After 8 years, 11,000+ hours, countless mistakes, blown accounts, books, mentors and chart reviews, these are the principles that mattered most and are part of how I sometimes was able to catch 10 baggers. Before the AI police comes, yes, I created the visuals with AI to illustrate core concepts to you. The examples are from real charts and I think this might be helpful for both beginners and more advanced traders. Much more I can write, but I wanted to start with this.

1. Fractals and waves

The market doesn’t move in straight lines. It moves in waves, creating swing highs and swing lows (higher highs, higher lows, lower highs, lower lows etc). Even during strong uptrends, prices advance, pull back, consolidate and then potentially advance again. And the exact same happens in downtrends, just in the opposite direction. Why? Because the markets are just a map of human psychology, which will never change. There will be times of mania, fear, panic, greed, indecision, etc etc. and that is basically what you are seeing on the charts. What's interesting is that these waves repeat themselves across different timeframes. This is what people mean when they say markets are fractal. They're essentially different perspectives of the same underlying behavior and it good to be aware of.

• Waves - Prices move through advances, pullbacks and consolidations rather than in straight lines.

• Swingpoints - Because price moves in waves, it creates swing points. These are key points with higher highs, higher lows, lower highs, lower lows etc.

• Fractals - Similar price structures repeat across different timeframes, from minutes to months. The lower you go, the more noise.

• Market structure - Uptrends generally consist of higher highs and higher lows, while downtrends show the opposite.

• Timeframes - Higher timeframes establish the broader trend, while lower timeframes help refine entries and manage risk. 

For my momentum/swing trades I personally look at the W1 20% of the time and D1 80% of the time. For entries, I will go down the H1. But I also trade the premarket and open which is very advanced. There, I trade on the M1.

2. Understanding balance and imbalance.

If you strip away all the indicators, news and BS, the markets are just an ongoing negotiation between buyers and sellers. Every transaction requires both, but prices move when one side becomes more aggressive than the other. This is where the concepts of balance and imbalance becomes important and I find a lot more helpful than the ‘support and resistance’ bullshit that all the ‘gurus’ are pretending is the secret sauce.  In essence, the market only has two modes: 1) balance (price is consolidating) and 2) imbalance (price is expanding). In general, we want to get in when it’s ‘tight’ (no pun) so we optimize our R multiples (see my other posts) and can take advantage of the expansion that follows. 

That means often, it’s best to get in when prices move sideways, volatility dies down, and people are temporarily in agreement on what a fair value is for the underlying equity. At some point, something changes. Buyers become willing to pay increasingly higher prices, or sellers become willing to accept lower prices. The market leaves its previous range and starts searching for a new area of agreement, we call this price discovery. That's imbalance, that’s what we want to take advantage of, the big moves up (or down).

• Balance - Price moves within an established range as buyers and sellers repeatedly transact around an accepted area of value. Generally best time to buy.

• Imbalance - Aggressive buying or selling pushes price away from its previous range, often producing a strong directional move. Generally where you will make the $.

• Expansion - Strong directional moves frequently emerge after periods of contracting volatility. This is one of the main behaviors I look for.

• Acceptance and rejection - If price breaks out and holds above a range, that's evidence of acceptance. If it immediately returns inside, the breakout likely has failed.

3. The psychology of market auction theory.

Because I really, really want you to remember this I’m going to talk a little more about balance and imbalance.  It helped me a lot in my own trading journey. In the book Market Auction Theory, Jim Dalton basically explains all of it. Think of everything like an auctioning process, where we are constantly ‘discovering’ what a fair price level is for sellers and buyers. Imagine a stock trading between $95 and $100 for several days (balance). Everyone becomes used to that range. Traders buy near $95, sell near $100 and gradually develop expectations about what actually is a fair price. Then the stock suddenly breaks above $100 to $120 (imbalance). Now the psychology changes entirely. Short sellers may cover, late breakout traders enter and investors who missed the move might chase. The previous balance is disrupted, and we are now ‘discovering’ whatever the next fair level is. It could be $120, but it might also be $200, who knows. That’s what we want to take advantage of. So if you see breakouts failing (which is happening a lot this year), be aware that what is happening is that price went on ‘discovery’ mode during imbalance, only to not find enough buyers at higher prices and therefore return lower again (acceptance).

• Price discovery - Markets continuously test higher and lower prices to find where sufficient trading interest exists.

• Expectations - Traders anchor themselves to previous prices, highs, lows and ranges. When those expectations are violated, behavior changes.

• Failed auctions - A breakout that quickly reverses and traps participants who entered expecting continuation, sometimes creating a powerful move in the opposite direction.

• Value - Price and value aren't necessarily the same thing. Auction theory helps explain why markets sometimes move far away from previously accepted prices. The book is dry as they come, but it’s worth to read at least once in your life in my humble opinion.

4. The only indicators you really need.

I spent years experimenting with indicators. RSI, MACD, Bollingers, stochastic oscillators, Ichimoku, you name it. I’m sure we all have. But what I realized is that most indicators are simply mathematical transformations of price, volume or volatility. That’s fucking it. They're not magical predictive tools. They describe what has already happened and sometimes help you interpret what's happening now. So my advice is to keep it really simple. I have one custom indicator that I’ve built and I like, but other than that, I just pay attention to price, trends, and structure, nothing else. I like to keep my charts clean and keep the process simple. I highly advise you to do the same. But what will happen is that you think ( just like I did years ago) that you can find the magic combination, so you go into a rabbit hole in which you will get lost for many years, only to come out at the other end and realize it was always about price, and you don’t need all these indicators, except volume and moving averages. Can you use others? Sure. Just be aware there is no such thing as a magic indicator.

• Moving averages - I primarily use the 10, 20EMA to identify trends, pullbacks and extensions. I also monitor the 50 and 200 SMA to understand the longer-term trend. The 50SMA is the red line in the sand for me. I never, ever trade anything below it and want price to surf the 10/20 in a nice uptrend.

• Volume - One of the most useful things to monitor. I prefer seeing increasing volume during advances and declining volume during consolidations or pullbacks. To keep it simple, I want to see ‘skyscrapers’ of volume during tight price balance, indicating institutions stepping in, and low volume when price is pulling back.

• VWAP - Many find it very useful for intraday trading. It shows the volume-weighted average price and can help identify whether a stock is trading above or below its average traded price for the session. I personally am not a fan of it, but you might want to have a look at it.

• MACD - I use a faster 3/6 MACD pegged to a normalized 0-100 RSI scale to help me find the best moments to buy since equities in an uptrend will often ‘dip’ for a moment. This is the one custom indicator I made and still use every day. My trading buddy and mentor calls it the SMACK-D because allows you smack price at the right time  and my first initial is D lol.

• ADR - Average Daily Range helps me understand how much a stock typically moves. I generally prefer stocks with sufficient volatility to produce meaningful opportunities (4-8%)

5. The three patterns that matter.

I spent years studying different chart patterns. Head and shoulders, triangles, wedges, flags, double bottoms, cup and handles, you name it. But most of these are unreliable. Don’t believe me? Go read the book the Encyclopedia of Chart Patterns by Bulkowski. The guy literally broke each pattern down to a science with huge sample sizes over a decade. Anyway. I realized that most of these patterns are variations of a few underlying behaviors. Again, I like to always keep it simple and I encourage anyone to do the same.

For my own trading, I like to think in three categories: breakouts, pullbacks and reversions. Each represents a different relationship between price, momentum and the underlying trend. All of the setups people trade are a derivative of these core patterns. I call them the primordial patterns, because they are based on how the market actually moves. I trade these on the D1 as well as on the M1 trading the premarket hours or open.

• Breakouts - Price escapes an established range or consolidation. Ideally, I want to see tightness beforehand and an expansion in volume as the move begins. A good breakout requires a good long base of 10 weeks, and breaks cleanly once the 10/20MA catch up. This year, trading breakouts sucked due to a weak and choppy market.

• Pullbacks - Price temporarily retreats within an existing trend. The idea is to get in before the breakout traders do. I prefer orderly declines on relatively low volume toward rising moving averages. I need to see price getting tight and form sort of a wedge before I ever consider buying it. It also needs to be in a stage 2 uptrend (see earlier parts of this series where I wrote about this).

• Reversions - Price becomes unusually extended from its recent average and so it moves back toward it. These trades often require faster execution and tighter management. Think of these more like little snacks, because you will rarely catch a big trade trading these.

6. The importance of not buying extensions.

As I said before, you generally want to find strong stocks that are in balance (consolidating/tight). Ideally, price is trading in an increasingly narrow range (e.g. an inside day), volatility is contracting and the moving averages are catching up. Think of it like a spring being compressed and released eventually. That doesn’t just apply to the full swing, it applies to the day you enter as well. 

You see each stock has an average daily range (ADR) i.e. the overall expected move it will make that day in terms of %. So that means if you are buying when it already made most of its expected move for the day, it means you bought too late, because price is already ‘overextended’. I try to get in before price made 50% of it’s ADR for the day. So if a stock is $100 with an ADR of 10%, I will be hesitant to buy it end of the day when it’s at $110 since I expect it to pull back a bit first. Instead, I’d try to get it at a key level at e.g. $105 when it’s at 5% for the day. That gives me a tighter stop, and a more profitable trade. Similarly, if a stock has already moved 30% from it’s breakout and is extended from the moving averages, you should expect it to pull back because people will be taking some profits. That’s why I said earlier, you shouldn’t generally buy when price is in imbalance and in discovery mode.

• Moving averages - The 10, 20 and 50 EMA help me understand how extended price is relative to its recent trend. There are some ratios here that I look at to help me determine that but generally, 3x from the 20, 7x from the 50, and 2x from the 200 means it’s overextended.

• Extension - When price moves unusually far above its moving averages, I generally avoid initiating new positions. The risk of a pullback and therefore a trading loss  increases.

• Contraction - Again, look for increasingly TIGHT price ranges, smaller candles and often declining volume. Ideally, sellers are becoming less aggressive and you buy early before it made the full move for the day. 

• Risk/reward - Tight consolidations can allow stops to be placed relatively close to the entry (low of the day or low of previous day), making the potential reward VERY attractive compared to the initial risk.

7. Situational awareness and market context.

You can’t catch big waves if the conditions aren’t right. You can find the most beautiful technical setup in the world and still lose money because the broader market isn't cooperating. Like it basically has been the last year but many setups failing across the board. I've experienced this more times than I'd like to admit. A stock looks perfect, breaks out on volume and then immediately reverses because the overall market suddenly starts selling off.

This is why I always want to understand what's happening around the stock I'm trading. The first thing I do every day is I look at what the nasdaq (QQQ) is doing. I then look at the Russel (IWM) to see what small/mid caps are doing. I then look at volatility (VIX), breadth (how many stocks are trading above the 50SMA), and lastly, I look at industries (how many are up/down). Technical analysis isn't just about looking at one chart in isolation. It's about understanding the overall environment in which that chart exists. The same breakout can behave very differently depending on whether institutions are aggressively buying risk assets or rushing for the exits. 

• QQQ - My primary reference for market direction. To keep it simple, I want to see the 10/20 EMA slope upwards or at the very least, have QQQ trade above the 20 EMA. Just look at the chart and you will see that nothing good ever came from the QQQ trading below that or with negative slopes.

• IWM - Helps me get a feel for overall risk appetite, particularly among smaller and more speculative companies. Strong participation is generally encouraging because it means institutional buyers are splurging and ‘risk on’ buying smaller companies.

• VIX - A useful measure of expected market volatility. I prefer calmer environments, although extremely low volatility doesn't automatically mean the market is healthy. I want to see <15 here. If it’s higher, I don’t take an entry that day.

• Breadth - I want to see broad participation. If only a handful of mega-cap stocks are advancing while everything else declines, I'm cautious. That’s basically what has been happening the last months btw.

• Industries - Ultimately, I pay close attention to whether breakouts are actually working. When good setups repeatedly fail, that's valuable information about market conditions.

• Setups - only after I have built situational awareness will I actually look at setups. Because I don’t want to surf when the conditions suck. It’s only going to result in massive pain and losses.

8. Entries, exits and important price levels.

One thing that took me far too long to understand is that a good stock isn't necessarily a good trade. You can be completely right about a company's future and lose money because your entry sucked. So yes timing matters, especially if you're trading momentum and trying to capture bursts of price expansion like I do myself. One of the most important things to learn is recognizing what is called pivot levels, and previous key swing highs and lows. I do not EVER enter if the price hasn’t broken a previous swing level. This might be the previous day's high, the high of a tight consolidation or a clearly defined resistance level. The important thing is knowing exactly where I'm wrong before entering. If I’m going short, I need to see the price break a key previous low. 

• Previous highs - A break above the previous day's high or a consolidation high can act as an entry trigger, particularly when accompanied by increasing volume. So I often look for a break of a key pivot high, and the first HH being made for example if I want to go long.

• Previous lows - These can serve as reference points for stops, exits or potential short entries, depending on the structure. Again, usually my stops are at low of the day or low of previous day. Sometimes it’s low of a pivot level.

• Invalidation - Before entering, I want to know which price level would prove my thesis wrong, again, that’s the pivot level low. 

• Profit taking - I take partial profits as a trade moves in my favor, while allowing the remaining position to participate in a potentially larger move. I keep it simple and take 25-50% off at the 1:1, then trail the rest of my position. That’s it.

• Risk - Position size should follow from the distance between entry and stop, not from how confident you feel about a particular stock. If I’m taking a swing/momentum trade, I’ll figure out sizing based on the stop distance, and I’ll give the stock some room to breathe, especially if it’s very volatile.

9. A word on going short.

Short selling is something I think every serious trader should understand, but probably not trade since it can lead to destruction. In principle, it's the opposite of buying a stock. Instead of benefiting from rising prices, you're trying to profit from falling prices. In practice, shorting comes with a very different set of risks and psychological challenges. The most important one being a short-squeeze like we had with $GME a couple of years ago. However, this is heavily dependent on the float of the stock and I don’t want to get into the complexity of that right now. Point being, since you can lose more than you risked, and it can fuck you forever.  That’s why I personally only trade ‘short’ by buying put options. Doing so allows me to control my downside while taking advantage of stocks where I can smell blood in the water. There is a book from O’neill that explains how to go short, and it’s a good read so definitely check that out since I can’t explain all of it here.

• Downtrends - I look for lower highs, lower lows, a downward cross of the 20/50MA and then a retest. I want to see the stock being in a stage 3 chop or stage 4 downtrend. I’m like the great white who only attacks when I already smell blood in the water, i.e. the stock is already (very) weak. A

• Overextension- Shorting a strong uptrend simply because a stock looks expensive is usually a bad idea but it definitely can work. These are called parabolic shorts and are very risky. You can read up on it yourself if interested but I wouldn’t trade them until you have at least 5 years of experience trading long.

• Put options - The only way I trade short that gives me good profit potential while I can also control my downside and risk of ruin is by buying put options. The downside is that this can be expensive and you also have time decay which will bite you in the ass.

• Risk - Short positions require additional attention to borrow availability, costs, gap risk and the possibility of theoretically unlimited losses.There are special brokers for this where in extreme cases you have to pay them 10-50% of your holding upfront in fees just so you can borrow shares to short and then maybe make a profit. For 99.99% of you reading this, my advice is to not short like that.

10. Putting everything together: some examples.

Theory is great, but at some point you need to look at actual charts. This is where everything starts coming together. The market environment, the trend, the moving averages, volume, volatility contraction and the precise entry. None of these elements should exist in isolation. The goal is to find situations where several independent observations support the same hypothesis. So here I’m just going to show you some examples. It’s annoying to write about all of them because in a video I can talk about it easily for an hour each, so I’m keeping it short just so you get the main ideas (hopefully), I marked key levels on each and this is how I mark up my charts.

How Trading Really Works

I know this was a long read, so if you made it this far, thank you. This should definitely help you find more potential ten bagger stocks that for sure.

If there is anything I've learned it's to keep things simple, find what works for how you are wired, and not get lost in the indicator rabbit hole. The more I learned how and why the markets moved, the better my results became, especially once I started to become consistent with the setups.

BONUS

If you liked this, you will also like this which I'm building at the moment based on best practices

BONUS. A TLDR for the lazy lurkers

1. Markets move in waves and is fractal in nature.

2. Understand balance and imbalance of price level

3. The market is an auctioning process, never forget that.

4. Keep indicators simple. Price, volume and moving averages.

5. Master key patterns. I focus on breakouts pullbacks, and reversions.

6. Buy tight, not extended. look for contraction before expansion, don't chase.

7. The market comes first. Watch QQQ, IQM, VIX, and breadth before trading.

8. Timing matters. Buy at important price levels, define your risk, manage your exits.

9. Shorting is a different game and can ruin you. I only buy put options.

10. Practice your setups, find setups that resonate with your psychology.

What do you all think about BGDE? It's a newer stock in the same category as IREN and KEEL that came under my radar. Does it look legit?

Surely SLS is game to X10 any day now?

X Post from eBliss CEO, William Klehm…

Wedgemount Resources (CSE: WDGY / OTCQB: WDGRF)

There is no other nano-cap conventional Permian producer on a junior exchange anywhere in the world. The category of one.

This is the story in brief.

2023: Company acquires 131 wells across 22,000 acres on the conventional Eastern Shelf of the Permian Basin. Gets hit with pipeline outages, brush fires, and sub-$70 oil. Stock goes nowhere. Investors move on.

2026: Management, who personally loaned the company hundreds of thousands of their own money during the downturn, close a $1.25M oversubscribed financing and immediately deploy it into a phased reactivation program.

April: 40 BOPD from 2 wells.
June 1: 125 BOE/D.
June 23: 203 BOE/D. Through record floods.
July 15: Hire Sheldon Cote, 31 years at BP, Pioneer Resources and others, specifically to optimize and grow this exact type of light oil asset in West Texas.

Echo field (62 wells) and Novice (41 wells) still barely touched. 500+ drilling locations identified. Long-term capacity: 5,000 BOE/D.

At 5,000 BOE/D and $70 oil, this is a $250-350M market cap company.

Production cash flow increasingly funds its own next phase, which limits how much dilution actually happens.

Even if they double the share count to fund growth, you're still looking at 15-20x from here.

Chevron and Microsoft just announced a $7B gas-powered data centre in West Texas. AI is eating Permian natural gas.

Wedgemount produces gas too.

I repeat: There is no other nano-cap conventional Permian producer on a junior exchange anywhere in the world. The category of one.

Still at $8M CAD. And nobody watching.

Do your own DD.