Thread by @SRxTrades

In the last 3 months I made close to $1 million dollars

While most people are panicking on this pullback...

I'm planning to make the next million into the end of the year

Below I'm going to explain exactly how I'm going to do this🧵👇

To start off, we have to understand the point of this strategy..

The goal is to simplify trading and look for repeatable patterns to trade

We want to take advantage of strong market trends & use the leverage of options for a low risk high reward approach

Using big momentum swings in the markets we can catch the biggest moves

While alot of people panic over a market pullback this is when some of the new leaders and best setups emerge in the markets.

we want to be in the strongest stocks in the market that institutions are pouring into

that way when the markets move higher these will be the leading stocks

heres how we are going to identify these:

1. Finding market strength and weakness

The easiest way to find out if the markets are trending is to:

Pull up a chart on

and add the 8, 21, 50 EMA's

EMA's can be used as a momentum gauge for when the markets are the hottest and stocks follow through the most.tradingview.com

2. Framework

Now that we have the EMA's on the chart, we can make some rules for when we want to be active in the markets.

Use $SPY / $QQQ

1) Whenever $SPY / $QQQ are above the 8/21 EMA's, we want to be long with full size/conviction

2) Whenever $SPY / $QQQ are below the 8/21/50 EMA's, we want to use smaller size or completely avoid trading the long side

This way we have a guide for when markets are going to be following through, and our strategy will be the most effective.

We can also use this on the individual names we are swing trading to narrow down our criteria.

This framework alone can save us from weaker periods and chop in the markets...

under the moving averages = derisk

above the moving averages = foot on the gas

since we are trading under the 8/21 on $SPY/$QQQ as of Oct 12 we want to wait for these moving averages to reclaim in the coming days/weeks before putting on a long position

3. Scanning for leading stocks

Easiest way to scan for leading stocks and themes is to use: tradingview.com

Click on screener(bottom left)

We want to narrow it down to search for liquid stocks that are leading the market higher on volume

Here are the parameters I use in my scan:

Price: Over $3
Market cap: Over $300m+
Volume: Over 500k
Change: Over 0.01
Adr: over 2%

And most importantly, the 21,50 EMA's below price to find leading names

Now we have a list of the strongest and most liquid stocks in the market

Sort the list by volume descending

4. Setup

You are now looking for a chart that is setting up in a tight base with a tight pattern forming

The goal is to find names that are either just breaking out or about to breakout of tight bases

Use this checklist

1. Tight pattern or base
2. decreasing volume on consolidation
3. Setting up above the moving averages

Below are some examples of setups I look for

The goal is to scan through all these stocks and look for setups that match our criteria

we want to find 4-5 of the best looking stocks and create something called a focus list:

a focus list is a more in depth watchlist consisting of a few of the best looking charts in the market.

by focusing on only a few of the best setups in the markets we can stop ourselves from overtrading and focus on executing our plan.

A name that caught my attention on my scan:

$MP

The stock is setting up in a massive daily base

leading theme in precious metals

Relative strength on market pullback

volume decreasing in consolidation and increasing in expansion

5. Entry

The easiest way to enter is to find a trigger level for the breakout

What I look for, is a previous level of resistance that price has rejected multiple times

In this example, you can see the $82.5 price level has rejected multiple times

If price breaks over that level, then we can assume a daily breakout is likely to occur

We want to confirm the breakout with lots of volume over the trigger level

Entry is taken on a break above the trigger level

For confirmation, we want to see high volume on a break out of the base.

For example $IONQ recent base breakout:

-Leading stock in emerging theme
-Breaking out of a tight daily base
-Ton of volume

Enter long at the break above the the trigger level

We can use the 5m time frame to confirm our entry.

Break over our key level with volume is the entry

Stop loss is placed on the low of the daily candle that broke trigger

to make sure that we manage our risk in case of a failed breakout

7. Targets

Take profits at previous resistance levels

If price is making new all time highs, use Fibonacci levels to scale out.

My scale out strategy is 25% of the position at a time and moving up stop to break even after first trim.

after third trim you leave runners with a trailing stop under the 8 EMA

This sets you up for a huge r/r trade

for breakouts we do not want the stock to comeback to our entry level

the strongest stocks will lockout traders and keep running

this is why my scale strategy works so well to hold winners

The goal is to hold onto the trade until targets are hit or you are stopped out

This will help you make trading emotionless Everything is preplanned and you are taking amazing risk to reward trades

Breakouts allow you to capture huge moves and using options contracts you can use the leverage they provide to risk small amounts of money for bigger hits This works best when markets are very strong and setups are firing(above moving averages)

Like any other strategy this is not a holy grail strategy but there's a reason why some of the best traders in the world swing strong names, and buy leading stocks in leading sectors.

I've personally used this strategy to catch:

$OKLO
$RKLB
$HOOD
$RGTI
$IONQ
$QBTS
$TSLA

in just the last few months

I post these setups every night on my twitter with trigger levels, option contracts, and targets.

So you can follow along, and learn the strategy.

If you enjoyed and learned something from this thread LIKE+RT❤️for more trade plans and educational threads.

I also made a video about this:

instagram.com/reel/DPulu3RDM…