# Alex's Swing Trading System

## A Quick Note Before You Dive In

What you're about to read is **my system** — built entirely around **my personality, my risk appetite, my emotions, my lifestyle**, and how I want to approach the market long term.

The rules I follow… the types of setups I trade… how I trim and manage positions… the frequency and pace I operate at — **it’s all tailored to me**. It works because it *fits* who I am, both as a trader and a person.

So don’t come here expecting something to copy and paste into your own process.

Instead, use this system as a **starting point** — something to **learn from, test, get inspired by**, and adapt as you figure out what actually fits *you*. That’s the real goal. Over time, your own system will take shape — one that aligns with your mindset, your life, and your long-term goals.

This is mine.\
Go build yours, but I'm here to help ;)

Alex

{% embed url="<https://youtu.be/r6LAZ4x1x2M>" %}

## CORE PRINCIPLES

### Core Philosophy: Trading the Market Waves with Intentionality

In my approach, **trading starts with the market — not the stock**. It’s about aligning with the **psychology of market cycles** and understanding how capital flows shape trends. The goal isn’t to catch random setups in isolation — it’s to ride the **right wave**, with the **right names**, at the **right time**.

That wave is the core. The stocks I trade? They’re simply vehicles. Once I determine the phase of the market — whether it's the early stages of a trend reversal, a continuation setup, or a correction — I build a **concentrated basket of liquid leaders** that reflect that environment.

This mindset — seeing things at the **Market Cycles + Portfolio level** — allows me to stay detached from any single stock's noise. It helps me operate systematically, without emotional interference from individual P\&L swings. I’m not chasing every breakout or swing setup. I’m positioning **within context** — the broader market structure, relative strength flows, and internal breadth.

A big part of that edge comes from **only trading the top liquid leaders** — and trading them the best I can. By choice, I remove the noise of everything else. It’s impossible to catch everything that’s moving, and I’m not trying to. These names offer the **highest probability setups**, the cleanest structure, and the strongest institutional backing. That’s where real performance comes from — and that’s where I stay focused.

### Mental Models That Drive My System

This is not about chasing confirmation. In fact, the **edge comes from acting before it feels easy** — before everyone else sees it. The system is built around a few critical mental anchors:

* **Market > Setups:** Always respect the market’s phase. A good setup in a bad tape is not worth your capital.
* **Price First:** Ignore the noise. Structure and price action override everything — news, indicators, sentiment.
* **No Breakouts:** My edge is in **pullbacks to structure** — usually around the 21dma. I don't chase highs. I wait for price to come to me.
* **Cushion Is Leverage:** The profit cushion on current positions gives me the flexibility to test new exposure — it’s my tactical edge.
* **Defense Is Offense:** In corrections, survival and mental clarity are alpha. I protect capital and wait for new alignment.
* **Play the Odds, Not the Outcome:** I treat every exposure as a probability — not a guarantee.\
  That mindset makes it easier to adjust quickly. If the setup doesn’t develop or the odds shift away, I reduce or exit exposure without hesitation. I’m not here to prove a point — I’m here to allocate risk where the edge is. It’s not about being right, it’s about staying aligned with probability.
* **You Can’t Catch Everything:** In strong markets, there will be hundreds of names moving. Trying to chase them all leads to scattered execution and underperformance.\
  Focus on the **strongest setups out of pullbacks**, trade them well, and add only when there’s room, not from FOMO.

### It’s Not About Being Right — It’s About Playing the Odds

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FudDJ5MlBrjgVralH6b5Z%2Fimage.png?alt=media&#x26;token=956d7bfa-8dee-4c60-830d-3ee61277fc60" alt=""><figcaption></figcaption></figure>

Once you’ve been through enough cycles, you stop expecting clean cause-and-effect. Some days, your best name gaps down 2–3% on no news. Other days, everything you touch sticks and gaps up. That’s just how markets work — **random in the short term, but structured and repeatable over time**.

I trade with a win rate around **40% on average**. And I’m completely at peace with that — because this game isn’t about being right all the time. It’s about knowing that when the right setup shows up, the **odds have shifted in your favor**, even if that doesn’t guarantee a win.

Think of it like counting cards in blackjack.\
You're not predicting the exact outcome of the next hand — you're reading the environment, understanding when the odds lean in your direction, and **sizing your bet accordingly**. I do the same with each trade.

That mindset shift is huge.\
You start to see losses not as failures, but as part of the math. You stop expecting every trade to work — and that helps **detach from outcome, manage emotion**, and stay consistent.

Because at the end of the day, this game is about **playing your edge**, not chasing perfection.\
And if you do that with discipline, the winners take care of the rest.

### The High-Level Structure of My System

1. **Market Timing First:**
   * I use **price**, **breadth extensions**, and the **McClellan Summation Index (MCSI)** to determine whether the market offers a favorable risk/reward window.
   * I focus on **oversold breadth** (ST/MT/LT) for entries and avoid new positions when the MCSI is in a confirmed downtrend.
   * **No market confirmation = no portfolio risk.**
2. **Position Building via 21dma Structure:**
   * I trade **pullbacks into the 21dma-structure**, either on weakness into the zone or on strength when reclaiming structure.
   * After a market pullback or correction, I like to get the **weekly 10wma-structure** **confluence** as well for added confirmation.
   * I avoid buying anything >1x ATR above the 21dma.
   * Everything revolves around **structure**, **relative strength**, and **positioning context**.
3. **Concentration & Execution:**
   * I typically trade **5–15 liquid names** at a time.
   * Full position size is entered early — risk per trade is between **0.25% and 0.5% of total capital**, up to 1% on high-conviction setups.
   * I don’t scale blindly. **Adds are treated as new trades**, with structure, risk, and separate stops.
4. **Selling Rules:**
   * I trim **into strength** (e.g., 2R and 5R) and **on technical weakness** (21dma or 10wma break).
   * Stops are based on **closing behavior around the 21 EMA or 10WMA low**, not intraday noise.
   * I don’t use hard stops — it’s a **discretionary but disciplined approach**.
5. **Earnings Management:**
   * Position sizing into earnings is managed based on **cushion vs. implied move**.
   * I never hold full size into earnings. At most, **1/3 or 1/6**, depending on extension and risk.
6. **Exposure Management:**
   * **Out of Correction:** Start light. Engage leaders. Use cushion to add.
   * **Confirmed Trend Pullback:** Add back exposure at support, only if cushion permits.
   * **Overbought:** Stop adding. Trim strength. Protect gains.
   * **Breakdown:** Cut risk. Sit out. Reassess. Watch MCSI and breadth for re-entry signal.

### Summary Mindset: Structure Over Emotion

This is not a fast-paced, scalp-the-open kind of system. It’s **intentional**, **framework-based**, and **psychologically resilient**.

* I operate **exclusively on daily charts** — no intraday noise.
* Focus time: **first hour and final 30 minutes.**
* My **edge is in selection and timing**, not in sitting at the screen all day.

I don’t care about hitting every move. I care about putting size behind the **right move**, within the **right wave**, with **risk fully defined**.

If I’m trading without a map — just reacting to candles or alerts — I know I’m operating at a disadvantage. That’s why I built this system: to bring structure to my trading, clarity to my decisions, and **longevity to my edge**.

### 10 Golden Rules

**1. Respect the trend, not your cushion.**\
Don’t let short-term P\&L fluctuations shake your confidence. Focus on structure, not fear. Let your selling rules guide the trade.

**2. Engage early, not late.**\
Edge comes from recognizing early shifts in trend — not chasing consensus. The best moves begin before it feels comfortable.

**3. Manage Open Heat actively.**\
Your unrealized gains are not safe by default. Use trims and trailing stops to stay in control of your equity curve.

**4. Ride strength, don’t guess tops.**\
Strong trends often run further than expected. Stay aligned with price, and let structure—not opinion—tell you when it’s time to exit.

**5. Small drawdowns are the real edge.**\
Progress isn’t about big winners — it’s about keeping the down periods shallow so you’re ready when the tide turns.

**6. Position smartly, not emotionally.**\
You don’t have to catch every move. If it’s the start of a real trend, you’ll get your chance. Focus on where you want to buy, not on FOMO.

**7. Survival is a position.**\
In bad markets, your best trade might be going flat. Capital and mental clarity are more valuable than a forced trade.

**8. Wait for confirmation, not pride.**\
You don’t need to be first. Let price prove it — reclaim key moving averages, see the RS, then engage with structure.

**9. Master inactivity.**\
Not trading when there’s no edge is just as important as knowing when to push. Use quiet markets to build edge, not to burn capital.

**10. Patience compounds.**\
Swing and position trading requires emotional detachment and time. Let setups work. Focus on weeks and months — not minutes.

## MARKET TIMING

Timing the market windows is the foundation of my system—that’s the priority. I use TradersLab’s TLMM dashboard for that.

Over time, I determined my edge, where buying a pullback setup has the highest probability or working and leading to a sustained move. I buy early in the market move, but I am still waiting for the Price and Breadth confirmation to increase the odds.

I do buy on weakness in an uptrend, if a leading stock is into support, even if short-term breadth is not oversold. But that's not the bulk of my positioning, as I recognize that the odds are not as high as if the market is oversold.

### Price Structure Comes First

The 21-day moving average isn’t just a line on the chart — for me, it’s a **core structure** that keeps me grounded in what matters most: **price**.

Price reflects everything. Every belief, every forecast, every position — it's already baked in. You don’t need to guess where things are headed when you can simply follow what’s happening. **Price tells the truth.** And when you trust that, trading becomes a lot simpler. Be dumb — follow price.

That’s why I anchor so much of my process around the **21dma-structure**. When the market is trading **above a rising 21dma**, that’s my safeguard. It means the short-term trend is intact, the structure is clean, and conditions are favorable. If we’re below it — especially after a strong move — that’s when I stay cautious. That’s where chop lives. That’s where traders give back gains.

After a larger pullback or correction, I want to see **price reclaim the 21dma**. That reclaim is everything — especially if the 21dma starts to curl back up. That’s what resets the structure and gives me a green light to look for entries again.

From there, I focus on two main types of action:

1. **Buying weakness** into a **rising 21dma** — when the trend is strong and a pullback gives me a high R/R entry at structure.
2. **Buying strength** on the **reclaim of a declining or curling-up 21dma** — especially after a broader pullback. That reclaim often marks the start of a new wave.
3. **Selling new exposure without cushion** — positions added without prior trim or buffer get sold if price closes below the 21dma-structure. No hesitation. No ego. Just respecting structure.

The goal isn’t to predict — it’s to respond. Structure tells me when it’s safe. Price tells me when it’s time.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FDyBwtPfPsvTZVBG0Mz9x%2Fimage.png?alt=media&#x26;token=901e611f-52cb-420e-b4db-73cc02f38a73" alt=""><figcaption></figcaption></figure>

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FABpFdXooq9daDVpGj3ye%2Fimage.png?alt=media&#x26;token=da36f183-9412-4e6d-904c-1bc97dad3768" alt=""><figcaption></figcaption></figure>

### Breadth Extensions for Timing. MCSI for Confirmation.

In my process, price always leads. But once structure starts resetting, I turn to **breadth extensions** to time the opportunity, and to **MCSI (McClellan Summation Index)** to confirm that there’s real participation behind the move.

I use **breadth extensions** like a rubber band. When they stretch too far to the downside — especially after a correction or a hard pullback — it doesn’t guarantee a reversal, but the odds begin to shift in our favor. Every strong move starts from a state of stretch and fear.

Here’s how I frame it:

* **Very short-term (VST)**: % of stocks above their **5dma**
* **Short-term (ST)**: % above the **10 & 21dma**
* **Mid-term (MT)**: % above the **50dma**
* **Long-term (LT)**: % above the **200dma**

When **very short-term or short-term breadth** drops below 25%, I’m on alert. That’s where fear peaks and the market gets washed out — often creating the conditions for a snapback. But how I act on that depends on **where we are in the broader market cycle**. If we’re in a **strong market early in a new trend**, those quick VST washes might be all you get — and you have to be ready to step in fast. Later in the cycle, or during deeper resets, I tend to wait for more confirmation and broader participation before committing size. Context always matters.

* If very short-term or short-term breadth is oversold, and price retesting or reclaiming the 21-dma structure area, I prepare for **pullback trades**.
* If mid or long-term breadth is washed out, I watch for **deeper cycle reversals**.

But timing isn’t enough — I need confirmation. That’s where **MCSI** comes in.

I’m looking for MCSI to curl back up after a downtrend — ideally right as **price is starting to reclaim the 21dma**. That’s **not a green light**. That’s where I **test the turn**. Maybe I take a small starter, start leaning in, but keep it light and measured.

If MCSI then pushes higher, **reclaiming its own 10dma**, that’s the **real shift**. That’s when **participation starts to broaden**, and I get the **confidence to size up**. That’s not feelers anymore — that’s when I **press the gas**.

If **MCSI flips down**, especially after an extended run, it signals that **breadth is contracting** — and when that happens, I stop looking to add. No new trades. I’m not cutting all exposure, but I **hold off on committing new risk**. In this kind of environment, **structure isn’t breaking yet**, but the **wind is shifting** — and pressing here is how you end up getting chopped to pieces.

I want to see participation stabilize before I step back in.

#### The Flow

* **Breadth extensions oversold** = *timing window opens*
* **MCSI curl-up + 21dma reclaim/retest** = *early confirmation, test the turn*
* **MCSI 10dma reclaim** = *press with conviction*
* **MCSI curl-down** → caution, participation fading.

That’s when I stop hesitating. I don’t need to know the bottom — I just need to know when the wind has started to shift in our favor.

That’s when I size in. That’s when I press.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FxESdLgRf359oXQKWS1CZ%2Fimage.png?alt=media&#x26;token=dc215828-80ac-4544-9a2d-5c364c9ae45e" alt=""><figcaption></figcaption></figure>

## ENTRIES

### 21dma-structure Pullback&#x20;

Over the years, I went from trading 10 different setups, to only focusing on the variation of a single setup. The market, relative strength, and group strength context is more important than a technical setup.

I keep it simple — when a stock pulls back into its **21dma-structure**, I look for **one of two entries**: either weakness into support, or **strength through a reclaim, reversal, or tight range setup**.

1. Buy **on weakness** against the 21dma right into structure. No confirmation it will bounce, but R/R is best and risk taken is minimal. I like those on **red-to-green moves** right off the open. They can be incredibly powerful, especially in strong tapes.&#x20;
2. Wait for the daily reversal (prior day's high pivot reclaim in a pullback), and 21dma-structure high reclaim, a R2G move, or a DTL or base level breakout to engage **on strength around the 21dma-structure**. R/R is less, but the odds of working is higher due to trend re-confirmation.&#x20;

While I wait and look for those ideal conditions, I want to be clear — **relative strength and intraday action** still drive a lot of my decisions. I pay close attention to how the market behaves in real time, and how the **specific names on my focus list are trading**. That ultimately dictates whether I take a trade.

Even though I have preferred entry techniques, I’m **not rigid**. If there’s a **high-quality setup unfolding**, I’ll get involved — even if it’s not a perfect textbook entry.&#x20;

There’s still a good amount of **discretion in my system**, and I’m good with that. It lets me adjust without breaking structure.

That said, my foundation doesn’t change: I want to trade **liquid leaders first**, and I wait for them to **pull back into their 21dma-structure area**. My buyable zone starts **as long as price is within 1xATR of that structure** — ideally where we see a **tight range or a daily reversal** develop just above it. From there, I adjust based on context: market breadth, recent stock behavior, and my current portfolio cushion.

{% content-ref url="alexs-scans-traderslab" %}
[alexs-scans-traderslab](https://traderslab.gitbook.io/primetrading/alexs-scans-traderslab)
{% endcontent-ref %}

#### Daily Reversal example

HOOD entry on May 6th off the 48.34$ pivot that confirmed a daily reversal off prior day's high.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FCh5ZhFDvjdKN73YgpCsi%2Fimage.png?alt=media&#x26;token=ad7e7a11-c6b5-4f78-8e67-04a91ada7e35" alt=""><figcaption></figcaption></figure>

#### 21dma-structure high reclaim example

SE entry on April 24th 2025 as it reclaimed the 21dma-structure high, and the bar turned black on my charts.&#x20;

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F4J5PeK0iHXmGxGkWUbne%2Fimage.png?alt=media&#x26;token=882fe5e1-f082-417b-bd1c-c28164406abc" alt=""><figcaption></figcaption></figure>

#### DTL or base level breakout example

MBT (Bitcoin futures) entry on April 21st as it reclaimed the 21-dma structure high, but also broke out of a DTL structure.&#x20;

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FBo55VMBfWDFNcweukWzf%2Fimage.png?alt=media&#x26;token=3433f223-e109-4cc3-b838-31bd55c0cd93" alt=""><figcaption></figcaption></figure>

I usually use a mix of these techniques to build a position into a leading stock around the 21dma-structure.&#x20;

I **don't engage if price is above 1xATR-21dma extension**. I want them as close to their 21dma-structure as possible. Not short-term extended.&#x20;

## TECHNICAL CHARACTERISTICS

### Relative Strength

I developed my own RS ranking system, that I use via TradersLab.io to filter my ideas and focus on the top RS liquid leaders of the market.&#x20;

**RS Rank (From Tlab doc)**

This is Alex's proprietary score that takes into account a stock’s **performance over multiple timeframes**, including **1 month to 1 year**, along with the **stock’s distance from its 52-week high and low**.&#x20;

Other considerations:

* I focus on Liquid Leaders with high 1 /12-month Relative Strength (RS).
* Once the trend is confirmed, transition to recent Leaders (1/3-month RS leaders).
* After significant correction (deep MT & LT oversold) focus on short-term RS and first to consolidate and reclaim kma’s. (21dma structure and 50dma)

### Volume

I use volume mainly as a contextual tool — not a core input in my decision-making. Low volume during pullbacks often signals healthy digestion, while sudden high-volume spikes — especially in the form of exhaustion gaps — can hint at potential reversals or shakeouts.

That said, I don’t rely heavily on volume to make trading decisions. I monitor it, take note of the story it tells, but rarely let it drive the trade. It’s secondary — useful for color, not for conviction.

### Previous trend

I focus on names showing high Relative Strength — the liquid leaders. But I also want to see **a strong uptrend on the left side of the chart**. Ideally, it’s either the **start of a new uptrend out of a correction**, or **a strong, extended move followed by a clean base or pullback**.

That prior leadership matters to me. I want to see names that have already shown they can lead.

And just as important — I look for **clean, predictable price action**. If a name trades choppy or keeps reverting to the mean, I’m not interested. I want **smooth, directional strength** — not noise.

### Higher Lows

Structured higher lows are part of my process, as I like to see that right-side pullback being defended a bit higher, proving that buyers are more aggressive and/or sellers are getting exhausted and not looking to push the stock down as much.&#x20;

I am looking for these higher low structures on a larger or smaller timeframe.&#x20;

* (1) - Bigger structure within the intermediate base to build the larger setup.&#x20;
* (2) - Micro structure to setup an entry setup above the 21dma-structure as we retest it.&#x20;

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2Fhp8s4r7pwAekAfYS1hub%2Fimage.png?alt=media&#x26;token=5105b040-cadf-4ee2-9d6a-12a148ce3fc5" alt=""><figcaption></figcaption></figure>

### Moving Averages (21dma-structure)

As an intermediate-term swing trader, the **21-day moving average** is the backbone of my system. Over time, I’ve simplified my approach to the point where this is really the only indicator I keep on my charts — aside from a few key lines to help define structure and pivots.

To give that moving average more context and flexibility, I use a **21-day EMA structure**, built from the **lows, highs, and closing prices**. This creates a dynamic zone — not just a single line — that helps me visualize trend, momentum, and risk. It gives enough room for natural volatility, while still keeping me anchored to the trend.

Everything I do — from entry to trimming to holding — revolves around this structure. When price is above it, I lean in. When it’s below and declining, I stay out or manage risk tighter. Simple, clean, and consistent.

{% content-ref url="tools/21dma-structure-tv-script" %}
[21dma-structure-tv-script](https://traderslab.gitbook.io/primetrading/tools/21dma-structure-tv-script)
{% endcontent-ref %}

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FUF6y8w1RDvg0J5Xc34eT%2Fimage.png?alt=media&#x26;token=53bf246e-1143-4dd8-ac37-246e4f5c19b3" alt=""><figcaption></figcaption></figure>

## BUYING PROCESS

### Position sizing

Position sizing in my system is fully rules-based but context-sensitive. Every trade is entered with a defined risk, sized as a percentage of total capital. My default approach is to enter with **full position size right away**, using clear structural levels (primarily the **21EMA**) to define stop-loss risk.

#### **Base Risk Allocation**

* **0.25% of capital risked per trade** when entering on **weakness** — typically during a retest of the 21DMA-structure area, where R/R is most favorable and risk is clearly defined against the 21EMA.
* **0.5% of capital risked per trade** when entering on **confirmation** — such as a clean daily reversal or reclaim of structure after the pullback, offering more evidence but slightly reduced R/R.
* **Up to 1% risk** on **high-conviction setups** — where everything aligns: strong relative strength, group leadership, favorable market conditions, and clean structure.

Managing risk starts with how I size positions and pace my exposure. My goal is to keep losses under control and avoid situations where I’m forced to act before the end of day, since patience is built into my system.

* If I size too heavy near the lows of structure (e.g., 40%+), I increase the odds of getting stopped out or taking a loss so large it forces me to sell before EOD. That goes against the discipline I want my system to enforce.
* Instead, I keep initial entries in the **10–20% range** of my risk budget. This keeps me flexible and prevents oversized losses.

I prefer to **build positions with 2–3 adds** as confidence in the setup grows and the structure holds. Each new add is treated with its own logic and risk, rather than simply averaging up or down.

* **Near the bottom of structure:** win rates are lower, so I size small — around **0.125–0.25% NER per entry**.
* **Near the top or slightly above structure:** conviction is higher, so I can size more — **0.5–1% NER per entry**.

This tiered approach means I’m adding risk only when conditions are stronger, while keeping exposure small when the probabilities aren’t in my favor.

By structuring entries this way, I:

* **Control the size of my losses** if the setup fails.
* **Stay patient** by letting end-of-day rules dictate exits, not position size pressure.
* **Let conviction guide scaling**, instead of fear or urgency.

This discipline keeps me consistent across trades and aligned with the edge my system is designed to capture.

#### **Contextual Adjustments**

Position sizing is dynamic. While my base structure is consistent, sizing is adjusted based on **market context**, **portfolio traction**, and **performance feedback**:

* **When the market is coming off a deep oversold condition** and I already have **open positions working well**, I will scale up:
  * **0.5% risk** on strength-based entries right away.
  * **0.25% risk** on weakness, with the option to **add an additional 0.25%** risk if strength confirms in the following sessions.
* **When the market is extended** (e.g., breadth and price action are overbought) and not emerging from an oversold zone, I reduce both **position sizing and overnight exposure**. My priority shifts to protecting capital and preserving open profit cushions.

#### **Performance-Based Modulation**

Aggressiveness is also influenced by **recent trade performance** and **YTD equity curve status**:

* If my system is in sync and recent trades are working well, I give myself permission to **press harder** with larger initial risk or layered exposure.
* If I’m out of rhythm, or in a drawdown, I automatically **scale back size** and shift focus toward execution quality and base hits.

This built-in performance modulation ensures I’m pressing when conditions are most favorable and protecting myself during periods of lower edge.

### Adding to a position

When it comes to adding, I don’t just average up into strength. I wait for the stock to **set up again** — as if it were a brand-new trade. That means a clean structure, a defined entry, and solid risk-reward.

Since I usually get my first entry low in the base or near key support, I’m not eager to raise my cost basis without a good reason. I’ll consider adding if the stock **pulls back into that original buy zone**, or if it forms a **higher low structure that’s still within the broader buy area**. Both setups give me defined risk and allow me to stay in control.

And when I add, I treat that entry as a **separate position** — with its **own stop-loss, its own profit target**, and its own exit plan. It keeps me objective and prevents emotional decision-making around the full position size.

## SELLING PROCESS

### Stop Loss

* **Initial protective stop (daily):** use the **21-DMA structure** (I anchor to the **21-EMA low band**). Intraday flexibility is allowed as long as the **daily close** holds the structure.
* **After the 5R trim is taken:** I **shift the stop to the weekly timeframe**. From that point, the trade is managed off the **10-WMA structure** (weekly close below and failure to reclaim = exit on the following session). This widens room for a bigger multi-month trend while position risk is already neutralized and the position proved itself.
* I use **soft stop-losses**, meaning I don’t place hard stop orders with my broker—instead, I manage exits manually based on structure and closing behavior.

### Partial selling (R-multiples)

I scale out **into strength** using **fixed R targets**:

* **At 2R:** sell **⅓** of the position.
* **At 5R:** sell **⅓** of the position.
* **Final ⅓ (“runner”)**: hold until the **10-WMA structure breaks** on the weekly chart (see stop rule above).

#### What is “R” and how I calculate targets

* **R** = my **initial risk per share**.
  * **Long:** R=Entry−Initial Stop
* **2R target (long):** Entry+2R
* **5R target (long):** Entry+5R

**Example (long):**\
Entry **$100**, initial stop **$95** ⇒ **R = $5**.

* **2R** = $100 + 2×$5 = **$110** → sell **⅓**.
* **5R** = $100 + 5×$5 = **$125** → sell **⅓**.
* Last **⅓** rides the **10-WMA** until that weekly structure breaks.

#### Why the 2R trim matters

Taking **⅓ off at 2R** banks **+0.67R**. If price later hits the **original stop**, the remaining **⅔** would lose **−0.67R** → **net ≈ breakeven** on the trade. That **de-risks** the position, removes a lot of stress, and lets me **hold through normal reactions** while aiming for the multi-month leg.

#### Discipline & automation

Using fixed **R targets** lets me stage **limit orders at the broker** (OCO/brackets): two profit-limits (⅓ at **2R**, ⅓ at **5R**). This makes the whole “trim-into-strength” process **fully systematic**.

### Execution notes

* I prefer **end-of-day** decisions for stop/structure checks; intraday only if there’s an **abnormal move** (e.g., gap far beyond targets or a decisive break of structure).
* If 2/5R is **gapped through** at the open, the ⅓ fills at best available; I still treat the trade as **de-risked** and switch the stop framework to the **10-WMA**.

**Bottom line:** fixed **2R/5R** trims + **weekly 10-WMA management** after 5R is hit gives me **better R:R at entry, larger initial size**, and a clear path to **capture the bigger trend** once the trade proves itself.

### Earnings Management&#xD;

I manage earnings exposure based on the relationship between the **implied move** (from options pricing) and the **cushion** I’ve built in the trade — but it’s not a rigid rule. I also factor in **my conviction on the name**, the current **market cycle**, and how **earnings reactions have been playing out overall** in the broader tape.

To gauge potential volatility, I use **Optionslam.com** to get the **expected implied move** — a quick way to understand the market’s pricing for post-earnings swings.

Then I weigh that against my cushion:

**If cushion > implied move:**

* **Not extended**: I may hold up to **1/3 position** through earnings.
* **Extended**: I typically reduce further, holding **no more than 1/6 position**.

**If cushion < implied move:**

* I usually **close the position** — unless I have unusually high conviction or a very specific reason to hold.

There’s flexibility built into this — it’s not a formula, it’s a framework. The goal is always the same: protect open gains, respect risk, and only size through earnings when the **setup, context, and cycle all align**.

&#x20;<https://www.optionslam.com/earnings/stocks/NET>&#x20;

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FZLrXCvT8Wtba4duu0U7J%2Fimage.png?alt=media&#x26;token=33a210fe-522d-4580-925f-70d1cd044b8b" alt=""><figcaption></figcaption></figure>

## EXPOSURE  & PORTFOLIO MANAGEMENT

My execution framework revolves around price structure, breadth extensions, and the McClellan Summation Index (MCSI). These three tools help me time when to engage, when to press, and when to trim. It's a flexible system, but built on consistent principles.

### Out of a Correction (Trend Reset)

After a correction, I look for alignment across multiple signals before committing risk:

* Price must reclaim the 21dma, showing early strength.
* Medium- or long-term breadth extensions (stocks >50dma or >200dma) should curl up from oversold.
* MCSI (McClellan Summation Index) must turn upward, signaling internal market participation.

That’s when I start engaging — testing exposure in high RS names with clean structure. It’s not about going all-in — it’s about building traction with controlled risk.

**Goal:** Stay nimble, test exposure, and get traction.

**Exposure:** Start light (0.25% to 0.5% NER), often with 1-2 pilot positions.

**Approach:**

* Prioritize leaders showing early RS and clean structure.
* Tightly manage risk. No margin used unless traction develops.
* Use cushion on open positions to justify adding.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FKKjr5xKtJXvPORU6e0Ol%2Fimage.png?alt=media&#x26;token=45bab82b-30f8-4c28-946c-952b95a9ad69" alt=""><figcaption></figcaption></figure>

### Pullback Within a Confirmed Uptrend (Trend Continuation)

**Different playbook here:**

* The trend is confirmed — price above key MAs, structure intact.
* Market pulls back toward the 21dma, and short-term breadth (stocks >21dma) reaches oversold levels.

**Approach:**

* Hold core with trailing stops.
* Avoid adding unless it's a clean retest setup or short-term breadth extensions are oversold and the market is back into a support area.
* **These pullbacks present a strong opportunity to re-engage — either by adding back exposure to core positions, or entering new leaders that are setting up near the 21dma structure.**
* Unless we're in the late stages of a larger trend, this is typically where you want to get aggressive again.
* Only test new exposure if open profit cushion allows it.

That’s when I get aggressive again — either by adding back exposure to core names or stepping into new leaders that held well.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FS3j3ZScvkVivuCu6JHQy%2Fimage.png?alt=media&#x26;token=40f9410b-b455-490d-b8a8-a6d9aafbff18" alt=""><figcaption></figcaption></figure>

### Breakdown / Full Correction

**Goal:** Protect capital, reset.

**Exposure:** Cut to cash. May test short-side trades with tight risk.

**Conditions:** Loss of trend, MCSI flip down, indices below declining key moving averages. (21 & 50dma)

**Approach:**

* Avoid guessing bottoms.
* Focus on preservation of mental and financial capital.
* Prepare watchlists, observe RS, and wait for signal to re-engage.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FLCbcJigT4lpc5nis6Csq%2Fimage.png?alt=media&#x26;token=ceebf523-22cf-4d63-ba18-c13ec216588a" alt=""><figcaption></figcaption></figure>

### Summary Flow

* **Correction** → MCSI turns up, breadth ext. curls up from oversold, 21dma reclaimed → Start engaging.
* **Confirmed Uptrend + Pullback** → ST breadth oversold, 21dma test, MCSI hooking up → Add back exposure.
* **Uptrend + Overbought** → Trim into strength, stop adding, protect gains.
* **Breakdown / Full Correction** → MCSI flips down, trend lost, indices under key MAs → Cut to cash, focus on capital preservation.

## EXECUTION

### **Timeframe for Analysis**&#x20;

Exclusively daily charts — they offer the clearest perspective on trend structure, key moving averages, and actionable risk-reward zones. I don’t use intraday charts at all, as they introduce unnecessary noise that can lead to hesitation, second-guessing, or poor decision-making. The daily timeframe keeps me aligned with the bigger picture and reduces emotional interference.

### **Optimal Timing for Trades**:

* Prefer entries during the **first hour, mid-day pullback (lunch hour)** or the **final 30 minutes of the session**.
* These are periods where the morning emotion has settled, and you can gauge whether a breakout or setup is holding.
* When we get a **gap down open followed by an early reversal**, that’s different for the open. Those **red-to-green moves** right off the open can be incredibly powerful, especially in strong tapes. That shift in sentiment, right out of the gate, often sets the tone for the day.
* The final 30 minutes is key for decision-making: it’s where I confirm closing strength, breakout validity, or make risk adjustments.

### **Order Types**:

* **Market orders** are used to ensure fast execution when the setup is valid and structure is in place — especially important when dealing with liquid leaders during breakout or retest zones.
* I’ll use **limit orders** only when I have clear structural levels and liquidity to justify more precision, such as when bidding during a mid-day pullback into support.
* Speed of execution matters more than saving a few cents — the goal is to secure position in a clean spot, not to time the absolute low tick.

### **Gap Up Open**:

* **Avoid chasing gap-ups** at the open — early strength can often fade or trap late entries.
* Let the stock settle and observe how it behaves after the open.
* If the gap pushes into **exhaustion zones**, use that strength to **trim into strength**, not to add.
* I only consider **adding** if the gap is clean, **supported by volume**, and confirms a **breakout setup I was already prepared for** — never on impulse.

### **Gap Down Open**:

* Reassess the setup immediately. If the **structure is still intact**, I usually hold — especially if the move looks like part of a **broader market shakeout**.
* Avoid panic exits right at the open — often the worst time to make a judgment.
* But if a **key level is breached** and my stop is hit, I exit — no hesitation.
* If the name **stabilizes and reclaims structure** later in the session, I’m always ready to **reload with fresh context and tighter risk**.

## UNIVERSE&#x20;

### Universe List Criteria

#### Why I Only Trade the Top Liquid Leaders

In my system, I only trade the **top liquid leaders** — and I’m strict about it. During a strong market cycle, this universe typically narrows down to **30 to 40 names**, and that’s more than enough. These are the stocks that consistently show **leadership in price, volume, and structure** — and that’s exactly where I want to be.

Liquidity is a critical filter. When a stock trades with high daily volume and strong dollar flow, it tells me that **institutions are involved**. That institutional support brings **order** to the price action — setups are cleaner, structure holds more often, and risk is easier to manage.

These names don’t just behave better — they also tend to deliver the **largest percentage moves**. That’s because real trends are built on **sustained institutional accumulation**. Leaders get stronger as they pull in capital and attention. They lead sectors, then indices, and often run much further than people expect. I want to be in those names early, and I want to manage them with size and clarity.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FWXNHMkBVETebD8hy7xda%2Fimage.png?alt=media&#x26;token=84a5e25a-a043-4354-94d3-ea5b0db5fe37" alt=""><figcaption></figcaption></figure>

#### My Universe Filter

To stay focused, I use a scan inside **TradersLab** that filters for only the highest-quality names. These are the criteria that define my trading universe:

**Goal: Find the top liquid leading stocks**

* Top RS Rank (Alex’s RS composite rating)
* 250mil$/daily liquidity
* Minimum 1mil shares avrg. daily volume.
* 8% > ADR > 2.5%
* Price > 10$
* Market cap > 1bil$
* Exclude China & HK
* Exclude Biotech, Materials, Defensive, Energy, Utilities, Real Estate, Healthcare, Industrials
* Earnings in 7+ days

{% content-ref url="alexs-scans-traderslab" %}
[alexs-scans-traderslab](https://traderslab.gitbook.io/primetrading/alexs-scans-traderslab)
{% endcontent-ref %}

## ROUTINE

### Focuslist

Each day, I build a **Focuslist of \~5 names**, ideally the night before when the market is closed and there’s no noise. Every name should have:

* A clear **entry alert**
* A well-defined **structure-based stop**

This keeps me selective and focused — I’m not trying to catch everything, just the best setups with real potential.

That said, I’m flexible. If the Focuslist isn’t performing — especially in a strong market — I’ll pull from my **PB Scan in TradersLab**, which captures names that meet my core setup criteria in real time.

If the list gets too crowded (more than 5 names), I filter using the following priorities:

* **Relative Strength**: Both RS Rank and short-term (1M) RS
* **Sector/Theme Leadership**: Strong setups within leading groups
* **Volume Profile in the Pullback**: Lower volume = healthy digestion
* **Price Tightness**: Compression often precedes expansion
* **Structure Distance**: Closer to structure = more size
* **ADR**: Higher ADR improves portfolio leverage and efficiency

The goal is to stay sharp and actionable. Fewer, higher-quality names. Clear plans. No guessing. Let the setups come to you.

### Screentime

* I aim to limit screentime to what actually matters. My edge is defined by **where**, **how**, and **when** I engage — not by constantly watching the tape.
* The only times I want to be active during the session are:
  * The **first hour**, where setups may trigger or early strength confirms.
  * The **final 30 minutes**, when decisions are made: entries confirmed, trims executed, or risk adjusted.
* Outside of those windows, I act **only** if:
  * An **entry alert** is triggered from my Focus List.
  * A **stop-loss** level is hit.
* The rest of the time is intentionally quiet — less exposure to noise means better decision-making and less emotional fatigue.

### Sleep

* I target **at least 7 hours of sleep** every night. If I’m underslept or mentally off, I acknowledge it and scale back.
* No aggressive trading if I’m tired — alertness is non-negotiable for execution and discipline.

### Health

* **Minimum 3 hours of exercise per week**, to maintain energy and focus.
* **No alcohol during the week**, to preserve sleep quality and mental sharpness.

## TRADE EXAMPLES

### HOOD (5/5/2025)

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F4BR5wDRWqp6FR9iuptxr%2Fimage.png?alt=media&#x26;token=d0753fe1-4576-45ca-87d8-70ef4ce98830" alt=""><figcaption></figcaption></figure>

### PLTR (4/22/2025)

Pretty happy with how I traded PLTR around my core. It was my first position out of this correction, as it was sticking out like a sore thumb. Clear leader. I was able to put a good initial trade and holding only 1/3 into earnings after my extensions trim did put me in a good mental place to add back even more on the 21dma structure retest on 5/7.

Very happy how I identified the trade as top liquid leader, and trading around earnings on this pullback. Let's see where this one goes.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FUCfqHlS13hOdk8NZHl8q%2Fimage.png?alt=media&#x26;token=21d9020b-f992-44a6-8081-7f71e9b42a5e" alt=""><figcaption></figcaption></figure>
