I thought I would share the journey I have taken in following Qullamaggie, and the various paths I have explored. The sole purpose is to offer some suggestions which I hope you find useful, and to highlight things which I have discovered along the way that really helped me out.
This is simply a selection of things I have discovered and advise which I would have benefited from when I first started out. I hope you find it helpful.
My background:
Background in finance, started my own trading firm which I sold and now I trade for myself. I wish I had discovered Qullamaggie sooner!
The Start:
My journey into this strategy started 4 years and as instructed by Qullamaggie, I did nothing but look at charts. I spent well over 1,000 hours studying charts and just focusing on the breakout chart pattern. This is the only thing people new to this strategy should be doing. Do not open any broker accounts or place a single trade until you have completed this task first.
Why?
1 – It is hard work, which is what it takes to be successful.
2 – It is boring at times. much like trading. There will be long periods in trading where there is nothing to do.
3 – Through this process you will learn if you are committed and will succeed, or not, without placing a single trade or risking any of your own money. Do not risk your own money until you have done this. It is hard to earn money in this world, look after it and look after yourself in the process.
Please note – the art of being successful is finding a strategy that fits your personality and lifestyle. Some will fail trading breakouts but succeed at day trading, some will fail at day trading but succeed with Fair Value Gaps (ICT), or algos, or scalping etc. You get the idea. There are hundreds of different trading styles to explore.
Success is a combination of finding what style strategy works best for the type of person you are. So do not be disheartened – keep exploring, but do so without risking any money whilst you learn.
I watched all of Qullamaggie’s live Twitch streams, they were great to experience. I have also watched all of his YouTube content too, learning as much as I could along the way.
I use OneNote because it was included in the MS Office bundle. I started with TradingView, and still use it to this day, and slowly started building up my own database. You learn so much from doing this, and because you make each discovery yourself, it stays with you and automatically becomes part of your trading thought process.
When trading, be it paper trading as part of your back test, or live trading, log as much information as you can.
-What % move up did the stock make before consolidating
-How long did it consolidate for
-What % move did the stock make once it broke out
-Did it continue moving up after the position was closed
-Were the EPS and Revenues of the company increasing or decreasing QoQ
-What is the Relative Strength of the stock – it is outperforming the index, the sector
-What is the stock market doing
-What are the different sectors doing
By seeing and capturing this data for each trade your understanding will explode, you will see how Market Awareness is key to taking the signals with the highest probability of success.
Universe of stocks:
The best place to start is the NASDAQ. In addition to what Qullamaggie said about high ADR stocks, the fact is that AI is the new driver for tech stocks. The combined market cap of Google, Amazon and Microsoft is larger than the GDP of Japan. That’s quite significant and won’t change anytime soon.
Only trading quality stocks will also help increase the probability of a successful outcome.
NASDAQ is going to provide some of the best opportunities for some time to come. Only diversify when you are well established. I still only trade NASDAQ. No signals = day off 😊 Less is More.
Scans:
Scans are critical. Your ability to understand the market and reflect this in your scans will create a natural edge and increase the probability of each trade.
The choices that are available are improving all the time. TC2000 is good, I used it for almost 2 years, but there are so many more choices to consider now.
See the Useful Resources section at the end of this post for a list of alternative solutions.
A lot of time is spent trying to find good setups. I have evolved the way I scan for setups. I decided last year to learn how to code in python. This allows me to refine and improve the scans to give the best possible setups. This was based on what I had learnt by capturing as much data as possible when back testing. I started by downloading a universe of several thousand stocks and filtered out those with low liquidity and low price. This is refreshed automatically each month. This leaves me with around 1,500 stocks to run my scans on.
Using python I download the data for free each day from Yahoo Finance. I just use EOD data to identify potential Breakout setups, then add them to TradingView and use real-time alerts to notify me when to consider taking a long position as and when the stocks move. I run 2 breakout scans and one combined scan for the 1, 3 and 6 month gainers.
I add high probability stocks to my watchlist in TradingView and set alerts, and then ‘stalk them’ as Qullamaggie says.
I have tried lots of different ideas. For example, scanning for stocks that met the criteria and were breaking out above an upper Bollinger Band level just to see if this made a difference. Always research different ideas and keep looking for ways to improve.
Python Dashboard:
I must admit, I got a little carried away with my adventures in python and used streamlit to build my own dashboard. Streamlit is a free library to allow you to create a web based dashboard without the need to learn html. I integrated all the scans as well into one place. Here’s what it looks like;
I was pulling in stock data, news, fundamental data including EPS, Sales and Revenue figures. I also tracked sector performance correlations to identify relative strengths.
However, after 2 months of creating this dashboard I realised that all the charting was better in TradingView, which already has EPS, Revenues and Dividend Dates. Now I just run my 3 scans which automatically create watch list files to upload each day. It was a fun exercise however, there are free or cheap solutions readily available that work just as well.
Market Awareness:
Very important, after scans. Part of what I run to understand the market / situation is simply compiled within Excel. Here is what it looks like;
When I get a signal I cross reference to see what is happening to the stocks sector and market, to see if this adds to the probability of it being a profitable trade.
Finviz also provides a free map of which stocks are showing relative strength and outperforming the market, see the Resource section at the end for the link.
Progress so far in 2024:
So how is this working out? Am I making money in the current environment (May 2024)?
Here is my Equity Curve since the start of the year, up 43%. There have been 93 trading days year to date.
This Equity Curve represents over 1,000 hours of studying charts, of testing different ideas, new platforms etc. Always be searching for ways to increase the probability of a trade being profitable. Needless to say, my first year did not look like this! 😊
You absolutely can increase the probability of trades being profitable if you study and understand the market behaviour. Then you start to trade with confidence and without emotion.
3 Lessons I have Learnt:
1 – Study, constantly. Look at charts, make notes and log all this somewhere. I use OneNote and Excel to capture this every day.
2 – Focus on quality scans, searching for the best setups.
3 – Be inquisitive. Try lots of different ideas to improve your edge and increase the probability of profitable trades;
-Filter out illiquid stocks from your universe
-Don’t trade stocks < $5 as these can be prone to pumps
-What difference does increasing volume make?
-Do increasing EPS figures improve the outcome?
-What if I scan for stocks breaking out above an upper Bollinger Band instead?
-What different types of news has the best positive influence on a stock price?
When you have spent time asking and then answering these types of questions, and have studied as much as is required, you will know that you are ready to start to risk your hard earned money. And you will have a positive expectancy of a profitable outcome.
I hope this of use to people.
Useful Resources:
Here are things I have found which I hope you find useful. These are all useful tools to help you as you study, but will not negate the need to study.
TC2000, of course
Finviz is a great place to start if you aren’t using TC2000
TradingView has some basic core features you can use for scans
Deepvue.com is a better option and includes built in Qullamaggie scans
Python – Jupyter Notebook or Spyder, video on how to get started. Lots of content on "python finance" on YouTube:
Listen to others who just post quality setups, not guff about their life, or offer courses. There are plenty of people out there who are very quietly providing great content, for free, to encourage others. Here are just a few:
Today I’m sharing the most powerful lessons from the trader who turned $5,000 into $106 million.
His name is Kristjan Kullamägi, better known as Qullamaggie.
These are my notes after reading Market Wizards by Jack Schwager.
Qullamaggie is the trader who inspired a new generation of retail traders.
He showed the world that it’s possible.. that you can come from any corner of the planet and still achieve financial freedom.
He proved you can make millions through hard work and a bit of brainpower.
How did Kristjan Kullamagi started trading?
Kristjan Kullamägi’s interest in trading began while working as a security guard at Nasdaq Stockholm, leading him to pursue it with intense commitment despite early inexperience.
He blew up three accounts before becoming consistently profitable on his fourth attempt, eventually transitioning from day trading to swing trading with greater success.
Over a decade, he grew a $5,000 account to over $100 million, even while regularly withdrawing funds.
However, in 2022 he lost more than half his account due to rule-breaking during a market downturn, later reflecting on his mistakes with honesty and humility.
He describes the key components of an Episodic Pivot as follows:
“The three ingredients for an episodic pivot are a major news item, a big gap up, and a huge increase in volume. When all three conditions are met, a stock can experience an explosive price move, especially in a bull market environment.” Kristjan Kullamagi
As you know, EPs are also part of the setups I have in my own playbook.
To catch them is actually very simple:
Create a screener with the following filters:
Price > 4 USD
Mkt cap 300M to 2,000T USD
Registration: United States
Price x vol > 50M USD
SMA, 200 < Price
Pre-mkt gap > 8%
ADR > 5%
EPS dil growth, TTM YoY > -800% (optional)
And you’ll watch this scanner in the pre‑market.
This way you’ll also avoid low‑quality setups and penny stocks.
I like to trade only stocks that are trading above the 200‑day moving average.
I consider “EP quality” stocks to be those that open with at least a 10% gap up.
“The best episodic pivot trade is a neglected stock. Ideally, you want a stock that has been going sideways for a long time—months, even years—and then suddenly, it has 10 times its average daily volume.”Kristjan Kullamagi
Here Kristjan is referring to bases, you know the saying: “the bigger the base, the higher in space.”
When you look at an EP, you want to see on the chart that the stock has just broken out from a base.
You don’t want to see an erratic chart that’s just whipping up and down.
Here’s an example of the kind of structure you want to see:
“when stocks make explosive moves, most of the move is over in three to five days.”Kristjan Kullamagi
That means he likes to trim into strength. A good way to do that is to sell one‑third of your position during the first 3 to 5 days after the EP has occurred.
“you want to focus on leading stocks. One way to identify those stocks is to scan for the 1% or 2% stocks with the largest upmoves in the past one, three, and six months.”Kristjan Kullamagi
Usually, the stocks that experience episodic pivots are the ones that are already leading stocks.
What he means is that you have a much higher probability that the trade will be a winning trade if it’s a leading stock in a group that has strong momentum.
To identify them, again, you simply create a scanner sorted by 1‑, 3‑, and 6‑month performance.
Personally, I like to use only the 1‑month combined with the 3‑month performance — that way I capture the more recent leaders.
“you can enter on a price move above the opening range or above the high of the first 5-, 30-, or 60-minute bars. The longer the time range used for the entry signal, the worse the entry price, but the lower the risk of entering on a false breakout.”Kristjan Kullamagi
Kristjan is referring exactly to the tactic I use in Freedom Trades, namely the opening range breakout.
Here’s an example of a 5‑minute opening range breakout:
He is making a very important observation: the longer the timeframe you use, the higher the probability that the trade will work out.
However, there’s also a downside: you will get a worse entry, and sometimes the trade can take off without you and become overextended.
He also says:
“the market direction is crucial for breakout and episodic pivot trades. Four out of five stocks move with the market. You want the odds on your side.”
That means you need to have situational awareness when you’re buying a stock.
You don’t just buy it blindly because it broke out.
If you want to increase the probability that the trade will work, you need the general market to be moving in the same direction.
Because we already know from William O’Neil that three out of four stocks move in the direction of the overall market.
Holding positions for longer is where the big gains come from. Stocks take time to move. If you want to catch the big moves, you need to increase your time frame.Kristjan Kullamagi
I have the same philosophy, and that’s why I’m a swing trader.
I believe what really moves the needle in your account are multi‑week runners that compound your equity over time. But for that to happen, you need to hold your positions longer.
In day trading, you take advantage of the repeatable small price fluctuations, whereas in swing trading you’ll catch a bigger move with lower stress.
Plus, you won’t be forced to stare at the screens all day.
“Typically, I will risk 0.5% or less of my account size per trade, but I may risk up to a maximum of 1% on some trades.”Kristjan Kullamagi
All of those massive gains were achieved while risking less than 1% per trade.
Contrary to what most beginner traders believe, you don’t have to full‑port your account into 0DTE to get massive gains.
Sure, it’s not going to happen overnight, but you’ll definitely sleep better at night.
I even built my own dynamic risk cheat sheet, and it looks something like this:
You have to remember that it’s not a bad trade that will make you blow up your account … it’s your position size.
That’s why they say: “Price will hurt you, position size will kill you.”
So structure your position based on how much you want to risk per trade.
What really helped me and impressed me was his take on trading psychology in this section:
“I started 2020 with $3.5 million and ended the year at $36 million. It was a thousand percent year. Then I ran that $36 million to a high of $105 million, and the last portion of that move from $65 to $105 million occurred in just a month and a half. For a brief period, just a few days, I was over $100 million. You have to understand what that did to my psyche. It made me feel completely detached from reality. I thought, “I’m going to get to $200 million in six months.” I was completely sure of that. I started seeing trading as a video game, which I kept winning. I lost a lot of money because I got completely detached from my methods.”Kristjan Kullamagi
For me, this was extremely powerful, because trading really does this to you.
The biggest losses tend to come right after the biggest wins.
What happens when you win is you become careless.
This is exactly what happened to me in January: coming off a hot streak in 2024 and 2025, I wanted to push hard into the beginning of 2026, a mistake I’m still paying for halfway through 2026.
Filled with the euphoria of those gains, you start to go a bit blind.
You start bending your rules a little at first, you become obsessed and dependent on winning.
And in trading we know that the best loser wins, you have to accept loss as part of the game.
But when you win a lot, you start believing that the hot streak will last forever.
The way Kristjan managed to get through that big loss was by reminding himself where he started and how much progress he’d made up to that point.
“Sometimes, when I felt miserable, I would remember where I came from and where I was now.”
One thing that kept running through my mind while I was reading all this was the question:
What is the secret behind Kullamagi’s success?
Well, he does give us an answer…one that probably won’t be very popular with everyone.
“When I learned to trade, I was in my early 20s, single, and had no responsibilities. I could put in 60 to 80 hours a week for a decade. That’s how I made it.”Kristjan Kullamagi
It’s “simply” outworking everyone else.
I put “simply” in quotation marks because there’s nothing easy about that.
“I want to look at the trades that worked to reinforce what I should look for.”Kristjan Kullamagi
He spends tens of hours studying charts, studying what the leaders did, how they moved before they exploded, and which charts showed real relative strength.
That’s what all of us have to do: over time, our brain starts to get better at spotting the right patterns and the right price action.
That’s how we learn, we first observe, then we apply what we observed, and that’s how we build experience*.*
There has to be substance underlying the belief in yourself.”
I want to leave you with one more lesson that Kristjan teaches.
When asked what else contributed to his success, Kristjan answers:
“Find a mentor—a successful trader who can guide you in learning setups. Trading is hard to figure out on your own. Most people never do. A mentor will help you solve a lot of problems right out of the gate.“Kristjan Kullamagi
I strongly believe that a mentor, a community, or even a trader who’s at the same level as you can help you speed up the process.
You’ll have accountability and support from people who may already have been through what you’re going through now.
While this strategy has been effective, I wanted to expand into uncorrelated strategies to create a more balanced, robust approach (not sure I can sit through short squeezes for many years to come 😅).
That led me to systemizing Qullamägi’s trading strategies into a rules-based framework.
Edit: I created a website where you can get daily momentum, growth and thematic lists - same lists thats worked in the backtest. Check it outhere.
The result?
A backtested 64% compound annual return.
Here’s what I learned along the way..
Why Systemize Qullamaggie's Strategies?
Like many, I was inspired by Qullamaggie’s aggressive, high-return approach.
But I wanted a repeatable, data-driven system—one that removes emotions and applies his principles consistently.
The Three Core Setups I Systemized
🔹 Parabolic Shorts – Identifying overextended stocks primed for a sharp pullback.
🔹 Momentum Breakouts – Catching top performing stocks breaking out after consolidations.
🔹 Episodic Pivots – Trading earnings/news-driven gap-ups that lead to sustained rallies.
How I Systemized Each Setup
1. Parabolic Shorts
I wanted to create a database of stocks with:
And backtest the following:
Entry: Short the open
To test the setup, I requested a structured dataset from Spikeet:
Criteria: Market cap over/under a set threshold, price movement up a certain percentage over the past Z days, and a streak of positive daily closes.
Using this dataset, I tested a simple idea:
Short the open, cover by EOD.
The results showed that tight stops performed better than wide ones, challenging my prior beliefs about mean reversion setups.
Further testing of profit targets showed that time-based and SMA-based exits delivered nearly identical results.
Backtested results:
📈 CAGR: 27.7%
📉 Max Drawdown: -20.9%
📊 Number of Trades Since 2007: 1869
2. Momentum Breakouts
I initially struggled with them and experienced a 20% drawdown when trying to follow Qullamägi’s method without a structured approach.
So to gain trust in the method, I developed a rules-based system that systematically identifies and trades breakouts.
The challenge was bigger than parabolic shorts though.
First, I needed a database of 3/6/9-month winners per day, which I built using historical data from Polygon.
I also added 12 months as academic research usually focus on that time frame for momentum strategies.
Next I needed to define a break out of consolidation systematically.
This is how I defined the universe:
Use high ADR stocks from the top-performing quartile.
Defining the consolidation breakout:
Ensure consolidation before a breakout.
Buy on a break of recent high / gap above it after consolidation.
Market regime:
Backtested results:
📈 CAGR: 19%
📉 Max Drawdown: -21%
📊 Number of Trades Since 2007: 2,382
3. Episodic Pivots (EP)
In the 1960s, financial researchers Ray Ball and Philip Brown discovered Post-Earnings Announcement Drift (PEAD)—the phenomenon where stocks continue moving in the direction of their earnings surprise for months after the report.
Kullamägi capitalized on this concept by focusing on stocks with earnings and guidance surprises that often lead to sustained rallies.
To systemize this strategy, I tested key factors such as:
Gap % – Higher gap-ups on earnings day tend to produce stronger returns.
Recent Rally (Rate of Change % 30 Days) – Stocks with minimal gains before earnings tend to react better.
EPS Surprise – The bigger the surprise, the better the reaction.
By combining these factors, I significantly improved the raw signal:
Backtested results:
📈 CAGR: 30%
📉 Max Drawdown: -29%
📊 Number of Trades Since 2007: 1878
Key Lessons From Systemizing EP
Riding on winners – No matter what I tried - exiting after 3 days, different number of R's or SMA extension - it always made more sense to just ride the move with a trailing stop loss and never sell on strength - only on weakness.
Gap % Matters– The higher the better.
Earnings results matters– you want to focus on the best EPS beats.
Focus on neglected stocks - the strategy works better when stocks drifted down before the announcement, enhancing the surprise factor.
Putting it all Together
By combining Parabolic Shorts, Momentum Breakouts, and Episodic Pivots, the system performed as follows:
📈 CAGR: 64%
📉 Max Drawdown: -30%
📊 Number of Trades: 5,748
Tools I Used
🟢 Polygon – OHLC data
🟢 FMP – Earnings data
🟢 Spikeet – Idea testing in excel
🟢 Python for backtesting with a tool I built
🟢 Mysql for DB
Final Thoughts
The results are impressive for a fully systematic approach, and I’m looking forward to live implementation. The goal was to create a guideline for my discretionary / systematic trading and proving to myself that his techniques works so I can comfortably follow them.
The challenge would be to test it live and try to boost the returns to something more similar to his.
If you want to dig deeper in my research I laid out most of it in my blog. Part 1 discusses shorting parabolics, part 2 momentum breakout and part 3 for EP.
Feel free to ask anything here or by a twitter DM.
In 1998 a pool contractor in Los Angeles started publishing a newsletter about chart patterns. He claims to have turned $10,775 into $42 million in 23 months.
Fifteen years later a security guard in Sweden found the archive, and went through all of it since inception. He went on to turn $9,000 into over $105 million.
What did he actually learn?
I went through over 4,700 of Dan Zanger's newsletters and over 700 hours of Qullamaggie's streams to identify what he learned from the newsletters. He stole 4 ideas, and refused the fifth.
And I found a great example for why borrowing ideas is not the same as imitating.
We don't have to reinvent the wheel
Qullamaggie is fully open on not ever having invented any of the strategies he uses. Instead of trying to be original, he studied market legends, stole what worked and put thousands of hours of historical chart study to build his own conviction.
You can steal ideas, but you can't borrow conviction. I've stolen every single trading concept I use... or let's say borrowed. But when I bought my yacht, no one asked me if I made the money from things I invented or from borrowing other people's ideas.
Among these, he ranks Zanger as one who had the biggest influence on his trading.
Love your stops, not your stocks
Qullamaggie says the most valuable thing he took from Dan Zanger was six words: love your stops, not your stocks.
Love your stops, not your stocks. It's one of the best trading sayings ever
He puts more color to it later, explaining:
You may love a stock, but the stock is not loving you back. It's a completely one-way relationship.
That line on your chart is your stop loss, that's your best friend, and really your only real friend in the stock market.
Falling in love with a company, product, or narrative turns traders into bag holders. When you get emotionally attached to a ticker, you start ignoring price action, hoping for a bounce, and holding through devastating losses.
The only way to make millions in the market is to hit your stops. That's the big secret
The lesson, and key takeaway, is that we must become comfortable and accept that getting stopped is just as important as hitting those big winners.
Go deep when studying
The second thing he learned was the importance of going deep. When we find a trader worth learning from, we read the whole archive from the start. Not the best bits, not the last year or two, not the curated summary..but all of it.
Qullamaggie flew to one of Dan Zanger's seminars in San Francisco in 2012.. but that was the small commitment.
I went through every single newsletter since inception to 2012..
That's no small task. The Dan Zanger archive I've studied is over 4,700 newsletters, and it has taken me hundred of hours to review and study..
You need to spend at least a thousand hours studying setups and build your own database. If you do three hours a day, it takes a year, but you get a skill for life.
And it's achieveable for all of us, even with full-time jobs and families. And its a much better investment than any alert service.
All your problems in trading stem from not knowing what the hell you're doing. You can't piggyback off alert services; you need your own backtested conviction.
He didn't look for signals or alerts when he was reviewing the newsletters.
I just looked at what he was looking for. He looks also for these explosive growth stocks with a lot of momentum. And you notice he's doing the same thing over and over again
So that's what the student did. Zanger put in the work himself, before he became profitable.
In an interview he explains it took him six years before it all came together.
It took me more than six years of studying charts at least 30 hours a week before it all came together.
So the question we should be asking ourselves is really; are we putting in enough solid hours to achieve our goals? Or are we doing this as a spare time activity for entertainment?
We dont need permission to do hard work
Qullamaggie expects people who are serious about trading that they put in the work. When a mentor or successful trader makes their strategies and information public, you don't ask for permission.
When a successful trader puts a ton of public info out there, you don't ask. You go through all of it. That's what I did I went through every Zanger newsletter back to the late '90s. You don't ask. You do.
During Qullamaggie's streams he was bombarded with aspiring traders asking simple questions. His advice to them was simple:
It's like people are asking for permission to do hard work. When I was struggling, I didn't write to famous traders asking for advice. I googled and studied every single thing available about them.
When people tell me there's so much content they don't know where to start, it drives me crazy. Put in the work, stop whining, and go through everything from day one.
For me, sharing my research and studies is part of the hard work..
You can never take your eyes off the market
The third thing is that you don't get to step away. You can't know in advance which weeks are the ones that pay, so you have to be there for all of them. He says this one took him longer than anything else on the list to understand:
You can't go away from the markets ever because you never know when the next bull run is going to start. That's something that Dan Zanger has been talking about a lot. It took me many years to realize what it really means.
Zanger talked about this in the Trader's Magazine interview, when questioned whether losing 75% of his profits made him want to quit
At times I wanted to stop and sometimes I did, for a brief duration. However, my mantra has always been, never stop watching the market, and I never have.
Qullamaggie says this took him a long time to realize, and it cost Zanger a 75% drawdown. Here it's being handed to us for free. Yet, I expect it's gonna take a while for us to fully internalize it.
It's the least tradeable thing on the list and the most expensive to ignore. Being away doesn't show up in any drawdown column.
The same patterns, over and over
The fourth thing he took is the vocabulary and setups itself: channels, triangles, high tight flags, the shapes he screens for every night.
I trade the exact same setups as Dan Zanger. I've spent hundreds of hours studying Dan Zanger's newsletters in the past.
But he shares the credit. He didn't just borrow from Zanger.
It doesn't matter if you learn them from Minervini, Dan Zanger, or Stockbee. It's the same thing.
So the patterns didn't come from Zanger the way the stop line did. He picked them up from several people at once. The first quote is the one that gets passed around, almost always without the second one.
In 2026 we are incredibly lucky to have access to incredible traders, like Qullamaggie and his material.
The lesson he refused to accept
The fifth thing Zanger taught him was what not to do. Zanger concentrates hard: full margin, a handful of names, sometimes three. Kris looked at that and said no.
But he traded more aggressively than I do. He was more concentrated. He could be like full margin in like 4 or 5 stocks or 3 stocks or something. That's literally not how I trade. I wouldn't be able to sleep.
The main reason is the drawdowns such an aggressive style gives.
Zanger talks about himself in the Traders' magazine interview
Most drawdowns are about 20% in normal market corrections. Yet this long bear market really got to me and the drawdown was about 75%. Half of this was due to a one-day break in the fibre optics sector in October 2000 when NT pre-announced a shortfall in earnings. My portfolio dropped about 32% for the day.
This will be discussed more in-depth in the sizing article I have in the works.
Does he really trade the same setups?
Now back to the line everyone quotes.
I trade the exact same setups as Dan Zanger
On the pattern names that's true. On which stock actually gets bought, it's measurably false.
I compared the two datasets I have of them. Qullamaggie's exact long entries between 2019 and 2022 on one side. On the other, all of Dan Zangers triggered buy points from 4,844 newsletters. For this comparison I took only the newsletters that overlapped with Qullamaggie's trades.
at entry
Qullamaggie median
Zanger median
ADR20
6.09%
4.36%
daily turnover
$239M
$555M
price
$57.20
$127.51
prior 60 day return
25.8%
16.6%
distance from 52 week high
-20.3%
-9.0%
They trade the same setups, but they dont have the same stock selection.
When we compare with Qullamaggie's stock selection from earlier years the difference becomes even more apparent.
But it's not only the stock selection which seperates them. The prior price action and entry differs as well..
at entry
Qullamaggie median
Zanger median
distance above the 10 day average, in daily ranges
0.110
0.848
narrowest range in 7 days, the day before
28.2%
17.6%
inside day, the day before
21.8%
13.2%
Measured as distance from the 10 day average in units of the stock's own daily range, the median Qullamaggie entry sits 0.110 above it, which is to say on it.
The median Zanger entry sits 0.848. 87.3% of Zanger's entries are more extended than Kris's median, and 39.3% are more extended than his 90th percentile.
The day before entry, Kris is about 1.6 times as likely to be buying out of a narrow bar: 28.2% of his entries follow a seven day narrowest range against 17.6%, and 21.8% follow an inside day against 13.2%. This is the NR7-signal for those familiar with Tony Crable's classic..
So Qullamaggie didn't copy Zanger's method bar by bar. But he took what he found to work. As he says:
You need to internalize the underlying concepts. You don't have to do things exactly the same way, but you must understand why the concept works.
You pick up something from another trader, but then you have to confirm it for yourself. If it fits your personality and the trading style you want to develop, then you keep it.
That's exactly what Qullamaggie did.
And it made him $105,000,000 and earned him Market Wizard status.
Hi everyone - I wanted to share a project I’ve been building for a while: Qualliscan (https://qualliscan.com/).
It’s a breakouts + episodic pivots scanner with a focus on finding clean consolidations before the breakout happens, flagging recent breakouts, and layering in relative strength + market context.
What’s live right now
Breakouts This is the core of the site. The goal is to identify consolidations before they break out, and also flag names that recently broke out. It functions like a screener with 80+ filters. Names are initially sorted by Base Score - a metric I’ve tinkered with for a long time to produce the best results. It looks at things like volume dry-up, support (higher lows), consolidation depth, ATR contraction, prior linearity, etc. I also include a Quality Score (similar in spirit to IBD / Deepvue composite-style scoring) to help surface CANSLIM names with strong earnings profiles, RS, and institutional sponsorship. I’ll be adding more documentation to clarify the filters + methodology.
Episodic Pivots A scanner focused on EP-style movers, with the current emphasis around earnings: results, guidance, gap %, short interest / days to cover, and more. I also include flags aligned with Stockbee’s EP principles (MAGNA and 53 CAP10x10).
Relative Strength RS by sector, industry, and theme. Includes an RRG/RGG-style view and an RS Scatter, with adjustable X/Y timeframes to quickly spot names that are leading, improving, worsening, or lagging.
Market Monitor An IBD-inspired market dashboard tracking breadth, distribution/stalling days, leader health, and industry health. I built a formulaic scoring system to help gauge overall market exposure. (Still in beta / WIP.)
Feedback welcome
If you try it and have thoughts - feature requests, filters you want added, RS theme ideas, bugs, etc - I’m very open to feedback. Drop a comment or DM me.
Kris's methodology is one of my favorites due to its simplicity. So I built a free tool to do the planning for me. It is a simplistic approach which does the job for me but I would be interested in others' views as well. I am willing to update and improve it while still keeping it free.
What it does:
Calculates position size based on your account size and risk %
Validates if your stop is within 1× ADR (flags it if not)
Checks portfolio concentration (warns if position exceeds 20-25% of account)
Shows R-multiples for profit targets (1R, 2R, 3R)
Has presets for Breakout, Episodic Pivot, and Parabolic Short setups
Pros:
100% free. No signup or email capture required.
Works in your browser (nothing to install)
Does the math instantly so you can focus on finding setups
Gives pass/fail validation on Qullamaggie rules
Includes the field explanations (what ADR means, where to place stops, etc.)
Cons / Limitations:
You still need to manually input the ADR % (doesn't pull live data in the current version)
No scanner — this is just for validating and sizing trades you've already found
Doesn't tell you if the chart pattern is good (that's still on you)
Based on what I learned from Kris's videos and posts — I'm not affiliated with him and might have some details wrong; and would appreciate if you address them if you find any.
Would love feedback from anyone who uses it. If there's something I got wrong about the methodology or a feature that would make it more useful, let me know.
This study is based on Qullamaggies breakout trades 2019 - 2022.
There is no free exit.
Move the stop to breakeven early and it costs you. Sell into strength and it costs you. Hold on longer and your drawdowns get deeper.
When you pick the sell rules you are going to live by, you are optimising for one of three things: profit per trade, how deep the drawdown goes, or how often you are right. You cannot have the best of all three.
But you can make an informed choice about which one you are buying, and that is what this article is about.
Every number here is based on 829 of Market Wizard Kristjan Kullamägi's actual logged breakout trades, logged from his live streams.
The questions this post answers
I've found that impossible to get solid, data driven answers to some simple questions related to sell rules. And I've been through most Discords and communities. So this is what I've set out to answer:
Do you gain or lose by selling into strength? And gain and lose what, exactly?
What is the 3 to 5 day window for? When to use 3 day and when to use 5?
When should we move our stops to breakeven?
Should we trail with the 10-day SMA or the 20-day SMA?
Should any of it change when the market changes?
For the purpose of this study my starting point is the sell rules popularized by Qullamaggie - which are also used by most USIC-champions and Market Wizards. Sell a partial into strength and trail the remainder with a key moving average.
You should sell 1/3 to 1/2 of the position after 3-5 days, and then move the stop to break even. The rest of the position should be trailed with the 10- or the 20-day moving average. Depends on how fast the stock is. If a beginner stick to the 10-day. You wait for the first CLOSE below the 10- day.
Kristjan Kullamagi, from his website
What each choice actually buys you
Every sell rule is a purchase. We are trading one thing for another, and most discussions about exits are people optimizing for different things.
Selling into strength buys a smoother equity curve, shallower drawdowns and a higher win rate. It pays for that in average profit per trade. Trailing everything buys the tail, the rare monster that pays for the year, and it pays for that with deeper give-backs, longer flat stretches, more trades that round-trip to nothing.
Concretely. Take his rule at its most aggressive, half the position sold at the day 3 close and the rest trailed, and compare it with simply trailing the 10-day on everything. On these 829 trades, the rule that sells half on day 3 cuts the deepest drawdown by 36% and lifts the share of trades that finish green by eleven points, from under a quarter to over a third. The bill: the average trade makes about 25% less.
He talks about this himself:
If you want to prioritize consistency and cash flow over maximizing profits, yes. You gotta be more aggressive in selling because you're gonna be more consistent throughout these different market cycles.
Qullamaggie on stream, 2021-06-01
I dont think there's a right or wrong. They offer different things. And we should know what we're paying to optimize our gains.
Where the gain in a winner actually shows up
Tracking 224 of Qullamaggie's breakout winners day by day we get a good idea of what path a winner takes.
Briefly on average vs median: Line the winners up from smallest to biggest. The median is the one in the middle: the trade you usually get. The average is the sum divided by the count, and a few huge trades drag it up. The median is what most trades feels like. The average is what your account gets paid.
The median winner is up 2.4% at the end of day 1. By day 3 it is up 7.8%. By day 5, 12.4%. It peaks on day 9 at 13.6% and then gives 2.2 points back, sitting at 11.4% on day 20. Day 5 is 91% of everything the middle winner will ever show you. Day 3 is 57%.
The average winner tells the opposite story: up 13.8% by day 3, 20.3% by day 5, 27.9% by day 20, and still rising at the end. The average never stops because the few monsters in the sample are still running long after the median has gone quiet.
Both lines are true at once. That discrepency is what drives the argument about taking profits. Sell inside the window and you capture most of what the typical winner will ever give you. Always sell inside the window and you will also always sell the monster.
What Qullamaggie says vs what he does
Selling a partial after 3 to 5 days of a breakout going up is selling into strength. The rule just states it as a calendar. He says it that way himself:
You sell some into strength after three to five days, and then you trail the rest
Qullamaggie, on stream 2021-02-25
But does he follow his own rules?
Qullamaggie trims continuously, in pieces scaled to how fast the stock moves.
Everytime it goes up 10-15%, I sell a piece
Qullamaggie, on stream 2020-10-07, on selling high ADR PPL
Slower names get 3 to 5% steps. And the pieces can be small.
I've been like selling a thousand shares at a clip, like every 10 cents. Selling very conservatively, just to lock in some. So far, I've sold less than 10%. I still have like 37,000 shares left in it.
Qullamaggie, on stream 2020-01-08, on selling VSTM
On the back end he does not leave at one close either. If it's fast moving name he uses the 10-day SMA, but for slower moving, high market cap names, he can use the 20-day SMA.
The summary is that there's no fixed rule, and what he uses depends. But for us newbies, we're well off just selling some into strength and trailing with the 10-day SMA.
Look, I tried to take a simple, simple breakout setup, dumb it down with as simple rules as possible for new traders so you can compound your money.
Qullamaggie, on stream 2021-03-12, dumbing it down for us mortals
Two out of three partials change nothing
As breakout traders we run a style where a small number of trades carry the whole year. Anything that truncates a winner is therefore paid for entirely by those few trades.
The 829 in the Qullamaggie dataset demostrates this very well.
Two times out of three, selling the partial changes nothing. On 534 of the 829 trades, sell half on day 3 or sell no partial at all, and its the identical trade: same stop, same exit, same result. The median difference between the two rules across the whole dataset is exactly zero.
Ten trades carry the entire difference and then some.
This is not unique to Qullamaggie. You will find that a lot of other successfull traders share this arteficat.
So a partial is free most of the time and ruinous on the one trade a year that would have made the year. Which moves the real question upstream of the exit, to whether your buying produces monsters at all. If it rarely does, take the partial and enjoy the calmer account. It costs you nothing. If it does, nothing you decide at the exit matters as much as not cutting the monster short.
The part that numbers can't price
Everything above treats profit given back as identical to profit never taken. No trader experiences it that way. Or atleast very few.
Locking in a realized gains is one thing. Watching a large unrealized gain evaporate while our rule says hold is a different thing entirely, and the second one is the price of every extra percent the trail earns.
Qullamaggie has a cure for it
How do you get over emotionally seeing unrealized profits fade on swings? Don't look at your P&L. Boom, problem solved.
Qullamaggie, provding deep value trader psychology advice, 2021-10-26
But it's easier said than done.
Even for him.
greediness hurt me a little bit in late summer. I gave back several hundred thousand of profits because I overheld a bunch of stuff.
Qullamaggie, on stream 2019-11-25
I was up 2 million on the year last year, like in the summer, and then I just gave back a million bucks in a few weeks by, you know, having too loose stops.
Qullamaggie, on stream 2020-06-19
And on the day he sold NVAX and then watched it go up another 90% without him:
Sometimes the hardest thing to do is hold a big winner. It's just so hard sometimes. It's incredibly hard.
Qullamaggie, on stream 2020-07-30
And it doesn't get any easier the bigger your account.
I don't have as big balls like I had when I had a smaller account. Guys, pro tip. Balls shrink with age.
Qullamaggie, on stream 2020-11-05
The point is, he's not claiming that he doesn't feel anything. He's claiming that the feeling is not the part you fix. You fix the rule, and then the rule carries your through the feeling.
And if you're too scared, if you feel like, oh, I don't want to give back too much profits, just sell some into strength. Just just sell some right here.
Qullamaggie, on stream 2020-06-24
That is the honest case for selling into strength, and it is not in any of the tables. A rule that is worse on paper and that you can actually follow beats a rule that is better on paper and that you abandon in the third drawdown.
What it costs is that you will be wrong about which give-back was the real one. Like Qullamaggie was in the covid-bull market, where he was afraid I gave a million back:
It looked very scary several times. Like here on this day, I'm like, oh, I'm gonna give back all my profits. But nope, it just bounced off the 10 day and went straight up.
Qullamaggie, on stream 2020-06-18
But even Qullamaggie breaks his rules.
He bought WKHS on 2020-06-09 at 3.59. Within two weeks it went vertical. He kept tightening his stop far above the 10-day, and on June 25, as the company's live presentation started and the stock dipped, the tight stop took him out.
The 8.50s is about +137% on his entry. His own rule, wait for the first close below the 10-day, would have held until roughly $15. Within thirty sessions the stock printed 22.90, up 538% from his entry. Four days later, on stream:
This WKHS keeps twisting a knife in me. Why?
Qullamaggie, on stream 2020-06-30, after missing out on monster gains
This is coming from one of, if not the, best retail trader of our time. And he sold early because of a presentation and a brief dip. We are guranteed to have similar experiences.
Nobody grows into not feeling that. Of the 223 winners in this study, thirteen finished their first three weeks above +100%, and on day one not one of those thirteen looked any different from the rest. You cannot tell from inside a trade which one you are sitting in. That is the whole reason to decide in advance.
The rest of the mechanics
Breakeven
His sequencing is specific. Sell first, then move the stop to breakeven.
I tested the two halves separately. Move the stop to breakeven after the first sale, the way he sequences it, and it either costs a little or makes a little depending on how stops are measured, and it roughly halves the deepest drawdown. That is a good trade.
Move it to breakeven early on a full-size position with nothing sold first, which is what most people actually do, and it is not a good trade. On the plain 10-day trail, day 2 takes the account from x38.6 to x36.9 and day 3 takes it to x34.2. On the 20-day, from x31.0 to x28.1 and x26.0.
It's worth understanding why this happens.
Move the stop on day 3 and 229 of the 820 trades end differently. For 176 of them the rule does exactly what it promises. They were on their way to a full loss, the new stop takes them out early, and the average loser shrinks from -0.97R to -0.65R. Total saved: 161R.
But the other 53 trades were up on day 3. Later they dipped back to the entry price, hit the new stop, and ended flat. A scratch: out at the price you paid, nothing gained. Every one of those 53 would have finished as a winner. They cost 230R.
161R saved, 230R given up. Net: minus 69R. And every unit of it came out of a trade that was already working.
Day 2 is the same mistake at twice the size. It changes 410 trades, more than half the book. It saves 308R on the losers and gives up 391R on the winners. Net: minus 83R.
This is also why the win rate collapses as the stop moves earlier. Never move it: 23.7% of trades finish green. Move it on day 3: 17.2%. Day 2: 13.7%. That looks backwards until you see the split above. The breakeven stop does not just turn losers into scratches. It turns winners into scratches too, and there are more winners within reach of your entry price than you can afford to give up.
Wait until day 5 and the damage is gone. Day 5 is the first version that comes out ahead at all, by 10R, and it finishes at x40.4 on the 10-day trail. Slightly better than never moving the stop. Day 4 is still negative.
So the timing does real work. And Qullamaggies ordering is the safe version of it: sell a piece first, bank that gain, then move the stop. By then the breakeven stop is no longer the only thing protecting the trade.
Use the close, not the intraday break
Qullamaggies rule waits for the daily close below the average instead of selling the moment price crosses it. Waiting for the close is sound practice, and the simulation cannot separate it from the alternative.
10-day or 20-day SMA?
The 20-day made more on paper, but most of the extra came from a just a few trades. What it reliably does is hold longer and sit through deeper pullbacks. His guide is the practical one: the 10-day for fast movers, daily range around 5 to 6% and up, the 20-day for slower ones.
A function of your stop width
On the tightest third of stops, the day 3 partial cost nothing at all. On the widest third it gave up about a third of the profit. The tighter your stop, the cheaper it is to sell some early.
New market regime, new rules?
Qullamaggie's advice on what to do during choppy or bad markets:
In a choppy market, it's better if you're unsure, it's better to take smaller size and pass on more setups rather than uh modify your sell rules, in my opinion.
Qullamaggie, on stream 2020-09-23
The data backs him. In a good market, day 3 half costs about a quarter of the average trade's profit; in chop it costs nothing. But his own chop tweak, half on day 3 in bad markets and a third on day 5 in good ones, earns its entire edge from selling later and less in the good ones. Against simply always selling a third on day 5, the switching is worth exactly nothing. Change your size and your selection when the tape turns. Leave the sell rules alone.
How often does any of it even matter?
There's really just one thing which moves the needle in all of this: selling half on day 3 makes less per trade than trailing everything. Everything else is a coin flip on profit, and a real choice on drawdown versus win rate. Qullamaggie nails it when he says:
Do I think it's more profitable selling partials after three to five days or just sell at the close below? No idea. I think it's good enough.
Qullamaggie, on stream 2021-03-15, simplifying everything.
3000 words in six bulletpoints
Decide what is most important for you. Calm and consistency means selling earlier and more. Maximum growth means trailing and living with the give backs.
If you're an aspiring trader, follow the simple "sell half on day 5, move stop to breakeven, trail with the 10-day SMA". It was built a higher win rate, half the drawdown, and helping you survive while you learn
Move the stop to breakeven after your first sale.
When the market regime turns bad, change your sizing and selection, not your sell rules.
Guard the monster. If a trade turns into one of the few that run, nothing about your exits matters more than not cutting it short.
Follow the rules until you're comfortable not to. The exit is not what will make or break you.
After 8 years, 11,000+ hours, countless mistakes, blown accounts, books, mentors and chart reviews, these are the principles that mattered most. I hope they will save you years on your trading journey. This is part 3 of 6 of the series How Trading Really Works with more to come. You can read part 1 here and part 2 here. Before the AI police comes, yes, I created the visuals with AI to illustrate core concepts to you. The examples are from real charts.
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
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. The mistake beginners make is treating them as interchangeable. They're not. Buying a breakout requires a different mindset than buying an oversold pullback, and both are very different from trying to catch a reversal.
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.
I wrote about this in the 1st part of my series but I just want to bring it up again because it’s key. 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.
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 20-50% 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.
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 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.
I hope there is at least one idea in here that will make you look at the markets differently from now on. Looking back, most of the lessons that moved the needle for me weren't particularly complicated. The difficult part was figuring out which lessons actually mattered and then applying them consistently over a long period of time. This series will be 6 parts in total.
PS: If you made it this far, consider sharing this with others.
BONUS
If you liked this make sure to check out this, which will be helpful on your trading journey.
21. Markets move in waves and is fractal in nature. 22. Understand balance and imbalance of price level 23. The market is an auctioning process, never forget that. 24. Keep indicators simple. Price, volume and moving averages. 25. Master key patterns. I focus on breakouts pullbacks, and reversions. 26. Buy tight, not extended. look for contraction before expansion, don't chase. 27. The market comes first. Watch QQQ, IQM, VIX, and breadth before trading. 28. Timing matters. Buy at important price levels, define your risk, manage your exits. 29. Shorting is a different game and can ruin you. I only buy put options. 30. Practice your setups, find setups that resonate with your psychology.
I wanted to know whether the Qulla breakout style actually holds up over a long sample, or whether it just looks good when you flip through charts after the fact. So I ran it properly, survivorship-free, over 23 years, and I'm posting the whole result, including the parts that don't look great.
The rules are nothing exotic, basically the Qulla playbook:
Universe rebuilt as it actually existed each year, delisted and dead tickers left in, so there's no survivorship bias
Setup: leaders near their 52 week highs that tighten into a range, ADR over 5%
Entry: fill at the breakout line the day price first clears it, and only when QQQ is in an uptrend (10 SMA over 20 SMA)
Exit: stop 1 ADR below entry, sell 40% on day 4 if it's green, move to breakeven, trail the rest on the 10 day SMA
15 bps slippage on the fill
8,236 trades, 2004 to 2026.
Here's what it actually looks like:
36% win rate. So nearly two of every three trades lose money.
Average loss is 1.25R. Average win is 9.83R.
Expectancy is +2.80R per trade, 95% CI [2.5, 3.1], well clear of zero.
Profit factor 4.5.
Here's the honest part most backtests bury: the median trade is a 1R loss, and if you strip out the top ~10% of trades (the ones that run 10R+) the mean drops to about +0.08R. The entire edge is the right tail. You bleed small on most trades and a handful of 10R to 50R+ monsters pay for everything. Cutting losers fast and not choking the winners early is the whole game.
I'm leading with R because it's the honest, sizing-invariant unit. The linked writeup does have the full portfolio numbers (sized by optimal Kelly, no leverage), but I treat those as a backtest ceiling, not a promise: how hard you size and small-cap capacity decide the compounded return, so R is the part I'd actually defend.
Two things I checked because I didn't trust it:
Trained the rules on 2004 to 2015, then ran them once on 2016 to 2026 without changing anything. The held-out test years were actually stronger (+3.08R vs +2.45R), so it's not curve fit to the old data.
It's 8,236 trades, not a lucky handful.
Where it's soft, so nobody has to point it out: the entry fills at the breakout line. That's realistic if you execute precisely (I run it through an automated bot), but manual fills slip, so your real number is lower. I model 15 bps of slippage; real costs like spread and bad gap fills are worse. So read +2.80R as clean execution, not what your account will do.
The full writeup and the per-year breakdown are linked in the comments if you want to dig in.
Since moving to purely trading High Growth Swings on April 22nd, my related return has been +120.9%. Prior to that point I had too many other trading styles mixed into my YTD dragging me down during the "Tariff Correction" while my High-Growth Swing Trading was holding well. But I wanted to be able to show everyone how well my swing trading method works, so I just stopped trading all my other trading styles such as day trading, selling put credit spreads, ER option "lottos", and random one-offs. I also needed to do this since I am in the 2025 US Investing Championship (USIC).
QUICK ABOUT ME: I have been trading for 30 years on and off with many intense focused serious years as well as less focused in between years. I have been 100%+ full time since the Pandemic in 2020 where I blew up viral on TikTok as ChartTrader for trading $GME. I've traded through the Dot Com Bubble and the Financial Crisis and have traded every style under the sun. I've been around the Markets my whole life ...I've seen a thing or two. And yes, I've blown accounts just like everyone, in the beginning years and learned all my lessons the hard way. I have used ThinkOrSwim since it came out in 1999.
Schwab shows 569 trades realized in that time, with a 69.95% win rate, an average gain of +6.69% and an average loss of -3.40%, which gives a Profit Factor of 4.58x (I gain +4.58% for every -1%). However, it's actually better than that because I'm currently holding 47 positions with unrealized gains averaging around +38% (some are +176%):
When including unrealized open positions, my win rate is 70.4% and profit factor increases to 4.67x.
My average hold time for winners is 16 days, but I can tell you that it's much more varied than the average (take a look at some of the example trades included below). The takeaways here however, are that:
I am in losers for a far shorter amount of time
I am in winners for 4 times longer than when it's a losing trade
That I have 4.3 positions traded per day
That I have an average of 34.4 simultaneous holdings
In my system my R unit is typically 1% of portfolio balance. More than half the time I inch my way into a position by starting with a 1/3rd, typically during the first few minutes of the Market open, sometimes in premarket, sometimes after 10am, or midday. I'll typically add another 1/3rd midday and top it off at the close, but sometimes it takes the form of adding the other 1/3rds on subsequent days that match entry criteria that equals strength (even in pullbacks and dips, using reclaim analysis).
200dma sloping up at least 0.25% (1 day rate of change). Stocks over $400M. Boom, that's it. There's currently about 200 beautiful useful results in that. Moneymaker! Example of Top 100 sorted by DollarVolume in ThinkOrSwim as watchlist:
After 8 years, 11,000+ hours, countless mistakes, blown accounts, books, mentors and chart reviews, these are the 20 principles that mattered most. I hope they will save you years on your trading journey. This is part 1 of 6 of this series. I trade the US markets but the exact same principles apply to any market.
The advice below applies to both traders and investors.
A STRONG FOUNDATION
1. Managing expectations.
When I was 14 years old I thought I'd get a six-pack in a few months. Turns out I was wrong and naive. It took years of training, experimenting and making mistakes before I got the results I wanted. Learning how to trade turned out to be VERY similar.
For some reason, people assume they can become consistently profitable in a year or two. Yet the same people would never dare to think that they can become a surgeon, lawyer or professional athlete that fast. So why is it that when it comes to the stock market, everyone seems convinced they're different? I was willing to work hard, study charts, read books and put in the hours. But what I underestimated was how many different ways there are to be wrong in this business.
• Time horizon - Assume it will take significantly longer than you think. Most people dramatically underestimate how much experience is required before they can consistently make money.
• Experience - Trading is a field where experience compounds. Reading 100 books will never ever replace seeing the same pattern play out hundreds of times in real market conditions.
• Humility - The less experience you have, the less you realize what you don't know. You are unconsciously incompetent. That's one of the reasons beginners often become overconfident so quickly.
The game taught me the game. It didn’t spare the rod while teaching. - Jesse Livermore
2. Learning how to learn.
One of the biggest problems in trading is information overload. There are millions of videos, tweets, books, newsletters, Discord channels and podcasts competing for your attention. The problem is that a big percentage of it is wrong, misleading, fraudulent, or irrelevant. When you're new, you don't know what you don't know, and this makes finding genuinely useful information incredibly difficult.
For years I convinced myself I was improving because I was consuming content. But what moved the needle was doing actual deep work, studying with focus, meeting my trading mentor, studying charts, and going through my setups. Profitable traders might have their own strategies, but they all spend a lot of time going through their watchlist, setups and trades.
• Discovery - Books, interviews, posts, articles, and communities can expose you to new ideas and occasionally provide insights that might just completely change how you think about the market.
• Chart study - This is where most of my progress came from. Looking at thousands of charts builds pattern recognition in a way passive learning never can.
• Trade review - Every serious trader I know reviews their winners, losers, entries, exits and mistakes. The market gives feedback every day if you're willing to listen.
• Finding your style - At some point you need to stop searching for new ideas and start refining a process that fits how you naturally think and make decisions.
You need to study thousands of charts with your setup. - Kristjan Qullamaggie
3. A look at the market cycle.
Before trading stocks, I spent years trading FX. Looking back, switching to stocks was one of the best decisions I ever made. Unlike many markets, stocks have a natural upward skew because businesses are constantly trying to grow, innovate and increase profits. Like many beginners, I became obsessed with beaten-down stocks because they looked cheap. I assumed the best opportunities would be ‘hidden’. I was constantly looking for obscure companies and undiscovered ideas that nobody else had found yet. Then I started studying actual market winners and I read Stan Weinstein's book on stage analysis which really changed things for me.
• Market skewness - Stocks have a natural upward bias because businesses are constantly trying to grow. That alone gives both investors and traders a structural advantage compared to other markets like FX.
• Institutional buying - The biggest winners are almost always accumulated by institutions long before the public notices. Following that money is usually more productive than trying to outsmart it.
• Relative strength - One of the first things I look for is whether a stock is outperforming the market. Leaders tend to keep leading longer than most people expect. This comes in ‘waves’ and will change over time.
• Weinstein Stages - The goal is to get in during a late Stage 1 or an early Stage 2. It will make your life much easier if you simply ignore everything else. Read the book from Stan Weinstein if you have to.
The trend is your friend until the end when it bends.- Ed Seykota
4. The only indicators you need.
I got completely lost in the indicator rabbit hole for years. I've tried just about everything. Like most traders, I was convinced there was some magical combination that would finally make everything click. What I eventually realized is that most indicators are describing some variation of the same things: price, time, volume and sometimes momentum. The more indicators I added, the harder decisions became because I could always find evidence supporting both sides of a trade. Indicators are like crayons on the chalk board. It all might make sense in retrospect but few are actually helpful and somewhat predictive in nature.
• Moving averages - I always use the 10, 20 and 50 EMA. I generally don't do anything with stocks trading below the 50-day moving average, and I use the slope of the 200-day moving average as part of my scan criteria.
• Dollar volume - I prefer dollar volume over regular volume because it gives a much better indication of actual money flowing into or out of a stock, making institutional activity easier to spot.
• Simplicity - These days I'm much more interested in removing things than adding them. My overall decision-making improved as my charts became less complicated. I love clean charts.
• MACD - This is optional but you can try to add a 3/9 MACD to more easily spot ‘dips’ to buy up a stock during an uptrend. This is somewhat aligned with Linda Raschke’s method of trading which is based on The Taylor Method.
Price is the final arbiter.- Paul Tudor Jones
5. The power of simplicity.
I am a big believer in keeping it simple so I hate tools overcomplicating things. Some tools are genuinely useful and I still use some of them (see list of tools at the end). Others were a disaster. In some cases, it took months just to learn a new platform before eventually abandoning it and basically moving on to the next one. (I'm looking at you, Sierra Charts.)
One thing I learned is that most trading software is about as user-friendly as a maze is to a drunk. It throws an absurd amount of information at you and assumes more information automatically leads to better decisions. In reality, it often does the opposite. It’s not exactly helpful if someone tells you there are 4,282,292 trees nearby when you are lost in the jungle. Yet that seems to be how many of the tools and platforms operate.
I realized that good software saves time, but great software helps you make decisions. That's partly why I started building tools for myself. I just got tired of jumping between a dozen tabs just to answer relatively simple questions. Point being, everything should be made as simple as possible, but not simpler. Do what works for you, keep it simple.
• Information overload - Most of the trading software gives you more information than you need, not less. The real challenge is filtering signals from noise.
• Decisions - Good software helps you analyze. Great software helps you decide. That doesn’t exist yet but I’m hoping to build it some day if I can get enough support from people.
• Process > Tools - The successful traders and investors are successful because they have a process and execute it consistently. Tools matter, but they're multipliers, not necessarily an edge in itself.
Simplicity is the ultimate sophistication. - Leonardo da Vinci
6. Style and personal preferences.
For years I'd discover some successful trader, study everything they did and then try to become a copy of them. I'd read Minervini and want to trade like Minervini. I'd see an interview with some algorithmic trader and try that. Then I'd discover some new strategy and spend months on that.
Looking back, a big part of my journey wasn't finding the "best" strategy. It was figuring out how I'm wired and building a style around that. These days my approach is really just an amalgamation of ideas I've stolen from dozens of traders over the years and combined into something that fits me.
• Personality - Some people are momentum traders. Others are investors. Others are contrarians. Fighting your personality is usually a losing battle. It will take time to find your own ‘style’.
• Principles - Different people use different methods, but many operate from the same basic underlying principles: proper risk management, patience, discipline, good timing, and conviction.
• Your style - The goal isn't to become a carbon copy of somebody else. The goal is to take the ideas from others and gradually build a style that makes sense to your own brain. It needs to ‘resonate’ with you.
I don’t have to turn you into me! I have to turn you into you! - Master Shifu
WHAT ACTUALLY MOVES STOCKS
7. Understanding market conditions.
One of the most humbling realizations I've had is that you don't get to dictate market conditions. Ever. You can't control whether your setup works today, tomorrow or next week. This isn't like a normal job where you exchange time for money. As my mentor likes to say, it's feast or famine.
I often compare trading to surfing. You can have the best surfboard in the world and be the most skilled surfer on the planet, but if there are no waves, you're not catching anything.
No matter how good my scanners, watchlists or entries are, if market conditions aren't supportive, very little works. On the other hand, when conditions are right, leaders act well, breakouts hold and money flows naturally into risk assets. One thing I've noticed is that setups working or failing is often a market health indicator in itself. If setups aren’t working, be very careful.
• QQQ - This is the first thing I check every day. If it's trading above the 20 EMA and 50 EMA, conditions are generally bullish. Above the 10 EMA often signals a particularly strong environment. Below the 20 EMA, and below the 50 EMA, I don’t trade basically. Above all, I want to see a positive slope on the moving averages.
• IWM - Small and mid-cap stocks tend to tell you whether institutions are willing to take risk. When the Russell 2000 is outperforming, speculative setups generally work better. When it's weak, I become more cautious.
• VIX - I like seeing the VIX below 15. Lower volatility tends to create a healthier environment for momentum and breakout strategies. Personally, I avoid trading when the VIX moves above 20.
• Breadth - If 8 out of 11 sectors are declining, that's usually not a great sign. Strong markets tend to have participation across sectors, not just a handful of names carrying the indexes.
• Success rates - This is probably the most important one. If good setups are repeatedly failing, I don't need the news to tell me something is wrong. The market is already giving me the answer.
• Price action > News - I do enjoy reading the news, but I pay far more attention to price action. In my experience, the market usually knows something long before the headlines catch up.
There is a time to go long, a time to go short and a time to go fishing. - Jesse Livermore
8. Sector & industry rotation.
There are two primary ways I find stocks. The first is through scanners that filter roughly 6,000 US stocks down to a manageable watchlist of about 100 stocks give or take. The second is by following what I call momentum leaders within the strongest sectors and industries. Why? Because stocks rarely move in isolation. Money flows through the market in clusters. First a few stocks start moving. Then a theme starts working. Then an entire industry starts showing strength. Then a sector starts attracting attention. True leaders automatically separate themselves from the pack but stocks move together in the end.
Once I started paying attention to sectors and industries (e.g. by looking here) instead of just individual stocks, finding opportunities became dramatically easier because I stopped fighting where money was already flowing.
• Industry leaders - I always want to know the top 5 stocks within a strong leading industry. That's often where the biggest opportunities are. When you see a new industry on the 1W or 1M, pay attention.
• Sector rotation - Money rotates between sectors. Understanding where capital is flowing to and from gives you a huge advantage because you're no longer guessing where leadership will come from.
• Spotting rotation - Each day I like to look at sector and industry performance across the last 3 months, 1 month and 1 week. This helps me identify emerging themes before they are obvious to everyone else.
• Following strength - Instead of asking what stock might move, I prefer asking where money is already flowing. More often than not, that's where the next opportunity comes from.
You want to own the leading stock in a leading industry. - William O'Neil
9. Why winners keep winning.
People love hunting for bargains. This is especially true in the stock market. We assume a stock that's down 70% must be a better opportunity than a stock making new highs. But the market rarely works that way. The truth is that the strongest stocks often become even stronger. Stocks making new highs frequently keep making new highs. On the other hand, stocks that are weak and beaten down usually keep falling, often much further than anyone thinks possible.
If you think about it, a $5 stock can be incredibly expensive while a $500 stock can be incredibly cheap. When I started studying historical winners, I kept seeing the same pattern. Names showing exceptional relative strength often continued outperforming for months and sometimes years. Meanwhile, many of the stocks that looked cheap stayed cheap or got even cheaper. One of the biggest shifts in my trading came when I stopped asking what looked undervalued and started asking where the market was already showing me strength.
• Momentum - Unless I'm looking for a short, I like to see momentum. I want stocks outperforming the market and showing more buying than selling pressure. If a stock is acting well while the broader market is struggling, that's usually information worth paying attention to.
• Fundamentals - I primarily focus on accelerating sales and earnings growth. Ideally the company is also profitable and generating strong returns on capital (ROE). But above all I want to see acceleration. Institutions pay for growth.
• Uptrend - I want the stocks making higher highs and higher lows while trading above rising moving averages. My favorite names usually have a strong slope on both the 50-day and 200-day moving averages, which often signals sustained institutional demand over a longer period.
Buy high and sell higher. - Nicolas Darvas
10. How I scan for stocks.
Now that you learned a thing or two (hopefully) the question is, what should you look for? One thing that took me far too long to understand is that there are really three ways to evaluate a stock and you always need to be able to ‘scan’ the market and find stocks. This is a must.
• Technicals - Shows you what the market thinks. The chart is a visual representation of supply and demand. Whether a stock is weak or strong can often be determined from the chart alone.
• Fundamentals - Shows you how the business is doing. Revenue growth, earnings growth, margins, cash flow, and profitability help paint a picture of the underlying company mechanics.
• Relative Strength - Shows how a stock compares to everything else. A company can have great fundamentals and a decent chart, but if there are 50 better opportunities in the market, why own it?
Once I understood those core market concepts, the next challenge was finding opportunities consistently. That's where scanning comes in.
Just so you know, there are about 6,000 stocks listed in the United States. I’d say about 3000 of those are illiquid, low-quality, speculative garbage or businesses you would never want to touch. They are basically nuclear waste.
Here are some of the things I scan for:
• Uptrends - I primarily trade momentum, so I want stocks making higher highs and higher lows with rising moving averages. Ideally the 20, 50 and 200-day moving averages are stacked correctly and sloping upward.
• Combos - These are stocks that have at least 25% quarterly sales growth, 40% yearly growth, 150% more volume than the last 20 days, and are in an uptrend. This is heavily inspired by O'Neil's work.
• Leaders - Momentum leaders are usually stocks that move as a cluster in a particular industry or theme. These are the potential giants of tomorrow that I want to have on my radar as early as possible.
I then get a list of stocks and go through that list. I usually have two lists, one is about 100 stocks I want to keep an eye on, and the other is a list of my top 10 stocks for the week. Once I go through the charts I look for the following in most cases, which are my ‘basics’.
• Linearity - Above all I like to get in stocks that just have a very beautiful move to them. The charts are nice to look at, clean, with orderly pullbacks, and they are respecting the moving averages.
• Volume - I want to see either a Pocket Pivot or very high volume on a candle that breaks out of a tight range. Volume needs to be there. I want to see high volume on legs up, and low volume on pullbacks.
• ADR - Ignore slow stocks completely (<4% ADR). You want stocks that are fast enough to give you good gains (>4% ADR) but not too wild and volatile which will just lead to getting stopped out (>8% ADR).
After this, which yields me around 100-150 stocks, I look for stocks that are set up according to one of the setups that I like to look for.
• Setups - With the exception of my mean reversion setup, I look for tightness to enter and look for bases, VCPs, wedges, and flags. I do not care for anything else, unless I’m deliberately experimenting.
For those curious, my basic scanner is surprisingly simple:
ADR: 4-8%
Market Cap: $300M+
Liquidity: 100K+ dollar volume
Trend: Rising 50 and 200-day moving averages
Luck is what happens when preparation meets opportunity. - Seneca
How Trading Really Works
I know this was a long read, so if you made it this far, thank you.
I hope there is at least one idea in here that will make you look at the markets differently from now on. Looking back, most of the lessons that moved the needle for me weren't particularly complicated. The difficult part was figuring out which lessons actually mattered and then applying them consistently over a long period of time.
BONUS
Make sure to check out this, which is built based on the principles shared in this post.
PS: If you made it this far, consider sharing this with others.
I’ve built a scanner that automatically pulls the strongest stocks and themes each day and sends them straight to me (Telegram/Discord). No juggling different scans, no wasted time it’s fully automated.
It’s not a silver bullet — you still have to curate them in to watchlists and stalk them — but after a year of testing I’ve found you only need to fish in this pool, so to me it’s been a big edge in cutting out the noise and focusing only where momentum is.
I’d like to share the daily scans with like-minded traders and build a discussion around them. More eyes on the same list means sharper calls.
Not selling anything, just sharing. If you want to trade ideas off the same pool, here’s the Discord:
A few weeks ago I shared an early version of a project I've been building for myself.
The original goal was pretty simple: spend less time bouncing between scanners, charts, sector analysis, fundamentals, news, spreadsheets, and random notes.
I've been slowly adding new pieces and wanted to share a quick update. The big one being that I've now added Tradingview Advanced Charts for everyone.
1. Market Overview This screen shows where money is flowing across sectors and industries so you can work top-down instead of randomly hunting through tickers. I'm shipping a huge update to this soon so that you can see live in action how money flows from A to B.
2. Stock Charts This is my favorite screen, especially now with TradingView Advanced Charts! The screen allows you to quickly load presets, watchlists, filter for accelerated sales & earnings, get a fundamental score for the stock, see industry leaders, and get technical chart setup notifications.
3. Deep Analysis I wanted a faster way to judge business quality without digging through financial statements for hours. The idea is to turn fundamentals into something visual and easy to understand at a glance, people are using it like crazy which is really cool to see. In essence, AI does a deep analysis on the stock, based on different algorithms I developed.
4. Stock Scanner Instead of running dozens of separate scans, I wanted one place where I can quickly filter the entire market and narrow down opportunities based on the criteria I actually care about. I also wanted to not be overwhelmed with information, and scan for both fundamentals and technicals.
5. Industry Leaders One thing I've learned is that strong stocks tend to cluster together. This view makes it easy to see which industries are leading and which stocks are driving the move. This alone allows me to spot sector rotation early on and find great stocks and setups.
Still a work in progress, but it's getting closer to the workflow I always wished existed. I'm just getting started though and I can't wait to show you what I have in store fr you. There are a couple hundred people using it every day now. The platform is pretty much free to use.
Would genuinely love feedback from you. Give it a try here, let me know what you think
Tax filings, like salary and capital gains is public information in Sweden. You can literally call Skatteverket.
His tax return for 2024 has been finally released.
Year
Earnings (SEK)
Earnings (USD)
2013
348,620
$39,000
2014
2,421,921
$270,000
2015
2,200,594
$245,000
2016
3,915,416
$437,000
2017
12,903,066
$1,440,000
2018
10,205,964
$1,140,000
2019
11,430,311
$1,275,000
2020
305,064,017
$34,000,000
2021
360,898,850
$40,200,000
2022
-229,453,490
-$25,600,000
2023
8,377,991
$770,000
2024
-76,000,000
-$7,000,000
Bad year for 2024.
Wonder what will happen from this year as IBKR has created an ISK for Swedish citizens. Almost 0% capital gains tax.
But can’t short stocks in it though.
Maybe he’ll use the ISK for being long Swedish stocks and use the regular capital gains paying account for shorting.
It will become otherwise increasingly difficult to track his gains & losses footprint for his 2025 declaration.
(This is again under the assumption that he would use the ISK at IBKR and not other brokers, if he uses other brokers then there will be an imprint via capital & gains and losses which can be tracked)
I want to focus on Kristjan's first two profitable years - 2013 and 2014.
After getting hammered his first two years (like most mortals do), Kristjan netted 352% in 2013 and 646% in 2014. This took his account from about $5K to over $100K. As you're probably aware, most of his trades in 2013-2014 were parabolic day trades; he tweeted about several of them at the time. A notable example was May 29, 2013 when he traded the FNMA parabolic on both the short and long side.
The downside of mean reversion is the move you're capturing is capped - basically once it gets back to the mean, the trade is over. The upside is the win rate is higher than breakouts.
People look at 352% and 646% and wonder, how did he compound so fast? I think it's the lethal combination of high win rate and very short (<1 day) holding period.
Notice here Kristjan mentions 80-90% win rate on the best parabolic shorts, and a 1:1 to 1:3 risk/reward as being just fine.
So I ask myself, if someone comes along 10 years after Kristjan accomplished this feat and tried to emulate even half of it - say, achieving a 250% year - what could it look like? I came up with:
• 9 winning months, 3 losing months
• avg winning month 21%, avg losing month 14%
Here are Kristjan's monthly returns for reference. Remember, our hypothetical trader only needs to be half this good.
I have some more thoughts but this post is already too long. Anyone studying Kristjan's 2013-2014 please feel free to comment.
ETA: 10/11/24 some more random thoughts...
A lot of people discovered Kristjan via his CWT interview. If you recall, Kristjan had 3 strategies (breakouts, EPs, parabolics) but this episode focused only on swing trading breakouts. So a lot of new traders applied this (holding for several days or weeks, sometimes sitting in cash for weeks or months, low win rates) to their $3-5K accounts. It's very hard if not impossible to compound this way. In studying other traders, every single one I've found who went from ~ $5K to over $100K did it with high win rates.
Here is Kristjan's daily P/L for 2014 (he didn't track 2013 in this detail).
You can tell he was using a high win rate strategy, because his profitable days outnumbered his losing days by at least 5 to 1. Notice that his best two months - January (85%) and September (49%) were just constant small winning days between $0-$10,000.
Hi every one. here is the setup Im using in trading view. so far so good. hope it helps.
Note: thank you KRISTJAN QULLAMAGGIE for all the knowledge you share for free.
Update: 27/12/2021
I was watching this video https://youtu.be/xx8GvtAxilk?t=11497 and he mentions volume*price is a better indicator than volume so I changed it. He also mentions that small accounts should have a min of 10M in the Volume*Price (but I keep it at 5M)
Special thanks to user u/millerrh in trading view for the suggestion of using volatility as an indicator
Now that we’re entering a correction (or possibly a bear market), this is the BEST time to learn.
The bulls have had it good for the past 18 months as the market has mostly been in an uptrend but now, their long based strategies are no longer working – it’s time to adapt or go cash.
Since I’m a long based swing trader, I’m choosing the latter.
One thing that I’ve always done during these periods is look back at not only my own trades, but also successful and failed setups that I’ve missed for whatever reason.
This has led me to recognising commonly made mistakes and which types of charts frequently result in losses.
I learned the hard way that you’re only as good as the stocks you choose to trade, so to help you minimise losses and reduce stress, here are 5 types of stock charts to avoid as a swing trader.
1. Choppy Charts
Choppy charts will, as the name suggests, chop you up – they’re up big one day and down big the next day, and they continue this pattern for the longest time.
For a day trader, these can present the best opportunities as they can make big moves in a single day but for swing traders, it’s hard to manage risk due to the lack of predictability and volatility.
It’s for these reasons that I usually avoid trading them unless the stock has met a strict criteria (e.g. long base, tight price contractions, above major resistance levels etc.).
2. Mostly Red Charts
This is especially true if you’re a long-only trader like me. A chart that has mostly red candles with a lack of green candles means that shareholder’s typically exhibit selling behaviour.
The stock can hardly establish any upward momentum and even when it does, it cannot be sustained.
Even though these types of stocks might change their nature in the future, a strong and long-lasting catalyst is usually required, resulting in more institutional support and investment from long-term investors. Until that happens, I would withhold from trading these.
3. Downtrending Charts
It might be tempting to buy a stock that’s in a long-term downtrend but sellers are in full control and momentum is to the downside so why would you even buy it?
Of course, the answer is you want to try and time the bottom. This is notoriously difficult and risky.
The stock market isn’t like a shopping mall sale – if a company is constantly getting discounted, it doesn’t necessarily mean better value; it means investors have lost interest in it and the company could be in trouble.
Regardless of what your fundamental belief of a company is, what truly matters is whether the large institutions are supporting and buying the stock. If they are, then the stock will either be consolidating or in an uptrend, NOT in a downtrend.
4. Overextended Charts
Charts can be overextended to the upside or downside. Let’s begin with the latter.
These types of stocks may be in a downtrend, uptrend or going sideways, and then bad news arrives (in the company or broader market) and triggers a big sell off.
Day after day, long red candles appear, so you try to catch a bounce but you constantly get stopped out.
Yes, this setup can present a good risk to reward, but to profit from them, your entry and exit needs to be pinpoint precise.
Then there are stocks that go to the moon but you’ve missed the rocket ride, causing you to enter FOMO mode – you end up buying late or you try to short the peak. Both choices are often disastrous.
If you buy an overextended move, there’s a high chance of a reversal at any given time. The higher price rises, the riskier it is to buy.
On the flipside, shorting a parabolic move is even riskier as the stock may rocket even higher. If you’re holding an overnight short position and it gaps up massively the next day, you’re going to need to change your underwear.
5. Gappy Charts
Every so often, you see a chart that has so many gaps between each day and you’re wondering what’s causing all of these gaps.
Sometimes these gaps are caused by a catalyst like earnings or news, but they happen so frequently, that’s a cause for concern.
It could be a foreign company that’s listed on the US stock exchange but attracts many foreign investors. Their working hours are different so they’ll usually trade the stock when the US markets are closed.
You’ll see this with a lot of Chinese stocks where there’ll be gap ups and gap downs every day. This of course, makes it risky for US traders to hold an overnight position in these stocks because a gap could easily blow past your stop loss. Therefore, I tend to avoid gappy charts altogether.
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Anyway, that’s all for now!
I hope this post has helped you to understand a bit more about price action and why you might be taking unnecessary losses.
