1) Stop chasing stupid memes and "hot" stocks. Create your own opportunities.

When I read the daily chat in subs, including this one, it gets really depressing quick. All I see are the same
tickers posted over and over and over again, and usually total dogshit stocks. Everyone just copying what others
tell them to trade, so few actually thinking for themselves or finding their own trades and opportunities. Like, why
is half this sub bagholding SOFI and mentioning it nonstop? Was some recent DD posted on it and you all just
hopped in blindly? Why the obsession with the other same tickers, like CLNE, that get posted again and again?
Because others were posting about it? Look, I won't deny you can sometimes, potentially make money in meme
stocks or reading DDs. But chasing memes or pump and dumps is not going to make you money long term.
Maybe you looked at the fundamentals and you thought it was a great company with long term prospects. Ok,
sure. But if you are trading on fundamentals, why the hell are you buying short term options? If you are a
fundamental trader then you are a buy and hold investor with a year plus timeline. If you are buying weeklies or
looking for a quick pop, fundamentals don't mean shit, technicals are what matter. Stop mixing long term strategy
with short term trading, it just doesn't make any sense.
Set up your own scanners. Do your own research. Find your own opportunities.
2) Stop trading slow as fuck megacap stocks with a small account.
When I see people with sub-million dollar accounts trading stocks like Ford or even Apple, I can't help but cringe.
The one HUGE advantage that small accounts have is that they can trade the fast, explosive, hard moving small
cap stocks without having to worry about issues like liquidity and wicking the price upward. The reason you can beat
the market hard with a small account is because you can trade the highest beta stocks that guys like Buffett can't. But only if
you focus on them.
Trade the fast stocks. The stocks that really move hard. Those are the stocks that will get you rich quickly, not
fucking BABA on a 2% move.
There is an acronym you need to learn, and become obsessive about. That acronym is ADR. Average Daily
Range. If your account is less than a million, you should not even be looking at stocks with an ADR less than 5%.
They are too slow. When someone asks me to judge a stock or setup for them, the very first thing I look at is the
ADR. If it is less than 4 or 5 ADR, I tell them it is dog shit, whether I'm bullish on it or not.
AAPL has an ADR of 1.6 at the moment. Garbage stock for small accounts. Is it rallying? Sure. It is rallying in
1.6% increments. Can you make money in that? Sure, even more with options. But you won't double your
account in a month with Apple unless you YOLO everything into short dated options. It works until you go broke,
which let's be honest, most people here have or will.
TSLA has an ADR of 3.5. Not terrible, but you can do much better.
SPCE has an ADR of 12.5. THAT is what you want to see. I made a 42% return on SPCE in 3 days last week,
with SHARES. And I will show you exactly why I bought SPCE and many others before they exploded last week.
It wasn't simple luck.
3) If you want to gamble with options, then go for it. But if you want to be an actual
professional trader, you probably shouldn't touch options until you've shown consistency with
shares first.
Look, if you just want to gamble and hope to get lucky, knowing you will probably go broke, that's fine with me.
That's the WSB way. At least you are being honest with yourself. But if you want to get serious about trading, to
make so much money so consistently you never have to work again, you should not be touching options until
you've proven you can be consistently profitable trading shares.
Leverage and margin is something that ought to be earned, not used just because it is there.
Options are extremely unforgiving. Let's say you buy a stock at 10, it rallies up to 12, then tanks back to 10 again,
and you sell. With shares, you've just broken even. Not good, but obviously not bad either. Breakeven is fine for a
trade. But do the same exact trade with options instead of shares, and you could be down 20% on it. Good luck
overcoming that downward pressure as a noobie trader long term. Trading is hard enough without adding theta
and vega rape to the mix.
4) If you want to be a professional, then think and act like a professional.
Professional traders are process oriented. They are focused on improving their trading process more than they
are on chasing the hot next trade.
That means having a method or system to your trading. Something you can repeat again, and again, and
gradually improve. It means using scanners and finding YOUR OWN stocks and trades, finding tickers neither
you nor most anyone else has even heard of before, and making tons of money on them. Browsing WSB for DD
or the next hot stock is not a system, and likely won't lead to any lasting success as a trader.
It also means you have to work fucking hard. Success is rarely easy, much less in something as competitive as
the stock market. If you are lazy, or don't want it enough, be honest with yourself.

Now, on to making money.

What follows is one simple setup that will make you money if traded correctly. I will teach you a process you can
follow and repeat and improve upon. This obviously isn't the only way to trade, but I can promise you it beats the
market significantly if done correctly. So learn it, and practice it, and start making money. From there, the rest is
improvement, and branching out, and finding new strategies to test and perfect on your way to becoming an
independent, professional trader. In other words, the rest is gravy.
Breakout Swing Trading Strategy: The Setup.

This is a purely technical trading system. A lot of people will tell you technical analysis is nonsense and doesn't
work. Those people do not know what they are talking about. I've made my living as a purely technical trader, and
I assure you I am not the only one. Over my career I've picked far too many huge short term winners using
nothing but charts for it to be simple luck.
To put it in one sentence: We are going to look for strong, volatile momentum stocks that are breaking out of a
consolidation pattern.
Sounds easy, and it is, but the details are what really matter. So let's go in depth.
We will start by analyzing five of the trades I've made as part of my $1M challenge, so you can see exactly what I
saw on the charts when I entered my positions. I drew two red lines on each chart to show the "flagging" pattern I
was watching. The chart on the left is daily candles, chart on the right is hourly candles. Proof of these entries and
exits can be found in both text and screenshot format in my history.
Example #1: IDT
Bought @ 37.70 on 7/1
Sold partial @ 47.00 on 7/2
Return: 25% gain in 1 day
Example #2: SPCE
Bought @ 37.25 on 6/22
Sold partial @ 52.8 on 6/25
Return: 42% gain in 3 days
Example #3: [redacted small cap]
Bought @ 3.81 on 6/24
Sold partial @ 4.44 on 6/25
Return: 17% gain in 1 day
Example #4: LPI
Bought @ 68.86 on 6/21
Sold partial @ 91.39 on 6/25
Return: 33% gain in 4 days
Example #5: CRCT
Bought @ 35.74 on 6/25
Sold partial @ 41.85 on 6/28
Return: 17% gain in 3 days

What do these charts all have in common?

1) Strong momentum stocks. Every one of these (except CRCT which was a recent IPO) had doubled or
more in the past six months. None of this buy low, sell high stuff here. We want to buy high and sell higher.
2) High ADR (Average Daily Range). You want to trade the fast stocks, the truly explosive stocks, and a
high ADR is one of the best ways to find them. The average ADR on these five stocks was above 8%. Our
minimum ADR will be 5%.
3) Consolidation. The stock made a big move upward, and then began trading sideways with a tightening
range. Forming higher lows and lower highs. The ideal flagging pattern we are looking for is technically referred to
as a "pennant."
4) Moving Averages. Every one of these stocks was either riding or bouncing off of their 20 day simple
moving average. There is something truly magical about that yellow line on my charts, and I don't know what or
why it is, but it simply works. This is absolutely key to remember, to avoid stocks that are either too slow or over-
extended, focus on those at or near the 20 SMA. Occasionally you can find good breakouts above the 20 SMA
that are riding the 10 SMA, but these have a higher failure rate in my experience.
5) Strong breakout from their range on high volume. A "breakout" refers to a stock punching through
the top of the consolidation flag you drew. Ideally you want to see fast rising price action on large volume. This is
your entry point.

If you want to see more charts and examples of this strategy, this four hour video should give you plenty. If you
are going to employ this strategy, I highly recommend investing those four hours.
The Trading Process
STEP 1:
Set up a scanner and run it the night before your trading day. I will give you all of my scanner settings
below to get you started. Your welcome.
STEP 2:
Go through every single stock in your scanner. Look for the most promising stocks. In other words, the
stocks that have the five criteria I listed above. If you spot a good stock, do three things: 1) Draw a flag around the
consolidating price action. 2) Set an alert to the top of the range, to notify you when a breakout from that range
occurs. 3) Add the stock to a breakout watchlist. I don't know if you can do any of this with Robinhood, but you
ought to have a real broker and charting software by now. I use ThinkorSwim, but there's plenty of good software
options out there, like TC2000. Don't be afraid to pay a bit for good software, if you have to.
STEP 3:
Before market open, you should now have a solid watchlist of breakout candidates. Go through the list
and see which setups look the closest to breaking out, or which have already broken out in the premarket action.
Also look carefully for anything that may bounce hard off the 20 SMA. These will be your primary focus, but you
should also have alerts to all other stocks in your watchlist to notify you of a breakout.
STEP 4:
If a strong breakout from the range occurs, meaning good rising action on good volume, you want to buy
quickly. I would recommend a minimum of 10% of your account, to a maximum of 25%, but follow your own
personal risk tolerance. Set a stop loss order just below the low price of the day. You should always be using a
stop loss, especially as a beginner and especially with these volatile stocks.
STEP 5:
If the stock has stayed above your entry price by the next day, you can raise your stop to the entry price if
you wish, to limit your loss to breakeven. After 3-5 days, or after very strong price gain, you should take some
profits. Anywhere from a quarter to a half of your position. The rest we will let ride.
STEP 6:
Use the 10 day simple moving average as a trailing "soft" stop for the remaining shares. If it looks like the
price action is going to close below the 10 SMA, then close out the entire position. The reason I emphasize close
is because intraday price action can be volatile, and you don't want to get stopped out from a small dip just below
the 10 SMA, if possible. If you don't have the time to watch the market during the day, feel free to use a hard stop.

Scanner Settings

ADR (Average Daily Range) above 5%

Price X% greater than Y days ago (1 month, 3 month, 6 month scanners)
Price within 15% of 6 day high
Price within 15% of 6 day low
$Volume (close * volume) greater than 3,000,000
Listed Stocks Only (No OTC, etc.)

1 Month: 25% Greater than 22 Days ago

3 Month: 50% Greater than 67 Days ago
6 Month: 150% Greater than 126 Days ago

Feel free to adjust these settings to get more or fewer results.

ADR code for ThinkorSwim:
#Hint: ADR
def len = 1;
def dayHigh = DailyHighLow(AggregationPeriod.DAY, len, 0, no).DailyHigh;
def dayLow = DailyHighLow(AggregationPeriod.DAY, len, 0, no).DailyLow;
def ADR_highlow = (dayHigh/dayLow + dayHigh[1]/dayLow[1] + dayHigh[2]/dayLow[2] + dayHigh[3]/dayLow[3] +
dayHigh[4]/dayLow[4] + dayHigh[5]/dayLow[5] + dayHigh[6]/dayLow[6] + dayHigh[7]/dayLow[7] +
dayHigh[8]/dayLow[8] + dayHigh[9]/dayLow[9] + dayHigh[10]/dayLow[10] +dayHigh[11]/dayLow[11] +
dayHigh[12]/dayLow[12] + dayHigh[13]/dayLow[13]) / 14;
plot ADR_perc = 100*(ADR_highlow-1);

Screenshot (all scanners combined)

The Other Side of Breakouts: Break Downs

I'm going to recommend that you don't anticipate breakouts. In other words, don't buy a stock simply because it is
trading in a good consolidation pattern. Wait for the price to break upward from the range before you buy. The
reason for this is that consolidation flags don't only break up, they can also break down. I'll just mention that this
can actually be used as a profitable shorting strategy, but I won't go into depth on that in this guide. And I don't
recommend shorting for a beginner trader either. Let's take a look at a few examples of recent break downs.

SOFI
SOFI formed a decent flag in June, but then broke down from that range on 6/24. This day on 6/24 would have
been a clear signal to either exit a position, or to short the stock. The price simply collapsed hard after this point.
AMC
AMC formed a very strong looking flag in June. I actually broke my own rules and bought this in anticipation on
6/29. But I exited the position quickly on 7/1 when it became clear the price was breaking down from its range.
After that, the price collapsed.
Putting it all together. More complex charts.

Let's take a look at a couple little more complicated, tricky charts. We need to stretch your brain a bit with less
simple examples.
[redacted small cap]

Here you can see three consolidation flags back to back, with differing follow through. Flag, breakout, flag,
breakout, flag, break down on the 20 SMA. You will frequently see hard rising stocks following this "stair-stepping"
sort of pattern. Still pretty simple, so let's try something a little harder to see.
PLBY

Study this chart carefully, and you can see everything discussed so far. PLBY formed a nice flag in May. It broke
down from this flag on 5/11. But then it seemed to trade sideways for a bit and form another, larger flag again.
Note that the breakout/breakdown point for the first flag was the 20 SMA, and the breakout/breakdown point for
the second flag was the 50 SMA. This is no coincidence, and will be seen often. Some stocks will move based on
the 50 SMA rather than the 20 SMA, and these can be traded as well, but they are slower moving stocks, and I
recommend for smaller accounts to just focus on those stocks near the 20 day.
The failure point for the second flag was on 6/14. After that the price has collapsed.
One more thing to note on this chart. There are two points where the price on PLBY broke hard upward from it's
range, but then quickly fell back down into the range. These are referred to as "false breakouts," and will happen
to you often. Note that the first false breakout occurred well above the 20 SMA, which is one reason to avoid
breakouts well above the 20 SMA. They just haven't consolidated enough and have a higher failure rate. Patience
is king.
Frequently Asked Questions

When is the best time to employ this strategy?

This strategy should only be employed during a rising bull market, or possibly during a sideways market.
Breakouts will not work well in a declining market, and some other strategy must be employed.
The absolute best time for breakouts is shortly after a pullback in the market, when stocks begin to recover
quickly. You can see some explosive moves during these periods.
How do you deal with breakouts that have gapped up in premarket?
Those are more difficult. It all depends on the price action. If something has gapped up huge in premarket, I will
generally just pass on it. But if something is just starting to break out in premarket, I will look to enter. The exact
percentage is difficult to say unfortunately, but anything up more than 10% is usually a pass for me.
If I do enter premarket gappers, I won't enter immediately on open. I'll give it one to five minutes to watch the
price action. If the price is stalling or dropping at open I won't buy it. But if it is showing strong volume and rising,
that is what I want to see for a buy.
Can this strategy be done with options instead of shares?
It is possible, but I wouldn't recommend it, especially to start. Breakouts have a high failure rate, and options are
very unforgiving to failed trades. If you do decide to use options, I would suggest being much more aggressive
with your profit taking, perhaps even selling same day on a breakout. Since this is a swing trading strategy, you
can go quite short dated on the expiration, around one month dated should be fine unless you want to try for a
bigger move or gamble with even shorter expiry.
What do you set your stop losses at?
Already explained above. First day, the lows of the day. Second day, cost basis. After that, use 10 day SMA as a
trailing soft stop.
When do you take profits?
Already explained above. Take quarter to half profits after first big run up, usually around 3 to 5 days. Then use
the 10 SMA as a soft trailing stop.
What if the stock gaps down hard overnight? My stop won't protect me from that!
This is true. The only way to avoid overnight risk is to be a pure day trader and to never hold overnight.
Personally I find swing trading to be far more profitable, since the big moves take days to play out. Swing trading
also gives you much more time and freedom to live your life, since you can simply hold a winning position for
days or even weeks, and don't have to sit and stare at a screen all day long to make money.
Stocks gapping down big overnight is actually quite rare, but eventually you will experience it. But, let's do the
math. Let's say you put 10% of your account into a stock, and some news comes out and it tanks a whopping
30% overnight. As a percentage of your account, that is 10% * 30%, or 3% of your account. Definitely not good, of
course. But you aren't going to go broke losing 3% of your account. It can be overcome with time and good
trading. This is just part of the risk of being a trader.
I am curious if you handle "memestocks" or other very popular stocks differently. I hear a lot of people say these stocks
don't act rationally. Do you take more/less risk with stocks like this?
Yes, meme stocks often have much more support and move stronger than most other stocks. For this reason I
usually have more conviction to trade them, so I will put on a bit more size or even slightly anticipate the
breakouts. But I don't trade meme stocks just because they are meme stocks, they must fit the criteria and
patterns described above.
Meme stocks represent opportunities for massive gains and so you should take a bit more risk with them. If you
got in GME early, which I did, you can make life changing money.
Unfortunately today you've got too many people trying to pump too many names and everybody ends up diluting
each other. It's not like a few months back when the names were much more consolidated.
Do you use any fundamentals in your trading?
None. My trading horizon is too short for fundamentals to make any difference in the price action. Fundamentals
only make a difference for long term investors. If you are a short term trader, you don't need to worry about
fundamentals at all imo.
Additional Resources
I was going to offer several links here, but don't want to break any rules... Educational Material, Screenshots and
Charts, and a Live Trade Log can all be found in my submission history.
Thanks for reading, and good luck in the market.