favorable factors for a bear market or deeper correction while individual stocks are doing fine and breadth is holding up. The bounce would not be that powerful once breadth starts to decline and the defensive and other sectors start to crash down.
For me, it would be a pullback into the nine EMA. The nine EMA works well in a strong rally. When it fails and the stock closes below it, that is probably the end of the uptrend, or at least the start of a sideways pause. The past can't predict the future, and there are always exceptions and nuances between examples, but I've found this approach effective. I'll keep following what the market does. For now, the nine EMA is working fine.
It really depends, and you have to test it yourself. No one knows what fits you best. Back in 2024 I might trim maybe 15% when a position was up, say, 10R and getting a little extended. But now I don't, because I've gradually learned to sit through pullbacks better. I'm comfortable holding a full position and trailing it with the EMAs, especially when the market is doing well and is in the early phase of an uptrend. It is a process of finding your own approach and style.
Every day I go through my watchlists and scans. By reviewing all the stocks, you can tell which are doing better. If you keep seeing stocks such as TDOC and Snow performing well, then compare them with mediocre names. SE may still be above all its EMAs, while Shopify has dropped below the nine and 21 and is not as good. Affirm may be okay, and Adobe and other names may be breaking out from their lows. Comparing many stocks repeatedly helps you recognize relative strength.
I sometimes ask myself how I'd teach my friends, or my son, to trade. It is not easy, because everyone has their own personality and risk appetite. My answer is that I look for asymmetric risk-reward entries. I heard the idea from Jason Shapiro at the TraderLine conference and agree with it. I focus on finding entries with limited downside, represented by a tight stop, and meaningful upside, where the price should start trending in my direction after entry. The lower the risk, the better, because I'm aiming for asymmetric risk-reward.
I'm not especially good at exiting positions, so I don't have a special rule. For shorts, cover some or all when you feel excited, or when the stock reaches a level such as 1100. Sometimes you don't need a perfectly solid reason to cover into weakness. It is always good to cover shorts and lock in profits because there will usually be another opportunity, and the next short entry will generally be higher. The more extended the indices and sector are to the downside, the more you should want to cover.
This stock surfed down along the 9 EMA for about 34 trading days and fell almost 45%. Looking back, the highest potential risk-reward came when it reclaimed the 9 EMA and then pulled back. In early April, some leading stocks showed relative strength while the market was being beaten down. The semiconductor ETF held up through the downtrend and moved back above the 50 EMA during the first few bounce days. That helped identify a potential change in character and judge how strong the bounce could be.
I found that many breakouts or opening-range-high entries stopped me out before the stock continued higher. Eventually I was right and the stock went higher; my entry was just not right. So I started to explore whether another type of entry would let me stay on the boat and not get shaken out on the breakout days. That is how I discovered buying the intraday pullback, especially the five-minute intraday range breakout. It happens very often: you buy the opening-range high, the stock rolls over intraday, stops you out by taking the low of day, and then starts climbing higher.
I think the big picture is one of the main reasons. In this example, the stock was above its 9 EMA but below the 21, while QQQ and the semiconductor ETF were still extended below their declining 9 EMAs. The market and sector could keep bouncing into those levels, and the stock could follow them higher. Shorting every bounce into the 9 EMA isn't a good strategy. The 9 is the fastest EMA; a bounce can go beyond it to the 21 or even the 50. The stock was also showing relative strength, which put the odds of that short a little lower.
I can't know whether Dell will have a failed breakout; it could even gap up. I consider the market condition, breadth, and sector. The semiconductor sector had already run up very high, and names such as Dell had risen about 250% in three months. The odds of another 100% move were relatively low compared with buying after a correction. A lot of buying power had already been consumed during the uptrend, especially the last few gap- ups, and some peers were slowing down or falling off. The probability that Dell would stand out from the crowd and keep pushing higher was therefore quite low. It might rise another 25% or even 50%, but the odds seemed low to me.
The best example is a huge red candle undercutting all the support, probably into the weekly 21 EMA. That would be the spot where I'd take a mean-reversion long. If we only get a few days of orderly movement lower, without panic selling or an acceleration to the downside, I'm probably not going to take it. We may need a little longer for the base. It depends on the character of the move.
The higher time frame is the big picture, usually the weekly or daily chart. The semiconductor ETF was still above the weekly 9 EMA, but two huge red candles with volume after a strong uptrend could indicate a pause or deeper pullback. On the daily chart, the 9 EMA was below the 21 EMA, which was bearish, although price remained above the 50. Because my daily and weekly view was bearish, I'd look at the lower time frame for a bearish reversal and focus only on the short side rather than buying a rising 9 EMA on the 60-minute chart. The context and big picture matter most, and I remind myself to start there.
It depends on where the market opens. Today the market opened right at the end of the anchored VWAP (AVWAP) and slightly above the 21 and 9 EMAs. Since I was short-biased, that opening level favored the short side, so I took a few entries in the first 15 or 30 minutes. If the market opens weak, flat, or lower, I may wait for a bounce in the first 15 or 30 minutes, to see whether it can bounce into declining EMAs or unfilled gap levels. I'm not always good at sitting out the first 30- or 60-minute candle.
About 90% of the time I use market orders for entries. Occasionally I use a limit order, perhaps for fun or for a stock with a larger spread and less liquidity. For stop losses, I use market orders. I never use stop-limit orders because I want to ensure the sell order is filled when the stop price is reached. Sometimes using a limit order adds variety and keeps trading from feeling robotic, and over a long time it doesn't make a huge difference in performance. But on a day with many opportunities, I generally use a market order rather than manually typing a limit price.
I did not initially plan to go short on Thursday. I planned it after closing my semiconductor longs. It was about the trade feedback, my watchlist, and the individual stocks as a whole. After I closed the semiconductor longs, the sector had a huge flush, gapping down 5% and falling nearly 8% intraday. The previous day had also been a huge red day, down 6% intraday. Volatility had been increasing since mid-June or early June, with many wide-range candles, gap-ups, gap-downs, undercut-and-reclaims, breakouts, and then another gap-down. After an uptrend, that type of action can signal lost momentum, a needed break, or a rollover. My long trades were also mostly not working.
Definitely. I took more than 0.5% risk when I first started trading, but I began using 0.5% risk around 2023 or 2024, and my performance really started improving then. If I could learn trading again, I'd probably tell myself to use 0.3% risk per trade. That would suit my low win rate and tight-stop approach better because the system is prone to consecutive stop losses and losing streaks, which can lead to overtrading. If you use a wider-stop approach with a higher win rate, you can use higher risk per trade because mathematically you are less prone to losing streaks.
I don't think I can completely get rid of overtrading, but I try to reduce it and minimize the damage. It takes time; I spent almost five years working on this problem. The best way is to review your past trades and identify which ones you should not have taken, including trades where you did not even know what you were doing. With enough recorded data, you gradually understand when you are prone to overtrade. I tend to overtrade when the market is extended and stocks are doing well, because I start micromanaging, become too aggressive, and chase stocks if I missed the previous run.
Yes. A 10% loss requires an 11% gain just to break even. Risk management is always the number-one objective and should be above everything else in trading. My entry tactics may change over time because the market keeps changing, but I don't think risk management will change. I'll continue setting stops before the entry and defining my risk before entering a trade, whether I remain a trader, become an investor, or become a scalper. The style, entries, and selling could change a lot, but defining risk and protecting capital should remain constant.
I let my stop decide whether I sell. Either my stop gets hit or I keep holding the position. I've accepted the consequence of a market crash or another black-swan gap down stopping me out of all my positions; the drawdown could perhaps be around 25%. The probability of another huge gap down stopping out everything is also quite low. I define my stop before entering, at the level where I believe my trade is wrong and the market disagrees with my decision. If you don't trust your stops and try to outsmart them, you may occasionally benefit, but most of the time you will not.
When I buy pullbacks, I usually wait for a breakout. After the stock finds support at the level, I generally wait for a five-minute or 15-minute candle breakout. I don't usually buy the dip on the way down. I want the first lower-timeframe breakout to show a certain type of strength, so I'm not blindly buying a falling knife. Occasionally I may set an order near a specific level, but that is rare.
Yes. I've used non-low-of-day stops quite a lot. ALAB and FLEX were examples today. Most of the time I use one because the stop would otherwise be too wide from my entry. I don't have solid statistics, but I think the low of the five-minute breakout candle or the 15-minute breakout candle works pretty well if you buy at the right time. You only know afterward whether it was the right time. A non-low-of-day stop gives you a lower win rate, but it tightens the stop considerably. I'm comfortable re-entering if I get stopped out and the stock bounces back.
I never use a single indicator to determine whether the market is bullish or bearish, healthy or dangerous. The most important thing I analyze is the action of individual stocks. Yesterday’s gap down looked scary, but many stocks found support at rising EMAs and showed strength. Some closed strongly despite the indexes closing weakly. Others undercut and reclaimed the 9 EMA. Non-tech sectors were also doing fine, with some biotech names breaking out and financial stocks consolidating above the 9 EMA. Many names remained above the 21 EMA, inside their bases, or building higher lows. The weaker names were pulling back toward the 50 EMA, but most were still constructive on the weekly chart.
I don't treat IPO stocks differently from non-IPO stocks. The process is the same. On this stock, a pullback buy during the first five or 15 minutes, around 231, was reasonable. I'd have preferred the 150 to move a little lower so the other EMAs could catch up and tighten. The daily 9 and 21 EMAs were also far apart, and price was at the anchored VWAP (AVWAP) from the previous swing high, which lowered the odds of breaking out there. Because the market was rallying into declining EMAs, I expected chop or rejection. I did not think it was a good time to be extremely bullish and expected more entry opportunities after support and another higher low formed.
I never know, and you don't have to be certain. Do not seek certainty in trading. Even after a stock breaks out to all-time highs, you can't be certain it won't be a failed breakout and come back down. I focus on managing downside risk and finding the tightest entry point possible. The entry doesn't need to be very high; I need to be able to define my risk clearly.
Not really, because “distribution day” is a term created by other traders. But you can't ignore a candle like Friday’s: it opened weak, closed weak, and had huge volume. The weekly chart also showed a bearish engulfing candle, with price trying to move higher but closing well below the prior week’s low. I'd call that a change of character. After such a candle, I'd either sit out or look for shorts. I don't recommend shorting to everyone because I believe it is much more difficult than trading long.
I rarely manage my stops. If you rewatch my previous streams, you will see that I rarely raise them to breakeven or move them higher. Occasionally I do. Sometimes I take a position off before it comes into my stop. The stop is mainly a protective measure for a sudden gap down or black-swan event, such as the market falling 10% intraday. My actual selling is more discretionary.
Definitely. Even if this is only day one of the correction, and you prefer to sit out rather than short, look for relative strength and potential leaders emerging from the pullback. QCOM in 1998 started its rally relatively late during the first leg of the move, then led from February 1999 and rose 2,000%. We may not get another move like that, but I agree that we should look for new leaders during every pullback or correction. MRVL was a good example: it held up very well while the indexes were below their EMAs and moving lower, then became one of the biggest movers in the rally. Compare individual-stock price action with the indexes.
There is no specific best indicator. You should not focus on finding the best indicator for a downturn, support, or an entry. Price is the best indicator, perhaps with 80% price and 20% volume. Indicators such as EMAs and anchored VWAP (AVWAP) are calculated from price or volume. Recently I disliked the extension and volume spikes in some leaders. A stock can continue higher, but it can't go up forever at that volume and pace. A 30% gap-up in a mega-cap with huge volume is especially concerning because the volume matters as much as the percentage move.
Yes. Most of the time I'll not wait for the close below the 9 EMA because many current huge movers move very quickly and become too extended from it. In an extreme example, waiting for the close below the 9 EMA could mean giving back a 20% pullback. I'd rather sell into strength and try to re-enter after another breakout than sit through that pullback, especially when trading on margin with many positions and a lot of long exposure. When the market corrects, most positions can correct together and create a larger-than-expected drawdown. Holding to the close is also valid; this is simply my approach.
I used to sell many winners after a red candle because I did not want to lose profits, and that made me take less profit. Studying past winners helps. For example, QBTS had many pullbacks into the 9 EMA, and some even undercut it, yet most continued higher. There are many red candles during a strong uptrend. Improvement takes time: you may hold one winner successfully while being shaken out of four or five others. Eventually, that one trade that you hold through the later part of the trend helps you gain traction and become more comfortable holding winners.
I'd try to rest and stop trading for at least one or two days. If many new opportunities appeared the next day, I might still take one, but most of the time I'd stop for at least a day to refresh and reset mentally. Then I'd look for opportunities I was genuinely confident in and start with a smaller size. I currently use 0.3% risk per trade, which feels small enough that even ten losses in a row would produce only about a 3% drawdown. I made the mistake in 2024 of increasing risk during a drawdown. Never increase your risk when you are in a drawdown or losing streak.
There is no better idea. I chased today's gap-up breakout because I had a decent profit cushion and was trying to get the most from a strong rally. If a group is being bought every day, you can buy that type of breakout and use the low of day as the stop. The win rate is lower than waiting for a pullback, but there may be no pullbacks in the coming weeks. I'd rather take 1% to 2% risk to aim for a straight-up rally, and if it fails, I'm willing to give that profit back. Especially when the market is this strong.
Yes. Wednesday and Thursday showed good action: a gap down into support, many stocks finding strength, and some breaking out from their previous ranges. A gap-up market can show fading, and in general it is not the best probability-wise for buying a gap-up. That is not a black-and-white rule where a QQQ gap-up means I must avoid all new positions. It only means the tendency and frequency of good entries are somewhat lower.
I don't know, and nobody knows. You don't need to know when the bottom is found, and you will never know in advance. You need to react when the stock pulls back into support levels, preferably several support levels together, because that gives you a higher chance of finding support and continuing higher. It is not about predicting; it is about reacting. You can never predict a stock's movement or the market's movement with certainty.
I first prefer liquid stocks, perhaps those trading at least $500 million in daily volume or having at least a $10 billion market cap. That gives you a better spread and less slippage. More importantly, the stocks that make multi-week or multi-month moves are often the more liquid ones because institutions buy them. Focusing on liquid stocks gives you a higher chance of finding a huge winner, perhaps a 500% move, while still allowing a decent position size. Small, illiquid stocks have more gap-down risk and are difficult to size up.
Rather than focusing on whether I'm using the 9 EMA, 21 EMA, previous highs, anchored VWAP, or a gap, I pay more attention to how many support levels the entry has. For example, a stock may be pulling back into the 21 EMA and anchored VWAP (AVWAP) at the same time, while also filling an unfilled gap. You can include the 150 EMA or the weekly 9 EMA as well. The more support levels you have at the entry, the more edge you have. However, the stock must still look good on the daily or weekly chart. It should at least be building higher lows and reacting to its moving averages instead of completely ignoring them. I don't like choppy stocks with many shakeouts and wicks.
I don't have a black-and-white answer, but there are mostly two types of stocks I track. One is the hottest or most popular stocks in the market—the stocks leading the market, making a significant move, or representing the leading sector. Sometimes I put a sector ETF, such as the semiconductor ETF, in the tracking section. I wanted to watch MU and SNDK to see whether they became extremely extended and how they pulled back: whether they suffered a huge waterfall flush or simply chopped around. Their action tells me how strong or weak the market is. I also track some names mainly on the weekly chart. They may be bullish weekly even when the daily chart is not ready.
You can consider setting the stop below the unfilled gap or using the 9 EMA. It depends on your trading style. If you have a high turnover rate and capture short moves before switching to another stock, a tighter stop can prevent a larger drawdown. If you are more capable of holding through a deeper pullback and want to capture a longer uptrend, you can set the stop wider.
For the first few trades, I trade smaller. After a 26% drawdown in December, I reduced my risk from 0.5% per trade to around 0.3%, or even 0.25% or 0.2%, and focused on finding very tight entries. I wanted to take the best entries possible and rebuild my confidence. When I've two or three positions working, I'll usually also see broader market participation. Normally, you don't have two or three working positions when the market is unhealthy. I also want the trades to move away from my stops quickly rather than hang around them.
I prefer trimming less when we are in the early stage of an uptrend. There are definitely spots where I like to trim, especially when a stock becomes extended on the daily chart, but this is discretionary and I don't use a fixed indicator. Sometimes I use the 60-minute chart to judge whether a stock is extremely extended. For example, on MRVL, if you bought lower, an up day above 120 could be a good spot to sell some. Another spot is an unfilled gap. Tesla’s gap near 470, around the previous highs, could be resistance where I'd sell into strength. The most important thing is trusting the trend and not getting shaken out.
The weekly chart played a huge role. Tesla had been moving sideways since its late-2021 high, building an almost five-year base. The weekly chart kept making higher lows, then produced a huge green candle closing above the 21 and 9 weekly EMAs. After a pullback, we saw an undercut and rally back above the weekly 9 EMA, although it closed below the 21. On the daily chart, instead of rolling over, it also undercut and rallied above the EMAs. The next day it pulled back into the rising EMAs, held anchored VWAP (AVWAP), and closed above the 50 EMA. That could be a first higher low if it breaks the previous high. Holding above the EMAs is bullish, and the weekly VCP plus the daily higher-low setup made it attractive.
First, identify what “a lot of risk” means. Is 5% of the account a lot, or does the dollar amount feel large? Treating trades as percentages of your account is usually the best approach; forget the dollar amount. Do not put too much emphasis on leverage either. Manage each trade individually. I may be more than 200% long, but I did not buy everything at once. I had several trades working on Thursday, added two or three on Friday, and two more on Monday. Gradually build profit cushions and control drawdown as you add positions.
Above all, risk management is the most important thing to do well, regardless of whether you trade breakouts, pullbacks, mean reversions, indicators, commodities, forex, stocks, or crypto, and regardless of whether you are a day trader or position trader. Keeping losses small and controlling drawdown helps you stay in the market longer, giving you more time to learn and improve. If poor risk management makes you blow up your account in the first two years, you can't continue the journey. Risk management is the holy grail of trading. The second factor is learning from your mistakes by reviewing both winning and losing trades.
The EMAs were trending lower and the stock was continually building lower highs while the market was weak. Although it was showing some relative strength compared with the market indexes, a gap up into the highs and under anchored VWAP (AVWAP) created a very good short entry. Another example was an opening gap in January: the stock gapped above the EMAs while those EMAs were trending lower, producing a strong rejection at anchored VWAP. Those conditions—a weak market, lower-trending EMAs, lower highs, and a gap up into resistance—can create a high-quality short setup.
The main anchor I use is generally the high of the entire base. For MP, that would be the high of the huge base and the swing high of the move, which was also the all-time high. In this case it doesn't work perfectly because there is a lot of chop and the stock doesn't respect that anchored VWAP (AVWAP) very well. Still, it gives me a sense of whether the stock is above or below it and by how much. The second anchor can be the swing high of the recent, smaller base. I focus on the recent uptrend and the recent base, and I may anchor from the recent swing high or the first red candle. There is no single correct anchor; use the one that suits the stock best.
I really don't know whether it still has enough fuel to move higher, and I don't think anyone has the answer. It depends on the market. The stock looked pretty good that day, but I wanted it to consolidate for at least one day. If the market finds support at the 9 EMA, there may be a breakout opportunity. Yesterday was probably the best entry, and buying it now is riskier. With the market pulling back, I'm not sure whether it will hold the 9 EMA, although a 15-minute breakout may still be worth trying.
I don't think you can completely overcome it. I still feel frustrated when I see my equity curve decline from its peak. It is important to realize that you are in drawdown much of the time in trading. Kristjan Kullamägi showed Nvidia, one of the biggest winners of recent decades, and it experienced drawdowns from 2002 to 2006, from 2007 to 2016, another two-year drawdown, and another two-year drawdown. Even over the past six months it has been in drawdown. A drawdown in profits is actually good because you have already made those profits and are not losing your original capital. You can't avoid drawdowns or remain at an all-time equity high forever. You can balance holding winners with selling into strength and weakness.
The higher time frame provides the bigger picture and forms the foundation of my market view. For example, if QQQ is almost 2% above the daily 9 EMA and not close to any EMA, I'll not be very aggressive on the long side because the daily chart is telling me the market is extended. I'll not chase breakouts there. If I wanted to short an extended market, I'd zoom into a lower time frame, probably the 15-minute chart, and look for rejection at the EMAs. The extended daily chart suggests a higher chance of mean reversion, a pullback, or a reversal, while the lower time frame helps identify the entry.
After the first leg down, there is often a second attempt higher. It may look like a good bull flag and try to break out, but then fail and ride the 9 EMA lower. Volkswagen in 2021 had a parabolic top with two attempts to set up higher, but both failed. After closing below and losing the 9 EMA, price reached the 50 EMA and then formed a nine- month Stage 3 base before entering Stage 4. Waiting for the declining 9 EMA and a bounce into it gives a better short entry. If you don't wait for a close below the 9 EMA, you have a higher chance of being stopped out when support holds.
This has been a very stretched uptrend without a long base or a long pullback. It has pulled back only to the weekly 9 EMA, not even to the weekly 21 or the 50. Generally, even in 2020, a pullback to the 50 or 21 was healthier for sustaining an uptrend. I don't have much confidence buying this breakout after such a long uptrend without a decent base or consolidation, especially because breadth is considerably low.
I'd say two or three years. I've never had a down year since 2020: I tripled my account in the first four months after opening my brokerage account, then had a 50% drawdown in 2021, but I made more than 50% in January 2021, so the year was still green. I definitely did not consider myself profitable by then. The exact time depends on how much time you devote to trading and your personality—especially how quickly you learn from mistakes.
I skipped OKLO because it was gapping near the anchored VWAP (AVWAP) and the right side of the base was too short. A longer right side gives the stock more time to digest selling pressure before gapping higher. If OKLO opened above the 50 EMA, it would look much better, including on the weekly chart because it could close above the weekly 9 EMA. It can still work, but I believe it could have a pullback later, so I did not want to chase this gap-up.
From my experience, this type of gap down is shortable, but a one-day bounce has a lower win rate than a three- or four-day small base or flag before rejection from the EMA. It is still tradable, just less reliable. I normally study the one-hour chart because going back through 15-minute data is difficult. I go back to a lower timeframe only when the example is recent. If you study several hundred examples, you develop a sense of whether a gap down is shortable.