The Mentor to $100 Million Traders | Pradeep Bonde (Stockbee)

they will say that we gave this drug to 14 patients and 10 didn't die and the stock will go up 800% have you tried this strategy with options at all either in the money options or you know using a much smaller Capital size maybe 1% of capital so if you're in five today and you want to hold it for a week you're missing plenty of Trad throughout the [Music] week hi everyone and welcome back to another episode of trading takes I'm here with Judah today Judah how are you good how are you Chris good good

uh we have a very special episode today and we have a trading Legend joining us uh you might know him as Stock B we have Mr Pradip Bond prip thank you for joining us today thank you how are you doing yeah good good good well I know that uh we've been wanting to have you on for a while and uh you are a legendary swing Trader uh and Judah has drawn a lot of his style from a lot of your teaching so we were just very excited to talk with you today and uh I know

that you've mentored uh some of the biggest Traders out there like Christian Quil Magi and people like that so uh we're just very happy to talk with you today um so for people who might not be super familiar with you off the bat what is a little bit of your background how did you get into trading and uh how did you become who you are uh so I basically came to us uh in 1998 and that time was a boom which was happening and uh at that time I was working for a doom the person

who had financed the Doom he was heavily involved in the stock market uh so that was one of the things like I got a little bit exposure to and by around 2,000 we ran out of money whatever money we had raised and when the money got over when I came back to New Jersey uh like I my ex-wife she had bought some stocks and she said can you look at it because every day she had bought like Juniper Yahoo kcom every day those stocks were going down so I started looking at this and then I

got interested and then I started researching stocks and first two years I struggled a bit but like then I hit a jackpot in one trade and then I never look back after that basically so I've been trading since uh 2000 uh actually from 1999 around but like 2000 is really seriously and never done anything else but like trading basically since then and so how do you approach the markets that is so different from a lot of other people I know much of your style is you know kind of momentum bursts or uh you know the

episodic pivots you've talked about but it's basically when a stock has a Baseline and then something changes or it starts acting differently you are taking advantage of that new momentum so how do you approach the markets uh basically there are two things which I trade if you break it down to very granular level and one of the things which I trade is uh news so EP is episodic P or EP as it is called is based on news and I have a variation of that setup nowadays which I trade but essentially it is a news-based

catalyst based trade so if there is a catalyst for a stock which did not have a catalyst and suddenly there's a catalyst like to give you an example RGS which is like a stock uh which just three days ago um had a catalyst right and mean and as a result of this Catalyst the stock went up like 34% or more than that in a day basically right so whenever there is a news and if the news is not priced into the stock the stock is going to react and sometimes the news the reaction to the

news is just one day and the sometimes the news reaction is for a longer period And if you can ident identify that then you buy it based on the news Catalyst and make money that's the one way which is a news Catalyst based kind of a strategy which is EP and the second kind of a strategy is essentially in any Market any any stock if sudden buying comes in or sudden selling comes in then the stock moves in the direction of that sudden buying or sudden selling uh that is what is momentum burst and this

is just a shortterm phenomena where the stock will move 3 to 5 days and in 3 to 5 days it will make 8 to 20% more so you're just trying to capture a lot of these momentum burst and the good thing about momentum burst is that because there are so many stocks and in a year so many of them so many times make that move that you can make a living doing that particular thing basically so those are the two basic approaches but uh in addition to what I have done uh like in terms of

the episodic P I have developed a new variation of episodic P now which is based on higher volume kind of a major Catalyst as volume and that has expanded the universe of eps uh which I can trade today and that's become main stay of what I try to do in the EP side nowadays yeah so it'd be interesting to go into in a little bit of in-depth about both strategies you know EPS I know a lot of people have a misconception about the EPs and every every morning there's you know maybe five 10 five 10

different stocks that Gap up on news and they all have great volume relative to what it's been doing so how do you really calculate the gamechanging Catalyst and within that how do you determine you know which to take and which to ignore MH uh so yes you're right like in EP today for people any Gap up is EP any Gap up is not EP EP is essentially the story The Arc of the story should change like if you watch movies or if if you see good Television right and what they do is they make you

believe that this is what is going to happen and suddenly Arc of the story changes a character dies or a character is gets onto a plane meets a beautiful woman and things change or like an a some businessman hires a hooker just for one night stand and he falls in love and the story takes a different turn right pretty human so same way if a stock has some sort of a catalyst and that catalyst is not a one day or two- day catalyst but it is something which is going to change the trajectory of that

stock then that's EP right and basically because uh that's that episode is going to change the entire story after that the movie is never the same again right so that is what you're looking for now classically what is it that really makes a stock change his Arc of story is essentially uh most of the time is some sort of earnings or sales growth and this works best on stocks which are not on everyone's radar so when a stock which is neglected by the market or there is no reason for the market to pay attention to

that stock suddenly comes out and says look hey our sales growth uh is 100% 300% or 800% the market is going to react because that catalyst is not priced into the market right so the market is going to react and as a result the stock is going to double or triple I I remember the first trade I did like this was basically on a stock called uslbm which can be read remotely you would see most of the meters nowadays in us they read remotely using radio frequency so this was the company which like had discovered

this particular uh kind of a meter and they came out and this was a very this stock was in the market it had ipoed for two 3 four years nobody was paying attention it was Trading many days before it had this earnings day where they came out with this phenomenal 2600% sales growth and 900% earnings growth there were days when it was trading zero shares right so when the market discovered it uh there was a Scramble for everybody the funds everybody wants to get into this stock and in just like in a two weeks or

three weeks the stock went up 300% now this happens all the time where the market is caught by surprise and that's exactly what you are trading you're trading a market surprise now some surprises are shortterm and some surprises are long-term now the long-term surprises are essentially some sort of a earning story which is like an a which changes the Market's perception about that stock or some sort of a new technology like Nvidia is a classic example once the chart jpt came in uh since then it has been growing right or smci which had a recently

uh good uh this thing they came and surprised the market they came and said like and we are guiding higher because our sales are going crazy because of this people buying servers because of AI right now that's one kind of a story where you have a genuine Catalyst now there is this second kind of stocks which are biotechnology stocks and biotechnology stocks as most of you know if you have been in Market uh they move based on some phase one phase two phase three studies and most of the time they are like really uh like

they will say that we gave this drug to 14 patients and 10 didn't die and the stock will go up 800% right mean it has um like that so you have to know a little bit about the sector to make a call on biotechnology you need to understand a little bit of like what really what kind of stocks make big moves like cancer related nowadays like in weight loss related but like rare disease related so those are the things uh which are the second category of stocks which make a move the Third Kind of a

category of stocks is where there is a management change or there is some sort of a uh CFO leaves a company that's the first rat to Desert ship is a CFO right if company is going to go like there's some so or CEO new CEO comes in or something happens or there can be a some sort of a catastrophic cat at list right and that day like couple of months ago I was watching the news and I said saw this news saying look and a plane boing plane uh door fell out right now you just

like it doesn't make sense plane like I know Boeing is going to go down 20 30% on the short side you don't make the kind of money which you make on the long side on a EP right but I mean there is no way this thing is not going to go down right and so that's like in a very catastrophic or I remember uh four or five months ago mobile eye uh mobile eye which makes the chips for the EVs and cars and all they came out and they guided their earning significantly down there's no

way when I looked at it obviously the market reaction and you have to know how Market reacts on the short side many times when there's a negative Catalyst shortterm it just like gaps down and it recovers for a day or two but I was when I looked at that Catalyst I said no way they're guiding down like an significantly it's going to go down so that's another Catalyst which is there new product launches uh that's another Catalyst now these are like what I call as real Catalyst or these are like an these are Catalyst which

you and me can look at the information and say okay based on this the stock is likely to go up or go down right but there is another kind of a catalyst which is like there is just a story right there are tall stories uh like uh space if you remember SPAC the ticker for that particular thing uh that one day Donald Trump was the president and he declared that us is going to launch uh space force right and how the market operates is like then which company uh is related to space so they are

looking around for sticker and space has a sticker which is SPC space right and so uh uh that stock goes up 300% 400% 60 or 70 million shares traded that day uh earlier I used to ignore these stocks which used to have this flimsy Catalyst or some story Catalyst where like know we got this vertically going plane which will go up vertically and we tested it in some UK or somewhere and it went up 50 ft above the ground and the stock will go up 300% 400% nowadays I like those kind of stocks because I

studied those stocks and I have a second category of eps which I trade which is story EPS which are just like in a Kazi it's just like hot air like we are going to colonize Mars and uh the stock goes up for 600 700% based on that right so those are the Catalyst uh so I have classified like the Catalyst for lot of uh things nowadays because I have lot more experience than when I used to trade EP uh just in the beginning as earnings play so in order to find this systematically I have some

methodology in the morning uh all the method all the all these effort is done either in post Market or in premarket so I have developed a checklist to check whether a stock is in the first category which is like a stock has a real Catalyst I call them cats which are like real Catalyst and rest of the stocks I call them dogs uh and unfortunately or like for whatever reason the dogs make bigger moves than the cat so the I trade these docks very a lot nowadays and in fact the docks make bigger moves than

the stocks with real catalyst so as a result of this what I have done uh is basically I can classify them into two categories and uh if it is a dog kind of a thing I'm not going to risk as big as what I will risk on a real Catalyst because there I have a conviction and I know how it is likely to evolve and all I keep like an basically uh looking at these two categories or buckets and I treat those buckets differently uh in the second bucket I definitely want to look at whether

there's a big volume comes in or not right because the stories only fly if there is a big volume which comes in if there is a genuine Catalyst I don't care about volume because I know the Catalyst I buy I many times I'm the first one to buy because I know it's going to go up based on the real Catalyst but if there is a story then I want to see some volume and I've studied this uh obviously I buy them in the morning based on just the news also but if they do 10 million

plus volume uh then I considered that as something which is likely to have some legs and I'll give them more room to run for that particular stock so that is how I have created a new kind of EP which is called 9 million plus volume EP and that has become a main stay of what I try and do nowadays because because the classical EPS where you have a stock like smci or root come out comes out with earnings and makes 100 200% move in a year happens only five or six times while the stocks which

will have this sudden surge of volume of like 9 million it happens 400 500 times in a year so it gives you a lot more opportunity to find these trades and my research shows that these stocks which have these very high volume breakouts they tend to make 50 to 100 200 % moves after making that kind of a volume moves and so that's what I go into so the the 9 million volume when does that come in by because a lot of the times when there's 9 million volume the Stock's you know a lot higher

than than you want to get into and then another question which is in the same category is stocks that Gap up too much what is considered too much and what do you do about it if you if you want to get into it later on like rivian for example it went from 12 to 18 last night and and you know in aftermarket and then it gapped up and like sometimes this happened you know not to follow through but a lot of stocks follow through they just Gap way too much and you know you can't get

into it because the Gap is too too too much at the moment so what would you suggest over there uh so like typically this is a phenomena which is happening in the market like and if you are Trad if you are trading the if you're trading the market uh both of you people look too young for that but if you're trading the market 25 30 years ago right uh if there was a good Catalyst which came in the stock was not gapping up as much as it is gapping up currently right and it used to

Gap up 8% 6% 5% many of the EPS I got into they're gapping of four five 6% so there is a long pathway or there is a long runway for them to run nowadays what happens is stock gaps of 30 40% on the Catalyst because every single kid is trading news currently right and basically that's the most popular Style uh of trading for day trading or for algorithmic trading or everything right so I look at like the Catalyst once I look at the Catalyst and I see what is the total move this catalyst is likely

to make based on this particular thing and if I see that the stock uh is gapping up even beyond that range like and I when I saw rivan mean rivan is not something new I seen and traded Duan multiple times because it keeps showing up in 9 million EP all the time right and basically I know the catalyst is not worth 50% move right I know because rivan has 624 million or something uh like a float is what ran float is like 600 million plus 614 million right its capitalization is 11 billion that's another very

important thing to remember which is like my all my studies on EP show that the best EPS have a capitalization below 10 billion right and 10 10 10 billion below 10 billion and the best ones have capitalization below even 1 billion right if you see like can I last just in last one week if you see this ra rais RGS which made a move uh it's capitalization was what like in it's capitalization after it made that big move of 400% is 45 million and before it made that move its capitalization was 11 million right 11

million cap capitalization stock can double triple go up th% right but if you have a stock which already has 30 billion or 40 billion capitalization or even there are not many stocks in the market which have capitalization about 40 million 40 billion right if you look at the total market so if you have 10 billion capitalization 11 billion cash is going to double triple means anything can happen in the market probability of that happening is very low right based on a catalyst which I don't even think was was like really game changing so capitalization is

very important you see this uh stock which has made this Big Mo uh mlgo or something right that right mlgo now if you look at uh that stock is up like in what like th% in last this thing and if I look at the capitalization capitalization explains a lot of it because prior to this move of th% it capitalization was 6 million can a 6 million capitalization stock go up and make 10,000% move yes uh but a 60 M billion capitalization stock so you have to look at the Gap in context of what is the

capitalization of the stock right so for me when I looked at ran I said like this particular stock capitalization is already about 10 billion right and 50% is this catalist really so that's why I didn't get into that particular stock so I always look at like what is the capital ation what is the float smaller the float more likely but typically I would not take a gap up of 40 50% unless the Catalyst itself is really gamechanging or I really think that I must get into it kind of a thing and uh 20% Gap UPS

10% Gap mean anything up to 20 30% 30% nowadays is a norm 20% I would still take it basically it's a it's a fascinating style because it really Blends um you know what you would usually categorize is very traditional like momentum trading but the way that you are analyzing catalysts and you're basically doing Net Present Value calculations like a fundamental uh investor actually would and so understanding both of those things you can really understand the Catalyst understand the market cap and the price and then basically do your own version of a you know you're discounting

it to like the Net Present Value to see is it way off and those are how you can get those U terrific moves like an smci or an Nvidia early on when if you can see that they're might go up five or six times and then the stock might follow that over the course of you know a year or two years and those would be the more like classic episodic pivots where it's like a sometimes a long-term story a huge fundamental change stable earnings you have institutions getting in there and a huge revaluation as opposed

to something like rivan where it's um you know it's they have a short-term Catalyst yes it's a couple billion dollars huge gap up but then you have the next couple years where the earnings don't really change that much and so yeah it's it's a very interesting and how you categorize that and I think that that's a testament to your experience in the market and I know that something that you talk about frequently is like the procedural memory and so basically like the muscle memory of identifying these setups and then playing them immediately uh so for

people who are not uh super familiar with this style could you talk about the importance of that procedural memory and how do you build it yeah now so uh classic example of procedural memory at work is today mon I came into my office as soon as I came into the office I was looking at the news and I saw one stock Ariston net it said City Bank risk uh is price Target right and that instant I said like I'm going to buy aristan net today right at the open and I bought Ariston it and it

went up like some $12 right and basically now this is very difficult to explain to somebody who doesn't have enough experience in the market right uh because what works there is procedure memory I was not thinking I didn't do analysis it was just instant snap reaction saying okay um yesterday aristate was up or down less than. 1% or something so this news itself is enough for it to go up 10 12% right so procedural memory is something which we use in everyday life right when we are driving we are not even cognizant of what is

happening around us right and I see lot of time when I have stopped at a signal somebody is like eating a bagel putting on a lipstick or curling their eyelashes and they can still drive right uh why because it's a muscle memory right once you learn driving that's why if you have a teenager with my daughter is no more a teenager but when she was learning driving and you're sitting there and you feel so uncomfortable because they're not operating from procedural memory right they're trying to figure out like whether to take a right turn and

whether to put a indicator but to you it's like an complete part of you now right so this is what short-term trading is all about and this is why it's very difficult for new people to learn in the beginning short because uhm Traders operate from procedural memory and which is not a conscious memory and that's why you can sit next to a Trader who is very successful and you can watch him dve right but you cannot and this is what you'll see in many Prof uh proprietary firms uh there are traders who make 5 million

and there are Traders sitting next to them and they struggle to even make $50 in a day why because procedural memory and procedural memory is trained through repetion procedural memory is like an swimming is a classic procedural memory right as a swimmer you jump into the water automatically you know what to do you're not thinking what am I going to do which hand which how am I going to breathe right but that comes in through a practice basically uh similarly like in a if when a kid is born he doesn't have any procedural memories but

he develops thousands of procedural memory in the first year itself because without that they will not be able to survive so to develop procedural memory you need to break down a sequence into a process and practice that procedural memory you'll need to have a set process you need to do the set process again and again there has to be a feedback loop when you learn driving there is some feedback loop the driver instructor tells you what you're doing wrong as a result you correct next time and you correct next time now in trading when you're

doing it on your own you're your own driver your own driving instructor and that's what what makes it very difficult for people to correct their performance but the good thing about procedural memory is once you develop it it is permanent right so how can you develop it you develop it by basically narrowing down your focus I think and some of the classical problem I see with new Traders is they're trading too much too many things and they're trading too many stock so you can't have develop procedural memory for five styles it's very difficult right and

basically so if you break it down trade a simple setup develop a procedural memory uh Things become easier I'm curious about you know the the exiting and and selling in a position a lot of times when you have a good breakout it could move 20 25 even more in in one day and I know that this style you know especially EPS it's not like a momentum burst where you're looking for a 3 to five day move this could be longer term so what's the process there and you know something moves 20% in one day after

you already bought it how do you start to exit there do you take partial off that day and then you hold the rest what's that what's that trading strategy there uh so whenever I'm doing EP okay before I put in the trade I have my calculated in my mind what is likely percentage the stock is going to make a move right so I always like in a work out in my mind look and this is a catalyst smci stock is likely to make 50 to 60% move based on this particular Catalyst right or like say

uh you have like some sort of like classic example just yesterday envx yesterday or day before yesterday envx had some Catalyst right and this is a stock which I traded multiple times right and then I know I looked at the Catalyst and I said like this catalyst is going to make this stock go up around 20 25% kind of a thing right but obviously Market can surprise you sometimes uh So at around uh like 25% Gap like an after it like did that kind of a thing I started like in a selling 80% and I

kept 20% and I knew that by the end of the day because this is a catalyst this is a stock which I call as a story stock it doesn't have earnings it doesn't have sales it has the story that solid state high density battery which is is going to come out sometime in our lifetime and basically so uh so that I'm very clear that why I was exiting that particular trade but as against that uh some weeks ago I bought crdo uh crdo which is Credo Technologies and the earnings was phenomenal I looked at the

earnings I looked at the sales and luckily for me it wasn't gapping up much it was gapping up only 4% or 5% in the morning so I said based on this earnings and sales this stock is likely to make around 40% % move so I didn't sell on the first day the stock made a big move on the first day the stock went up 27% but I was expecting it to make around 40 50% move so I held it I only sold it once like it had reached around my threshold up around uh 40% and

then I moved my stop to say this is like an I'm very happy because it did that in seven days right it did 40% in 7 that's like you hit a jackpot right so I said like I'm going to lock in and I put in my stop to lock in at least 40% and the same day the stock started going down or it uh faded and I got stopped out right so for EP that is my approach to deciding when to exit now sometimes when you get into an EP and especially in some some of

these biotechnology and storage stocks um it just goes so crazy that it just makes no sense to keep on holding that stock like that day uh like it wasn't really EP I don't even know if there was EP I was just likeing in the morning I saw this mlgo showing up in one of my scans first thing in the morning 9 million right I entered it I didn't think it will make 288 per move right so I got out like when it doubled But like after that it went on to make so there is and

you holding it after that didn't really make much of a sense because I don't think it made much of the thing Beyond one day move it did make 80% move after that so for story stocks uh it's different but for like an EPS I'm always calculating in my mind uh based on experience based on the sales number based on capitalization as to how much the stock is going to move and I'm willing to give it more room to run and sometimes that comes to bite me because I have good profit in one or two days

and then I don't take it like Gap is a good example I got in and I thought like this is a real genuine turnaround and I got in very nice entry it went up around 13 14% I didn't take the profit I said like I'll let it run and it stopped me out for Break Even mhm yeah so what does your risk management look like U so you described you know when you're looking at an episodic pivot or something where it's more fundamentally driven you're willing to give it a wider range because you expect more

consistent you know uh bigger upside and you're willing to take that a little bit of extra risk with story stocks or with social momentum or something it's kind of easy come easy go where everything will be going great and then it can all stop at once so what are the technical signals that you look for are you usually using low of day are you using a trailing stop are you using a certain pattern uh so basically when I enter basically I try and enter like if I identify these stocks I try and enter uh first

thing in the morning uh so I don't do pre-market but like I enter at the opening print or something like that that time most of the time based on the Catalyst I know that look can I I'll give it 3 to 4% 2.5 to 3% room below my entry uh because if it is genuine Catalyst it should be like a bullet which just goes up it should not come back right and basically and if I get stopped out and if I'm convinced about the Catalyst then I'll reenter but most of the time the stock which

has genuine Catalyst it just goes right and basically now for story stock that's where uh there are couple of risk management I'm not convinced in my own mind because I do all these analysis uh that even though storage stocks can make me more money than the real Catalyst stock to put in more than 10% or 20% of my account in it uh so the risk management also becomes the size which I am willing to take in one of these story stocks kind of a thing so the size itself is much lower while in a good

Catalyst kind of a stock where there is a genuine Catalyst um on a EP I'm willing to go really big I'm willing to put big money because that's how you grow your money right and basically so uh but on a story stocks I always like can I try and play smaller size give it a little bit more room because I've been surprised every single time I exit a story stock it tends to go up 30 40% more or even more than I expected right is how many people who trade would have expected something like mlgo

to make the kind of move it made right and so you always get surprised so I try and keep a smaller portion I get 80% out at profits which are good 50 60% and then I keep a 20% position in case it does some uh crazy things basically so now generally generally for exit right and after trading many years and after looking at what uh happens to uh stocks I always exit in tranches so I peel my positions so I'll exit 20% Then I'll see then I'll exit another 20% Then I exit and the last

20% I try and give it as much room to run as possible so how much uh positions do you usually have at once at that point because if you don't get stopped out of one with 20% you're adding on another and another and another and it could pile on so you end up with you know 10 10 plus position I don't end up ever with 10% position or three to five positions the stop position which is just 20% left I don't even consider it a position then like but and when I do momentum burst also

I tend to operate in higher price I focus only on higher price stocks so my position sizes are much larger on those stocks because the stops are very small right uh so I typically go in with like 40 50% of the account kind of a see if my stop is going to be just 1% then I go with a larger size basically right so can we get into momentum burst and you know what it is exactly MH yeah uh so momentum burst is just a sudden burst of momentum as the word itself says right and

it can start from any level like if you look at like say recent trade which I did in orale right and I it suddenly the momentum came in there and the stock had a breakout which was like and it was up around $111 and then in next four days it went around $83 or $90 right and so uh this is just a phenomena in the market where if some stock suddenly has a breakout right all the Traders they just go onto that particular stock today aristan had broke out first thing in the morning it was

very apparent right and rest of the day people kept buying that particular stock now what happens is because the market has these like you guys are from investor underground you're first one to enter most of the news place you enter in even pre market I see like any on Twitter and all right but there is a second layer of people who enter near the open then there is a third layer who are the followers who enter later and then there is this super uh intelligent people who enter on second day and there on there are

super super intelligent who enter on third day also right so as a result the stock goes up to or three days and after that there is nobody left to buy and the stock typically collapses or like it goes into orderly sideways move or it pulls back so I'm trying to capitalize on this 3 to 5 day moves and it's highly profitable because in 3 to five days the stock makes 8 to 10% moves or if it is a high price stock you risk $5 and you make like 70 801 $200 in just three to 5

days right uh so I try and do and that is the foundation why I can take bigger risk on an EP is because I have this studied stream of Trades which I'm doing where I'm hitting singles single single singles right and then once in a while you get like a home run kind of a trade you can take a 10% risk because you know that even if that trade doesn't work out uh it's not going to be a problem because I can recover through singles and the singles allow me to finance my once in a

while big EP trade where I'm willing to put um 100% of my account or like I go with a 10% stop because I'm so convinced the story is lifechanging right so that's what momentum burst is on momentum burst I try and enter as early as possible as soon as the momentum is visible or it's like valid and uh I hold those traits for three to four or 5 days and after third day I see what has happened if the the trade is still working in my favor I'll hold it otherwise on third day you know

it is not working you can kill the trade go into the next trade do you pyramid out or is it just uh you know one sale at three to five days uh I also pyramid out of it like I don't pyramid like and I enter everything in one go but I exit in terms of peeling it right basically that's just uh fascinating because I know that uh other very successful Traders like Lance breitstein he talks about like the Easy Money trades and basically having those singles add up as kind of your padding so when a

huge opportunity comes along you can take that extra risk because you know that you can make that up with the Easy Money Trade so it's just great to see different styles but the same commonalities between uh excellent Traders um and so I wanted to ask what type of Market does this work best in I mean right now it seems like the ideal Market because it's it's a bullish Market it's a reflation kind of Market you have things that Trend uh but you know if a bare Market comes along do you change your strategy or are

you just much less active so the momentum burst works both on the long side as well as it works on the short side like uh in fact and I did a trade uh yesterday which I made more money than I made on the bullish side in the last 3 4 days which is Mona I saw Mona breaking down in the first uh few minutes and I entered at 9:31 actually I shed it right and it went on uh went down $15 or something my play basically my entry right uh so I trade both sides of

the equation but obviously for variety of Reason Taxation and all I have more capital on the long side because a lot of capital is in uh accounts like foron Cas and trust and all so obviously when there is a the market is going down then I do less amount of trading not because of like just because a lot of capital I cannot trade on the short side uh so that's why I don't really focus much on short side even though I know the small caps are excellent for shorting all small caps most of the small

caps they're just like any at some stage they all collapse right so you can make money on the short side but not being a focus because 80% of money is like really on the long side where I can't really do shorting what kind of stock momentum bust Works based on momentum works again momentum wor works best on stocks with capitalization below 1 billion okay 1 billion and three sectors uh produces the best momentum burst biotechnology technology and consumer discretionary if you have to trade momentum worst if you just stick to biotechnology and Technology uh you'll

get high wi rate because that's the kind of thing where like a suddenly if buying comes in more people chase that moves more people are attracted to that particular thing uh lower price stocks do best higher price stocks don't make such a big move but higher price stocks you treat them differently because you are not looking at percentage gains but you're looking at if I risk $1 we can make $10 or $5 or $8 it's the same trade right so that's the thing and uh essentially uh stocks with iped in the last 10 years they

tend to do well than stock which are more established when you're looking at either EP or as well as momentum burst uh mostly and uh especially the one which are like in basically in the last three years can have good moves on EP also and on momentum bu also but I'll take any move but like typically the smaller the capitalization is say one thing capitalization is very important which is like the most important thing if you have a choice between taking three or four four different breakouts choose the one which has the smallest capitalization smallest

float and lowest price and momentum burst is is more technical right like usually the Catalyst comes out a week ago and then it sets up or tightens up like how do you look at the momentum burst itself I don't really care about Catalyst I don't care about anything else it's just a pattern-based trade right it's just a pattern all that I want is the stock should not be up two days in a row before the momentum burst happen the context is important where the momentum burst is starting from right and if the stock is already

very extended the stock has made three4 Moves I'm not going to be going into a momentum burst on a fourth breakout or third breakout but if the stock has consolidation or it has orderly pullback and this is the first day of a breakout uh then it is likely to work for 3 to five days uh the trick is to avoid extended stocks the trick is to not like and get into a Third Leg of a mo or fourth leg of a first second leg ideal best that it's very logical too uh because if you look

at a stock that's already up two three four days in a row that you know momentum Burse is actually the parabolic or that's the grand finale of the move as opposed to a a momentum burst at the beginning of the move that's the Catalyst and basically the market recognizing that something's different about it so that's that's just a very logical thing to do it makes a lot of sense um have you tried this strategy with options at all either in the money options or you know using a much smaller Capital size maybe 1% of capital

uh and using something like that with some of the more established stocks like Nvidia or something uh unfortunately like I had tried options many years ago when I was starting and I didn't find luck with options at that time so I never Revisited lot of time like and I have lot of Traders whom I know either members of my site or outside who might know are very good at options and all uh the thing is that like know what I do is working so well that if I to make options work I to spend three

four months experimenting with it and the opportunity cost of doing that is something which at my stage in life I just don't see it as this thing but can it be done with options there are Traders on my site who do it with options right uh so yes can can it be traded differently than what I do yes but um I don't use daily charts like I just use daily charts I don't go on a lower time frame uh can you go on a lower time frame and slightly improve your entry or exit yes but

I just don't do that because it works for me currently but yes can you do options yes possible yes and this is a style that really uh seems to depend on just compounding you know you have position after position after position you know as long as you can control the draw Downs I mean the accounts could just compound like crazy especially over you know years or decades yeah so if you want to manage you know uh an account with three to five positions on average maybe six how would you do that with so many names

you know breaking out or gapping up what's the best way to continuously rotate and I mean we could speak in in either large account or small account but even you know what's the best way to even grow a small account or any suggestions for you know Traders under ptd who you know tra swing trading could be very beneficial there you know he hold something and you could really multiplayer account and get into that you know 25,000 Plus uh I think fundamentally there are two ways to impr like in a grow small account or large account

right one is you do a larger size per trade right the second is to do large number of trades right means if you cannot do and I don't think somebody who's a beginner should do a large size trade I can do large size trade because I know what is my risk parameters and how much I'm trading and I know the capital which I'm trading if I get wiped out it's not going to be the end of my life kind of a thing right but uh uh the easiest way for a small account to compound is

to do lot many trades right means like and this is where you have to find a methodology or you have to find a setup which produces so many trads and if you can do that then you can compound much faster and that's why like smaller accounts uh they can do well if they can't do day trading they can do swing trading holding for two three days is a very good thing if you can get 5 6% as long as your stop is not like 5 6% and if your stop is 2 and a half 3%

and if you can get six s% on a trade and you do it multiple times even even though stocks can continue it's best to kind of take the take the position off and continue rotating it and rotating it you know like because for chewy for example you know it makes a a huge move but you know at the end of the day it took six days to do what it did today but let's see can make 20 25% you know now you take it off a few days ago you have to be okay you know

not you know not looking at the long term because you're continuously selling and moving to something else and rotating so it's like two three days around 10 20% and you just keep on going and going yeah I think this is a fundamental debate in the trading Community uh there are people who believe that you should not spend your time hinding singles and they're looking for these home runs only they're looking for this uh Trend following kind of a method they want to say oh you sold chewy for 12% profit see after that it went up

40% every stock which I sell goes up I don't feel any regret because I know as part of my strategy consciously I'm trying to capture that fast part of the move right I'm not trying to capture the large if I to capture a larger move then I'll base it based on fundamental reason based on EP based on some other methods which I have like bucket zero bucket one and bucket two which are stocks which I uh scan based on fundamentals right but here this strategy is designed to just hit these singles of 8 to 10%

right now that realization only somebody who's conscious about it has lot of Traders new to the trading they're constantly facilitating between doing this swing trading or doing uh Trend following and I don't blame them because um they don't have the experience and they don't have the understanding that most of the some of the best long-term Traders I know and some of the best trend followers I know their win rates are in 25 to 30% rate right and swing Traders I know a lot of them who have 60 70% win rates because they're taking see when

you decrease your holding period and when you decrease your expectancy about profit your win rate increas right y because you just it's like a sculping on a 3 to 5 days time frame essentially is what you're doing right and basically so so that's the fundamental debate people have to resolve in their mind I think and if you to compound look at like one of the stby members who's like a very active on Twitter monis right monice is one of the best Traders I know uh who's like a done phenomenally in like and what does he

do he's constantly putting money into trads taking it out putting money taking it out money how many trades does he do like in a year thousands right and that's why he compounds the way he compounds so there are two ways you can like be so good that you can find a trade and hold it for its entire move but be damn sure that what you're holding is going to be the one which is going to go 80 or 100% right or else if I to eat a pizza I can eat 100 slices of pizza or

I can hit the whole pie it's same right yeah the other day I was doing this math this math equation and let's say you start with a $10,000 account and you take five positions so you put 2,000 in five positions and you make 10% on that right even if you do 10% on one position you make $200 that day 20 days in a month you could make 4,000 and then now you have 14,000 for month two and the same thing five positions you have whatever it is400 in each you make 10% so it's 240 and

for 20 days and you just keep on doing that it's just 10% let's say on 20% of your account you just keep on doing that and keep on doing that and you hit those singles and that's that's I think you know what I realized is the best way to do that as well and that was obviously through your you know your teachings and your singles yeah I been like people come to me all the time like not members non-members also and they say oh how do I go to small account or big account I tell

them he singles mhm uh do they want to hear that no it's consistency see and it's work it's work right and they they want you to tell them look and buy Tesla it's going to go up 300% right you tell them look you need to do 300 rates to do 300% nobody's interested M it's a process that really Traders are interested but then by that time they have thought through these things uh lot of trading success is about thinking through these some of these issues right I consciously thought through these issues and that is why

um I pay a lot of attention to hitting singles right because I don't know when the next big trade is going to come or whether it will come or not also when is the next smcr route or some trade is going to come I don't know but I know every day I can find three singles five singles yeah and and you're limited to how many trades you could take so if you're in five today and you want to hold it for a week you're missing plenty of Trades throughout the week you know mlgo and RGS

were two examples but if you're sitting in Tesla chewy and you know smci you're going to miss those other two so the only way to catch most of the trades if you think about it is to just keep on taking those singles and continuing on otherwise you can't you can't grow an account MH that way yeah also see the classical this debate has been around since like ages like uh before the commissions in stock market came down right and people were trading Commodities when they were trading Commodities there were people who are Trend followers which

is what that entire Turtle Traders and all were and they like had 20% win rate right and then they had like this draw Downs which are 50% that's why the swing traders who are like in a basically swing trading started in the Commodities Market not in the stock market right because the commissions were $150 $200 per side uh before around 1970s or 1980s right so the classical debate has always been the people who hit the singles or swing trade uh the train followers think that they are wasting their time and the people who do Trend

following the other people think you look they're just holding on in the belief that they have so much dead time period when they're holding the stock which doesn't do anything right as you know most of the things which I think and most of the people know about EP but the new thing which I have discovered in recent years which is more 9 million that's something which many people don't really know or that is the thing which can really make you lot of money because it gives you a lot more opportunity universe and within that like

can you are a member right and you said or something so you know some of the things which are done which is like uh what I have discovered is that these stocks which have 9 million EPS there are certain stocks for whatever reason the market just loves them and they have repeatedly these 9 million EPs and on those breakouts they tend to make 40 50% move they're not like the normal momentum Burst when they move even their 3 to 5 day moves are 50% plus so I found a way to identify those stocks and we

call them sugar babies on the site uh but these are stocks which have high number of 9 million EPS in a given period of time either in 6 months or one year and to give an example Mara is like if you look at Mara swings every time Mara swings and Mara swings a lot in a year just the normal swing in Mara is 30 40% and many times 50 100% or clsk right these are stocks for whatever reason right when they swing they swing in 45 50% increment in just 3 to five days now knowing

this gives you a lot of age because then I just monitor these 25 30 stocks which are this propensity when they move to move in 40 50% increment so your momentum burst you're just trading a momentum burst on them or your trying to anticipate a move on them but just a small move clsk just like four five day couple of days ago I traded and just like an it makes 30 40 move in just like a zy excellent um so we're gonna get up to the the last section of the interview and we're gonna ask

you some more casual questions but before that uh I'm going to draw the winner from last week uh in the contest is to leave a comment in the comment section and anything that is interesting or a good takeaway uh you can win a T-shirt and so the winner from last week is is caveman 787 congrats you've won a trading take shirt and you can email webmaster investors underground.com now predi uh some of the questions that I want to ask you were related to you know you've been in the market for decades now uh do you

still enjoy trading do you still like learning the process is this what you're very passionate about and enjoy doing or is this just work no it's not work it's it's passion it's like I would not be trading because I made my money I can like can I retire I don't have to trade even single day and I'll be very well off uh or I'll not have some problems right I enjoy whatever I do I develop new methods I develop people I develop Traders I like I work with Traders all the time every day I work

with Traders uh and it's the process which I enjoy it's the joy which you get of discovering something new discovering a new set of idea developing a new setup idea and making it work yes and then who have been uh some of your uh students or who have you really enjoyed watching uh flourish who've learned from your style uh I think and I obviously chrisan K Magi is one of the most successful in terms of like before that there was another person who made 100 million he's not in the public domain but he made 100

million trading he took a 1 million account and Drew it to 100 million doing that thing Kelvin Wong was his name uh but like there are lot of other traders who are not on the public radar like monice who typic he's not exactly Trading My Style but he came into the site learned a lot of things and did uh do DOI star who's in like so there are hundreds of Traders like in I like I've taught hundreds of Traders and the thing is that I don't insist that they should trade my style so there are

lot of these kind of things the other thing which I'm very proud of uh which is like an a uh multiple times when Traders had catastrophic losses and when they contacted me I helped them to recover basically there are a lot of traders who have had like multiple like they have some many of them are not even members of the site we are not members but when they had catastrophic losses and they were like really up shet cek uh they contacted me and I helped them to recover their confidence and help them to recover from

that kind of a situation by giving them a road map saying look you need to hit singles you need to have uh how you can potentially come out of these kind of things so that's a that's one thing because successful Traders can be successful for many reason but somebody who gets into catastrophic loss needs a lot of Health basically yeah absolutely and then the last question is what is a great piece of advice that you've received uh many years ago many many years ago when I was just I was not in trading but I was

I got one piece of advice and which was to anything which you want to do go deep uh the real thing if you want to make any anything work is don't look at 5T deep or 50 ft deep go 5 mil deep go 50 m 500 mil deep if you can go deep into any pattern you can go deep into anything you can make it work so deep dive is something which I learned many many years ago in my previous career and that really made a difference to what I do and that is the advice

which I would give any Trader that is a great piece of advice so pep thank you so much for joining us and how can people how can people learn more about you or how can they um uh see what you're doing in your work uh I think they can go to my YouTube channel they can go on Twitter uh like I do have a paid service also but uh there is so much uh things in the free uh World which I have like and I do the videos I do uh I have a free blog

which I write occasionally so they can go and find out on Twitter I am active fairly active nowadays excellent thank you so much for your time and thank you for your contributions to the trading community thank you thank you it was pleasure talking to you thank you thank you take care thanks bye thank you for tuning into this latest episode of trading takes don't forget to hit the like and the Subscribe button and if you enjoyed this conversation please check out some of others with some great Traders thank you for watching