Hello, before I get started I want you to understand one thing about this strategy that you should never forget. It is the absolute baseline of this strategy and makes or breaks your account.
There are three types of "markets" that the stock market can express: Bull markets, Consolidating markets (aka sideways markets), and Bear markets.
This strategy ONLY WORKS in sideways markets and especially in bull markets. How you can understand if we are in a bull market or a bear market is by looking at our indexes.
What Are Indexes?
The major indexes are the S&P 500 ($SPY), Nasdaq ($QQQ), Dow Jones Industrial Average, and the Russell 2000 (among others). I mainly use the S&P 500 and Nasdaq. They all pretty much look the same, with minor differences.
How you spot the trend is whether or not the 10-day SMA is above the 20-day SMA and rising. Vice versa — if it is below the 20-day SMA, it could be turning into a bear market (the trend is probably reversing).
Why Account Size Matters Less Than You Think
Most retail traders make the mistake of trying to trade like a hedge fund — taking huge swings, holding through massive drawdowns, and over-leveraging. The problem is that hedge funds have risk management systems, teams, and capital buffers that you don't have access to.
For traders with accounts under $10M, the edge comes from:
1. Selectivity — You can afford to wait for only the best setups. Hedge funds have to deploy capital constantly.
2. Speed — You can enter and exit without moving the market.
3. Focus — You don't need to trade everything. Find 3–5 high-quality setups per week and execute them well.
The Framework I Use
My trading strategy is built around a few non-negotiable rules:
1. Only Trade in the Right Market Environment
Check $SPY and $QQQ daily. Is the 10-day SMA above the 20-day SMA and rising? If yes — the market is in bull mode and your long setups have the wind at their back. If no — reduce size drastically or sit on your hands.
2. Only Trade Stocks with a High ADR%
The ADR% (Average Daily Range percentage) tells you how much a stock moves on an average day. I want stocks moving at least 5–8% per day — anything less and the trade math doesn't work for small accounts.
My custom ADR% indicator shows this directly on your TOS chart.
3. Volume Confirmation is Non-Negotiable
I don't trade breakouts without volume. Period. If a stock breaks out of a key level on below-average volume, it's fake. My Volume EMA indicator shows you instantly whether today's volume is above or below the 22-day EMA.
4. Risk No More Than 0.5–1% Per Trade
This is the rule that keeps you alive. My Position Sizer indicator calculates your exact share count based on your stop loss and max risk — automatically. No more guessing.
5. Let Winners Run
The worst habit most traders have is taking profits too early. If a stock is moving in your direction and the trend is intact, there's no reason to exit. Trail your stop and let it run.
Final Thought
The edge in trading isn't some secret indicator or insider knowledge. It's discipline, patience, and a repeatable process. The tools I've built are designed to remove the cognitive load so you can focus on what matters: executing your process consistently.
If you want to learn the full strategy and get access to my weekly watchlists, join the Discord.