You have to learn how to buy relative strength names on weakness...
Every leading stock eventually pulls back
I like to use the 8 & 21 EMAs as areas where strong momentum names can find support during those pullbacks
BUT...
The mistake most traders make is blindly buying the second price touches an EMA
An EMA is NOT an automatic buy signal
It’s an area where you should start paying attention to how price reacts
Instead of guessing that the moving average will hold, wait for confirmation that buyers are actually stepping back in
Two of my favorite confirmations:
1. UNDERCUT & RALLY
Instead of buying directly at the EMA, let price undercut the previous days low
If price trades below the previous days low/range low, flushes out weak hands, and then quickly reclaims the level, that reclaim can tell you much more than the initial touch.
You’re letting the market prove that buyers are willing to defend the area rather than assuming they will
The undercut can shake out traders who bought the EMA blindly, trigger stops below the level, and create a much cleaner reclaim
This is how I bought $MRVL today
I waited for:
-Break under previous days low
-Tap 8 EMA
-Reclaim previous days low
-Buy on the reclaim
Stop loss goes to the low of day
I was able to catch a massive reversal with a few % risk, without having to GUESS the bottom.
2. 30 MINUTE PIVOT
Another way I look for confirmation is by dropping down to the 30-minute chart and letting price establish a pivot
Instead of trying to catch the exact bottom at the daily EMA, let the stock bounce first...
Once buyers step in, you'll see the first 30m green candle form off the 8 ema
Now you have a defined 30 minute pivot to watch
If price can break back above that pivot, you have evidence that momentum is beginning to shift back toward the buyers.
Yes, your entry may be slightly higher than someone who blindly bought the EMA...
But you're trading with confirmation instead of prediction.
That's the trade-off I'm willing to make.
This is how I bought $AMD today right off the 8 EMA...
Remember:
The moving average itself isn't the signal
It's the REACTION around the moving average that matters
A weak stock can touch the 21 EMA and slice straight through it
A leading stock can pull into the same EMA, shake traders out, establish a pivot, and then reclaim momentum...
That's why the process starts with RELATIVE STRENGTH
Find the stocks that have already proven themselves
Wait for weakness into a key moving average
Then
Use an undercut & rally or a 30-minute pivot to let price confirm that buyers are stepping back in
You don't always have to chase strength
Sometimes the best opportunity is waiting for strength to temporarily go on sale.
The only thing that’s guaranteed in trading is that you’re going to be wrong.
I get it wrong all the time.
The best traders you’ve ever studied are wrong. A lot.
Stop obsessing over being right. It doesn’t matter.
If you lose $100 when you’re wrong and make $300 when you’re right...
You can be wrong more often than you’re right and still come out ahead.
That’s the game.
Your job isn’t to prove you’re smarter than the market
Your job is:
To accept when you’re wrong
Keep the loss small
Give your winners room to pay you
The best winners are the best losers.
Learn how to lose.
Nobody talks about the real cost of a bad trade.
Not the money lost.
The next trade you make emotionally.
Bad trade → revenge trade → bigger loss → panic → account blown.
That's not one bad trade.
That's a spiral.
The only way to break it?
Don't make the first bad trade.
Green clouds.
Red day entry.
Quality tickers only.
The filter prevents the spiral.
Sell puts on red days for stocks you want to own 🔥
Lock in profits on those puts when the market goes green 💰
Sell calls on green days for your wheel strategy stocks 🔥
You’ll need a lot of patience in between
Simple but works like a charm 💰
$TSLA $NVDA $AMZN $QQQ $SPY
Stop trading every day, learn to trade only when it matters.
The framework that tripled my returns:
• Green clouds + RSI 50 → small position
• Green clouds + RSI 40 → normal position
• Green clouds + RSI 30 → aggressive position
• Red clouds + any RSI → zero positions
• VIX above 30 → maximum aggression
Less trades. Better entries. More profit.
Sell Puts at support areas
Sell Calls at resistance areas
Sell Puts on Red days
Sell Calls on Green Day’s
Always exceptions based on fundamentals and macro conditions
But…
Don’t make it more complicated than it needs to be
💰🔥
RSI > 80 on a daily chart = Buy a put OR Sell a call
RSI < 30 = Buy a call or Sell a put
But…
The most important factor is TIME
Buy Options = 3 to 24+ months
Sell Options = 7 to 42 days
When you learn this concept your returns will improve
Always exceptions
💰🔥
Advanced trading tip:
A lot of trading mistakes is due to having too HIGH expectations for big results. This causes stress, anxiety, poor judgement and overconfidence.
This can happen in 2 ways:
1. You lost money now you want to make it back.
*Well, then you start to force trades, revenge trade, take big positions and make a bunch of other mistakes.
2. You made a lot of money now you think you are unstoppable.
* You got lucky a few times so now you think you don't need to manage risk, increase position size and double your money.
🔑Takeaway
* Stay focused and keep calm at all times.
* Continue improving trading system and process
* In the middle of trading don't change your process only do it afterwards when you review.
* Consistency is what you are striving for as a trader nothing else (yes, nothing else).
______________________________
Overconfidence bias is the tendency to overestimate our knowledge and abilities in a certain area.
As people often possess incorrect ideas about their performance, behavior, or characteristics, their estimations of risk and success often deviate from reality.
A 10% loss requires a 11% gain to get back to even.
A 20% loss requires a 25% gain to get back to even.
A 50% loss requires a 100% gain to get back to even.
A 90% loss requires a 900% gain to get back to even.
This is why protecting capital is even more important than making money.
Stop reinventing the wheel.
Sell puts on quality stocks, take assignment if it happens, and then sell covered calls for consistent profits.
Throw some long LEAP calls in the mix when the market gives you opportunities.
That’s the strategy for reliable income.
Selling options?
✅ Pick 30 DTE expiration
✅ Pick an OTM strike, 0.2 delta
✅ Pick a strike at or below support
Buying options?
✅ Long term with expiration 1+ year out
✅ Pick ATM strikes
✅ Can sell shorter term calls to lower average
In both cases, choose great profitable companies and ETFs.
Stick to these basic principles, and you’ll be off to a great start!
If you invest $1,000 in a stock, you can lose $1,000.
But if you’re right, you can make $5,000, $10,000, or $20,000.
In the stock market, you don’t need to be right all the time to win.
What matters is this: when you find a solid company, don’t panic sell when the stock crashes. If possible, buy more — and most importantly, don’t sell.
Selling great companies too early is a terrible mistake.
90% of success in the stock market is patience and the ability to not panic.
Most of the time, you don’t need to do anything.
Just wait