in order to find a stock which meets my EP criteria I have this checklist criteria Magna 53 plus cap 10 by 10 you have to understand what kind of stories are working in the market currently anything related to AI is a story which works very well high price stocks is what I have moved my momentum bus trading to because I find highest price stocks have more smoother moves if I had to give one advice to anybody who's starting out focus on stocks which are capitalization below 10 billion so that is as far as EP is concerned which is trying to move your account in a larger increments these trades can move your account in 10% 15 20% increments in one trade sometimes 50 100% right depending on how much you're risking on those ideas when you see root after making such a big moves this capitalization is 620 million so if you look at when this Catalyst came in on a route the day the Catalyst came in on a route the day before that this capitalization was less than 126 million so if a stock is 126 million can you can I can it double yes if you want to become a profitable Trader have self- leadership because this is a game of self- leadership you have to be really motivated to do this this is not for everybody unless you self leadership you'll not make it in this [Music] business all right welcome back everybody it's my pleasure to introduce our next guest PRI Bond the founder of Stock B um he is known for focus on process codifying the momentum burst and episodic pivot uh setups and it's a real pleasure to have him uh as a part of the conference and for sharing his his thoughts and ideas on swing trading uh pretty thank you so much for your time and uh looking forward to this oh thanks thanks for having me of course uh let's go ahead and Dive Right In um I'm sure you've got a lot to cover I'm very much looking forward to it and at the very end we'll do uh you know a Q&A on the concepts and uh let's have it in uh okay so let's like and start by going into my slides I'll just share the screen so essentially there are two types of setups which I trade and that's the Crux of everything which I do one is catalyst base uh anything which is this is catalyst based or where there's a clearly identifiable Catalyst and based on that Catalyst the stock is likely to make a big move uh now that is basically one type of a trading which I do which is for finding trades which will move my account in larger increments of 20 % 30% 40 50 sometimes if I'm lucky 100% in one trade uh but there is another method which I trade and which is momentum worst and in momentum worst what I'm essentially looking for is these trades which are smaller duration or they are not shorter duration trade they don't move your account in big increment they move your account in 1% 2% 3 4 5% if you're lucky increments but you can find hundreds of these trades in a year so this is broadly the two ideas behind my trading and so let's look at the Catalyst based kind of a trading which is what like and I do and most of the people who know about uh my trading or Stock B they heard about episodic P so episodic PWS is one of the kind of setups which is based on a catalyst so the only reason I'm going to get into a stock is because there's a catalyst and if that Catalyst going to make the stock move then I want to be in that stock uh but these kind of Trades based on Catalyst episodic pivot which are going to move your account in big increments they are basically rare they don't happen as often as you would like them to happen plus the market has changed as a result of Market change a lot of time when there is a catalyst the stocks tends to Gap up a lot and the first day move tends to be very big and after that most of the time they don't do much or they just go sideways and then they will have a um reaction op afterward so to to profit from that kind of a uh phenomena which is happening in the market I also have a setup which is just a subset of the episodic pwot which is stocks in play which is essentially a trade which is just a day trade kind of a thing because on the day of the earnings or day of the Catalyst stock will sometime make 30 40 50% move and then nothing happens so I know that so I play them at just one day uh thing which is stocks in play uh now because stocks are reacting very violently to Catalyst because more people are trading episodic P most of the time what you see is the risk is higher getting onto an EP on the day of an EP so I created this setup which is more a delayed reaction EP and in a delayed reaction EP what I look for is I look for a stock which had uh Catalyst but I don't necessarily enter on the day of the Catalyst because that day you might get shaken out or um it's not necessarily the best entry which I get or it is gapping up too much so I wait for it to set up nicely and then when I get a lowrisk entry is when I enter that particular trade and uh so that's a delayed reaction EP and especially Delayed Reaction EPS work very well on the short side because on the short side whenever there's a negative Catalyst the stock gaps down and then it tends to like an a gap reverse during the day and for 3 4 days there is this tendency in the market all bad news has been priced in the stock goes up but after 3 4 days it starts going down so I do the delayed reaction similarly Delayed Reaction I do it also on stocks on the bullish side now these are all uh the these are all setups which are really A variation of the original idea of EP which I have been trading but in recent years when I look at the EP EP I see that there are not enough EPS there is not enough money uh because if a stock gaps of 40 50% on the day of the earning itself uh then incrementally it makes only 20% move so there's not much of a money in this so I created a set of idea which is like become my main setup idea now uh which is like and which happens more frequently uh it has much more profit potential than the original EP and that is the 9 million EP which is essentially uh to look for a trade in a stock which suddenly has a volume Surge and the volume surge is more than 9 million basically so it's basically a high volume breakout basically very high volume extremely high volume breakout which is not something which is a norm for that stock so that's become my main stay in terms of what I do uh if you're doing the classical EP you'll be lucky if you can find five to 10 trades in a year but when you do 9 million EP you can find 100 traits you can find 200 traits because it increases the universe to a large extent uh the so this is Sugar Babies obviously like word might sound very strange to people but uh when I did this 9 million EPS uh what I found is that there are certain stocks on which there is a continuous number of 9 million EPS which keep happening and those stocks when they make moves whenever there's a 9 million EP uh they make these big moves they make make just a swing moves of 40 50% in couple of days so I found a way of isolating stocks based on this 9 million EP how many time it happens in a year and I trade those stocks as a core list of stocks which we call it Sugar Babies because this is something which you can like go and find uh 40 50% swing in just 3 to 5 days on these kind of stocks so those are the other variations of EP so essentially to summarize this like and I started originally with an idea of episodic P some 22 years ago and that was my main idea today the original classical EP is a very small part of what I do uh most of my money is now comes from 9 million EP or sugar babies which is more main stay kind of a method which is more based on the same idea of moving your account in larger increments but using a different way of identifying talks uh which are going to make a big move now whenever you look at episodic p uh when I started trading episodic p in the beginning I was only trading episodic P which are based on a real catalyst so I was looking for real earnings I was looking for real sales or looking for a real something which is like say recent example crdu if you go and look at crdu what you're going to find is there is a reason why the stock went up right and basically if you see crd here right here uh this is what like was this earnings and sales let me pull this in here and if you see so it at 275% uh earnings growth 89% sales growth and this is what it projected so there I know why crdo was likely to go up on this day and there is a real Catalyst right but uh there are so many stocks which make moves and they are no real Catalyst it is just a story right uh good example of that is a stock which I bought yesterday HR right now this stock um it's a story that they are going to have planes which will fly vertically take off uh there is no real business right and if you look at their earnings or sales uh it's just hot air right and this is like and what in uh Wall Street terms is called fugazi right and there is just like there 0% sale there is no sales but these stocks can double triple they can make bigger move than crdo they can make bigger moves than stocks which are earnings from time to time the stocks makes these big moves right and it makes 100% 200% moves so the realization that stories make bigger moves than the real catalyst is really the turning point of also so nowadays I trade lot of story stocks as EPS anything which is a story is likely to fly better than a stock which is a real catalyst so I focus more on the stories which can be just like you just have to keep your logical brain aside to trade these kind of story stocks so that's the other twist which is like new twist to EP so story EPS is become like an very important the only difference is on a real Catalyst kind of an EP if I have a conviction I'm willing to put lot more Capital I'm willing to go 50 60 70 80 100% of my account on but on a story stocks I can't bring myself to put all my account on a story stock uh but even if you put 20 25% the storage stocks can go up 300 400% or at times even crazy so stories is another twist to the original idea of episodic p uh so let's look at some of the examples of this uh EP kind of trade the recent example is like ano is just what I just now talked about where there is a real clear Catalyst and based on the Catalyst the stock is going up right uh before I go ahead like if you have any questions you can ask because I covered a lot of things in this first few minutes so if you have any questions you can go ahead yeah just for people who maybe aren't familiar with an episodic pivot could you kind of give a brief definition uh and and maybe use one of the examples to to kind of walk through uh what exactly you mean by an episodic pivot uh so episodic pivots is a terminology which is more used in television or in movie industry uh basically uh the story takes a Twist right uh there is some Catalyst which comes in and as a result of the Catalyst the market completely re-evaluates its view about this stock super micro was going nowhere 6 months going nowhere and then it guides High and it guide significantly higher and the story took a turn that's the episodic p as a result of this this stock went up 154% in less than a month now that's the kind of thing which is a catalyst which changes the story or it changes the market view about the stock and because of that particular episode uh the stock goes in a different direction basically and I can show you similarly on a short side like an smci is example of long side but mobile eye right mobile eye came and like guided significantly down when it significantly guided down uh after that it went down like 20 30% right basically or uh here is a good example of a episodic P right door opens in a flight right means that's like the story took a to Total turn and the stock went down after that so that's what episodic p is it's some surprising news which the market has is not anticipated and that surprise leads to a stock making a Big Mo yeah perfect I think that's good for now if you want to run through examples I'll probably have some more questions to to jump in there okay so CDO is a recent example of this thing and as I showed you just now crdo if you look at it on the earn day of earnings uh even before the market open this was very clear that like it had significant from like negative sales growth 275% 89 % and I pay lot more attention to sales growth rather than earnings because earnings in today's market conditions are not necessary for stock to make move but what you want to see is sales growth sales growth is what drives stocks moves so sales growth was phenomenal not only that it was projecting for next four quarters this kind of sales growth and this kind of profitability so this is a good example and as a result you can see that the stock made a big move right and and this is an example of EP where there's a real identifiable Catalyst and as a result on the day of the earning itself it went up 27% and since then it has gone up around 40% right so that's one the other one recent one which is ASN right here on this particular day uh so if you see in this particular case also of ASN you're going to see that that there was a real Catalyst right so you can see that 92% 107% so there's a sudden jump in sales and it is guiding higher for next two quarters at least 110 57% uh profit is also so the Aspen as a result of this particular thing had this Gap and on the Gap and this is what happens to lot of BPS nowadays on the day of this Catalyst the stock made 56% move so lot of the Catalyst gets priced in in just day one and if you see since then the stock hasn't really done much is it is up 30% but most of the capitalist got exhausted on the first day itself basically it's up 57% and it ended up giving up some of the gains in last two days so that's another example recent example of like this thing uh EP obviously smci was something which was a big Catalyst uh smci had two things it had the earning or it guided significantly higher and then after a couple of days there was earnings uh but it also had a story element to it and the story uh you have to understand what kind of stories are working in the market uh currently anything related to AI is a story which works very well so it had both components it had a real Catalyst plus it had AI which is a story kind of a thing and as a result of this the stock made such a phenomenal move uh there is uh this thing uh app if you look at AP app lovan right and earnings and since earnings it has made like around 40% kind of a move on the earnings day itself it made around 24% move even when you go look at app also you'll see that those real Catalyst uh it's like basically has back to back quarters of 36 48% 44 any growth sales growth about 39% to me if it is happening back to back two quarters in a row the stock is likely to make a move because that kind of a sales growth is rewarded by the market if you study the big Winners which go on to make big moves they will typically have sales growth of 39% plus quarter after quarter after quarter so when I see something like this and a four-digit uh earnings growth and if the stock hasn't rallied then I am excited and the stock did make a move after that again there's earnings here uh so there is like an or it guided it guided higher actually it guided higher and then the actual earnings was here basically so that's one which was there uh then you had like an basically when you have a very neglected stock and we suddenly come out with earnings here in this case of P Industries for a long period of time it was not doing anything the price wasn't doing much and then it had a catalyst and the Catalyst was basically again earnings and sales right he see here you see 53% and it guided 49% for next quarter so 999 53% sudden jump in sales so sudden jump in sales and as you can see the stock made a big move 50 56% uh so that was another one um uh there are two types of episodic pivot when you're looking at real Catalyst right one kind of a thing is where you have a growth kind of a company uh like crdo is example of a growth kind of a company it has some product which is relevant to the AI industry so that is why it is in a growth kind of category or ASN also is in a growth kind of a category or smci is a classical growth kind of a thing but there is also another k type of an EP which works very well and which is a turnaround so in a turnaround kind of a situation when a stock for multiple quarters or multiple years in a row is not making good profit it has trouble with uh its business it sales are going down and then suddenly it comes out with sales and earnings growth which surprises the market then this is a turnaround and you will see that turnaround EPS often make bigger moves than EPS on stocks which are real earnings and real sales and the reason being that when a stock has this kind of two or three years of negative sales growth it gets beaten down to a very low price level it is like an a really beaten down the market has has a very negative opinion on it the market doesn't really care about this stock analyst drop their coverage and when it manages to turn around that can be a big move and aroman fit ANF is a good example of this kind of a turnaround see here this is where first I noticed this stock and multiple times I traded this stock and the stock from this first EP has continued to go up and it has made around 522 per move and if you see the reason it's very apparent it was a classic turnaround kind of a situation see for multiple years sales were growing down then a management change happened new management came in and they started this particular see uh sales growth started and when the sales growth started you see that the stock just took off 467 16% this is where like an this is where they also had to $628 so as a result of this particular think this stock has so this is an example of a turnaround kind of a situation uh recent stock which has a similar kind of a catalyst was GPS but hasn't done much so I'm keeping an eye on this because I wrote down this is a a turnaround EP because if you see again the numbers behind the scene on Gap and again there is a new management in gap yeah it's 93 but it's not really guiding higher it's not same as auman fish so that's not something which uh may make the same kind of a move but there is a potential for a turnaround kind of a situation so that's the second kind of an EP just jump with the question um would elf would elf also be in kind of that same vein a turnaround uh elf is more a growth it's a new company it's a new go growth right and it's a it's created this category see since this particular day I've been monitoring elf like multiple times I have got in got out of this trade and elf is more sales growth kind of a story as against a turnaround because if you see elf it's been growing sales at 49 78 76 76 85 71% for 6 seven quarters in a row so that's like an a a growth kind of a stock basically so anything which is a growth uh any stock which has 39% sales growth uh I am I consider that as an EP if it is Meaningful like the sales growth on 1 million becoming 2 million is not meaningful but if it is 10 million and it grows by 39 million or 100 million and grows by 39% that's something which is going to make the stock fly basically so elf is a growth stock uh turnaround stocks uh like and basically if you want to look at an example from past uh this is a good example of looking from past abis rent a car and if you go and see during this time period uh it's earnings shot up a lot during 2020 after being lower so that's a classic example of a turnaround kind of thing or if you look at this right so you see like an from a loss of $620 uh it had a jump of profit of 58 which is like a huge jump and as a result you'll see the stock from being trading at around $8 it went all the way to $250 or $300 I think uh to $400 right so that's a turnaround kind of a situation so those are the kind of situation uh two types of situation I look for which is one is a growth and in a growth kind of a situation I will look for uh sales growth of 39% plus and if it is two quarters in a row that's good and the other one is turnar around and when it comes to storage anything I will buy because it is a story uh now here again some categories are not going to have that kind of a sales growth sweet G green is an example where there was an EP here where it surprised the market and then this is the delayed reaction I actually bought it on this day instead of buying it on the first day basically so that's like an a basically power move Western Digital again if you look at Western Digital Corporation you'll see uh it's very apparent when you look at the numbers the numbers stand out when you have these kind of numbers right and it's very clear this is also a turnaround kind of a situation also because negative sales growth negative profitability and suddenly it surprises the market and as a result uh here like can you see I write down this if I find something like this so that I can remember and it made a move after that uh so there are like in a bunch of these examples uh there can be real Catalyst in the case of hims there's the real Catalyst which is uh they're going to come out with oen piic which is $200 OIC right and that's real catalyst so as a result the stock is up 60 70% from this uh obviously you have U inm which is a recent uh stock which made a move on a catalyst and you can see that it has a real earnings real sales right and basically so it's it's just had a turnaround kind of a little bit of a thing and biotechnology kind of a thing so that was real Catalyst in a biotechnology you can have real Catalyst now that's basically the kind of thing where you can actually see the numbers the numbers stand out the numbers speak to you and then you can with conviction say okay this is likely to go up 30 40% okay I can I put 50 60 70 80% of my account with the risk management yes and then make money all right unfortunately uh the last example which I'm going to show and which is what people want to find every day but this kind of a thing is going to happen only once in a lifetime it happens very rarely right it's a it's a unicorn uh you you can't base your strategy based on unicorn uh yeah root had like a really phenomenal number suddenly but in a year you're going to only find one or two examples like that so it's not really like see here 56 173 284 and that's what started this move uh but that kind of a thing doesn't happen all the time that's the problem right if it happened every day we'll all be billionair but that doesn't happen so as a result of this uh I like to go into the story stocks right so that is as far as real catalyst is concerned so two types of catalist I look for one there is a sudden growth in a stock or the market discovers that particular stocks as a growth stock or a turnaround uh typically turnaround make longer lasting move moves than growth stocks because most of the time growth stocks can make a move for one quarter or two quarters and they can flame out while in a turnaround if it's a real turnaround that turnaround can last for quarters months years in a comi FF example that turnaround is a genuine turnaround so the stock continues to keep going up so that's as far as the real Catalyst EPS are okay any questions here yeah so um you mentioned a few kind of criteria that you've looked for when you went through those different names uh neglect was a big one would you mind kind of summarizing some some key things that you look for that maybe you know if it's apparent in uh episodic pivot it brings it from uh a B minus setup to an A+ setup for you okay I'm going to keep this slide as it is I'm just going to add content on this so that it is easy so in order to find a stock which meets my EP criteria I have this checklist criteria Magna 53 plus cap 10 by 10 so each of these letters stands for some criteria checklist so Magna 53 so ma stands for massive acceleration I want to see a massive acceleration triple digit something which is growing at like 10% suddenly growing at 100 200 300% or so massive acceleration either in sales or in profit or analyst were expecting 10 cents and the company come out with 50 cents right so that's a massive beat on analyst expectation the next thing is Gap up if this news is a surprise to the market the market the stock should Gap up right and a lot of time people think that this earnings is good but the stock doesn't react the stock just sits there or it actually like and it doesn't re in premarket doesn't react so that's not what I'm looking for so the Gap up is important the next thing is neglect so I look for a stock which is neglected in terms of 2 months months 6 months one year two year three year the bigger the neglect better it is basically right and and neglect is not only in terms of a price action neglect in terms of number of mutual funds owning the stock you will see that some of the stocks they will have less than 100 mutual funds owning them when they are discovered by the market so that's a neglect right or there is no analyst covering that particular stock or there is no news flow on that stock when you go to some news site like uh the fly or bricking you don't see for months there is no news so that's a neglected stock and then suddenly the market discovers and it goes up like crazy root is a classic example of what happened like that right uh a stands for acceleration in sales so if there is a massive profit the company has made company can make massive profit by just reducing cost getting rid of employees right that's not really going to fly because it's just onetime Cost cutting which is there so I want to see if there is a massive acceleration in profit I want to see if there is an acceleration in sales so a stands for that acceleration in sales the 53 part the five stands for short interest so the stock should have a short interest of five days or more so if it has a short interest of five days or more that acts as a fuel and because the market is considering it as a negative story or there is like any no the market consider the market has a negative opinion on it okay so that's one now if it is a stock which is well known by a like it is some something which is like an a stock which is covered by analyst and all I look for whether the analyst the three is three plus analyst raising their price Target because if there is a substantially new news which comes in in the market the analyst go and increase their price Target this is what happened on the day on which smci came out with this news saying look and they're going to like an beat by sign significant 10 or 12 analyst raise their price target for SMC so three plus analyst If they raise the price Target then it tells me that this is something where the analyst think uh this is significant right because analyst raise their price Target if there is a new information for them to raise price Target so that's 53 now this is out of this this is the Magna part is must have me that's the must have Part 53 is optional uh and then if you want to find something which is going to make more explosive move then these cap 10 by 10 criteria are very important and the cap 10 by 10 is the capitalization below 10 billion the stocks which are capitalizing below 10 billion are the one which are capable of making big moves right and when you look at crdo right cdo's capitalization is like in basically 4.3 billion so this kind of a stock and double triple right or like in a root when you see root right after making such such a big move is capitalization 620 million so if you look at when this Catalyst came in on a route the day the Catalyst came in on a route the day before that his capitalization was just like in a basically less than uh 126 million so if a stock has 126 million can you can I can it double triple yes if a stock has like 100 billion as a capitalization like say when I look at moo even if it is a catalyst I do not believe move is going to double or triple it is going to make 10 or 20% move so that's capitalization and then the 10 stands for IPO of less than 10 years most of the big moves in a stock happens in the first 10 years of their IPO there are rare examples like Nvidia or something which will move later in their life but most of the time like can you look at a stock which has Z scale right and Z scale has made a big move after its IPO it's made this big move just like in less than four or five years seven years ago that's why in the first five years it made those big moves so that's my criteria for selecting a stock so that's the criteria and if the stock meets that criteria then I consider it as a real Catalyst great and do you have certain routines that you do every day and every week to keep track of EP new new EPS that are coming to Market whether that's you know looking at news um screening you know pre-market what do you kind of do to make sure that you're on top of any potential opportunity so in order to find this EP all the work you have to do it in pre-market or in postmarket so for that we have a process which we follow which we call it ntrt mtrt which is night time is right time morning time is right time so it's a checklist where every stock which had every stock which had like a EP kind of a characteristic if a stock had 39% sales growth right I want to know I go through like an I have certain sites like I use the sites like the briefing.com right so briefing now today is a holiday so you don't see the thing but like so if I go on a regular day you're going to see it will show earnings right so I go through this to look for anything which is growing earnings or sales uh then I look for like an a thingss uh so briefings is one of the sites which I use then in briefings also you'll see that they have this uh this is my number one source of information for most of the earnings related thing so they have this uh kind of a market summary or they have these stickers where they tell you what is happening for the day which stocks are up based on earning sales so I will go through everything in the morning by the time the before the Market opens by 8:00 8:30 I would have looked at every stock like say Assan is an example of a stock which was up there was a catalyst here so I look at this site to find information then I have some other sources like the fly and uh then I have my own software which looks at how many analyst have rais their price Target so that's another thing which I look for and as a result of this process any stock which is meeting my criteria I will know about it before the Market opens so if it meets my criteria of Magna 53 cap 10 x 10 I'm going to buy it at open basically right so this is a process it is a process and the checklist is there for this particular process uh there is a checklist and if a stock meets and then I'm going to go and look at it and it's the same process also I use for finding stories so here is a stock which I bought uh yesterday and it doesn't meet my criteria of like Magna 53 cap 10 and 10 but I know this is a story right uh there are going to be ples which are going to fly vertically people will be able to go from one place to another in 10 minutes you'll have a helicopter landing in your backyard science fiction right sounds very interesting and the stock is up like 17% based on that story and couple of times the stock has made 50 100% so I know this stock I know there is other stock like this so or uh here is another one this company from time to time makes these big moves it's a story right and they have a solid state high density battery with which In Our Lifetime sometime in our lifetime might come in but from to time to time they come out with press release saying they got an order something happened and the stock makes 40 50% so that's the story again those story kind of a thing I find through my process of ntrt mtrt so that's the process for finding these stocks yeah great and once the name is on your radar and you're either going to you're looking to enter it what's kind of your process for for doing so I I know you you like to enter right at the open um how do you manage risk uh you know right off the open um yeah what's what's your process for actually entering the names once you've identified them as EPS uh so when I look at the Catalyst and when I look at the strength of the Catalyst if I think that this talk is going to make a 50 100% 200% move then in that case mean like I will willing to take a 10% stop on that kind of a situation because I know this is a life changing kind of situation it's going to make like in multiples of my risk uh otherwise typically I enter at open right with a 2.5% stop and sometimes I get stopped out and the stock makes a move and if I believe in the Catalyst then I'll get back into it so it really boils down to if I have a genuine Catalyst and if I believe in that Catalyst I'm going to go into that stock at the open or I just wait for few minutes to see how the market reacts because a lot of time there are shakeouts and then I will enter sometimes and good example of that is again yesterday itself I looked at the stock srpt right I looked at the Catalyst I looked at everything but based on my past experience of srpt I had studied this stock uh previously I'd seen its earning I had this thing that uh it didn't react positively to earning so I had this thing saying okay this catalyst is good but I'm not sure whether the stock is really going to react positively so I decided that I'm going to wait for a delayed reaction EP on this particular stock right so I I'm going to wait for a delayed reaction so I didn't enter this particular stock uh even if I had entered I would have got stopped out probably because the stock went up and it faded right so then I'll wait for a delayed reaction so I decide based on the strength of the Catalyst there are situation which are must buy smci when I saw the Catalyst I knew this is to be must buy I just bought it but srpt I when I looked at the Catalyst I wasn't convinced that uh this is going to fly immediately I thought like I'm better off waiting because it was gapping up too much also so I said okay let me see right so two or three variations tactical variations either I buy it as an OPG order which is opening price guarantee or I wait few minutes and buy it or I decide to do it as a delayed reaction and could you walk through uh maybe a delayed um reaction EP that you bought and and kind of why you waited for that point to to enter the name uh sometimes like it just is uh like so here like this is him right mhm uh anyway I was traveling on this day but like the Catalyst was genuine Catalyst right so I said okay this catalyst is good uh really this is like any so I waited and then when it had a breakouts is when I bought it because that was the first positive day after that particular thing right and now sometimes what happens is this ba when I heard the news of door opening in Flight uh I have some background I worked for a cargo airline many years ago so I said like no way this stock is going to go down right I shot at Big position and I got stuffed out on the first day but I said like this is a genuine Catalyst right so I waited and on this day I sh it again with size mhm so uh it's like in once I study a catalyst and once I'm convinced about the Catalyst I just want to be in that particular stock uh to profit from it basically and if you delay the entry the it doesn't work uh mobile ey when I looked at what they guiding down that day I said like this stock is going to go down but I know there are people because it was gapping down 40% they will there will be a shortterm trade so I waited and then I shorted it on this particular day so delayed reaction EP is more and more what I'm doing also when I started doing this I was trading a six digigit account now I trade significantly more Capital so it's not the same thing I can do go on 100 million uh capitalization stock and put all my account so I had to wait for Delayed Reaction or try and get a better entry and uh I tend to trade more establish stocks on EPS also nowadays as against this very small stocks so that also drives the decision to get into delat action MH and what's your process for scaling out and selling uh a position once you're in it does it depend on the Catalyst does it depend on um you know which variation on the EP setup that you're using M MH yeah so whenever I do whenever before I take the trade right and I calculate in my mind based on my experience and the Catalyst strength of catalyst and all how much the stock is likely to make a move right so when I looked at Aspen that day and looked at the Catalyst I said this stock is likely to make 40 to 50% move based on the Catalyst right now unfortunately the stock gaps up 27% so what is the additional 20 to 30% additional I thought is possible Right basically so uh I bought it I had a profit and I put my stop to protect the profit I got Shen out on this particular thing I didn't reenter uh but incrementally it didn't really make big move after that like so I am like happy but my calculation was this is going to make a big move smci I thought like in based on that particular thing is it's going to make 80 to 70 to 80% move I didn't think it will make that kind of a big move of 200% kind of a thing but I was happy getting 80 to 90% so always look at what is likely to be the uh profit on this particular trade on the GPS I think and it is likely to make another 10 or 20% 20% kind of a thing it's not going to make double or triple right and so uh so accordingly I will decide my profit Target and I will decide where to get out I will give it a room to run if I'm genuinely convinced that this is going to go up 60 70% I'm not in a hurry to get out on that particular stock but once it reaches that kind of a Target I don't want to overstay the party in this crdo case I thought it will make a 40% kind of a move and it start made that move and started reversing so I got out for a profit basically right so I always before doing this I before getting into anything I always have a profit in mind and if that is what it does and if it doesn't do that and if it just hesitates after the entry I will kill the trade because the I have seen the one which work they just go like bullet if they keep coming back they don't work and what in your experience and this might have changed over the years for sure but uh What In your experience in in a good Market um are kind of the success rates of episodic pivots or different variations that you trade uh the classic EP in a very good Market if the market really has like an uh uh 12 to 14 months of bare market and everything's beaten down and it comes you're going to get 10 to 12 EPs and then you can like because everything which like if you enter right you can get like 70 80% win rate uh but like a you're lucky if you can get three to four ideas in a market like today the genuine e right right so I'm no more like in a really uh mean I will always buy EP if it shows up but what really my focus nowadays is delayed reaction EP and 9 million EP mhm so where my risk is very low because in a delayed reaction I'm sitting there waiting for a good buy point to come in and if the good buy points come in then so here deers I was waiting for a good buy point and then I waited and entered it didn't really make a big move I'm waiting for this stock to set up again uh because I think the earnings is good here the earnings was good for the kind of stock it is like it's not going to be phenomenal right and so so delayed reaction I waited and made sometimes like I thought like uh this thing is going to make a move GPS I had a big position second day it started rolling over I got out and I'm now waiting so 9 million EP is where most of my focus is nowadays anded reaction EP and 9 million EP is when 9 million Shares are traded on that day mhm yeah suddenly mean like it is not trading that kind of a volume and suddenly trades that kind of a uh volume right and so it can be like an most of the time this will be some sort of a story stock right and it's here is a classic example of like in a trade which I did uh during the covid-19 time on ep9 million kind of a thing and I didn't even understand why it was making that kind of a move but like it was making that kind of a move and the only reason I got into this particular stock was it showed up on that day in know ep9 Millions thing right mhm and it just said like look hey we are going to have like an a space flight we are going to colonize Mars and all yeah right but like 9 million kind of like an not here like it's where is that 18 or 90 million it traded one day when Trump decided to uh announce uh here mhm right uh you see like on this particular day it traded lot of volume right and basically so as a result the stock went up like for a couple of days again same kind of catalyst uh je Bezos goes into space and it trades like 50 60 million shares uh so it just went up right so or recently if you see uh gme right and here it should have been 9 million breakout it should have been 9 million breakout here right you know it's a story stock right and there is nothing there but the story so if it shows up in 9 million I'm going to buy and there are certain stocks which tend to make lot of 9 million EP in a year Mara is an example this is what I called a sugar baby kind of thing this stock if you look at it right I calculate how many 9 million EPS the stock makes in 2 years one year 6 months kind of a thing so if you see Mara has made 989 million plus breakouts of 4% Plus in last two years for whatever reason this stock when it makes a move like that it swings of just 3 to 5 days are like 40 50% so every time Mara has that kind of a setup and it is making that kind of a move I mean I just buy if there's a 9 million breakout and if it is at the start of a swing each of these swings are like big huge swings uh so those are the stocks where like Carana it's a storage stock right doesn't have like any reason why it goes up but it just has 9 million it makes 36% in few days so these are the stocks coin of firm so they make big moves so that is what I do on 9 million EP uh that's my main focus nowadays mhm for finding like bigger moves obviously mhm so these are like basically some of the things on the EP which is basically uh line extension or like saying look and I you had a Coke now you have orange Coke you have a green Coke you have vanilla Coke so it's just the same idea of episodic P but extra it to get lot more setups 9 million EP gives you anywhere between 100 to 300 trades in a year classical EP gives you only two to three trades so that's why I like it so that's as far as this is concerned and you can see some 9 million EPS like iron which is a recent example right uh so here 9 million EP and it makes a move of 54% in less than a week 9 million EP and it makes a move of 48% I don't even know what it does I don't care but it shows up in 9 million I buy I don't know what it does but I'm just saying right so same way clsk or like the drop King which I bought couple of days ago even though there is a genuine interest like yeah it's a 9 million EP it's going to make a move right so because it has multiple times made those kind of moves based on that kind of so that is as far as EP is concerned which is trying to move your account in a larger increments uh these trades can move your account in 10% 15 20% increments in one trade sometimes 50 100% right depending on how much you're risking on those ideas uh but there is another thing which I trade and I trade these singles what I call this is like home run strategy and this I call it as a single strategy which is a momentum bust in the case of momentum worst I'm buying a breakout or I'm anticipating a stock which is likely to break out and buying these are typically trates of 3 to 5 days 8 to 20% in a profit on a trade or $10 to $300 on a swing uh now again here again when I started trading these things I used to trade any and every stock nowadays my focus is more on high price stock so for breakouts I focus exclusively on high price stocks most of the time uh I don't really care about 8 to 20% I care about if I'm risking $10 can I get 30 40 $50 $100 so that's what I focus on and the other thing is if you want to trade these breakouts or anticipation setup the best returns I have seen are either on biotechs and technology stocks so if you just reduce your focus to just biotech and technology stocks then you can make lot of money and if you have to trade this kind of a method this kind of methods work very well when the market is going up or the market is favoring them so you need a situational awareness filter you can't be just trading them every day because there are time periods when you're going to get chopped to death every single breakout you buy is going to fail and there are times every single breakout you buy is going to work so you have to figure out when your breakouts are going to work and not going to work so every day morning I create situational awareness I answer one question are breakout likely to work if breakouts are likely to work then I go accuracy if they're not likely to work I sit out okay so and these are some of the examples these are very simple trades basically like I'm just looking for some sort of a range expansion so this is a stock which I bought on this particular day right because it was up like an $11 and this is a stock which I traded like in the last uh five years or six years I must have traded the stocks for every swing I trade because it's a very nice uh smooth moving stocks on both long and short side so I risk $10 on this particular stock and this is what it did in four five days it made $73 on that particular thing right there's a stock which is a sister stock of this because I saw o and I was in O I was keeping an eye on this one AutoZone and I saw AutoZone breaking out so this day I bought it when it was up around $30 and I put $30 as a stop and just three four days it's up around $160 $150 right so those kind of trades in high price stocks are very common chipot Mexican Grill which is one of my favorite stock I am very sad that it is splitting because that party is over my money making idea in chipot Mexican Grill was every time it had a breakout to buy and just keep buying a small because many time it breaks out and the breakout day is just like half a perc or 1% It is breaking out with 2% and it makes a move up 11% right so high price stocks is my thing for these kind of stocks uh deaker right anything which is priced above $100 especially nowadays $300 I'm always going to look for some sort of a like breakout so here it's up like with 1% in four days you rais $10 you made $45 so high price stocks is what I have moved my momentum bust trading to because I find high price stocks have more smoother moves uh they are more like the retail Traders don't want to get into high price stocks so I can do a smaller size but it still makes good money or I'll go into biotech or technology again in this particular situation you want to make money using breakouts uh the most important criteria which I found is capitalization capitalization below if you focus on there are lot of breakouts especially if you're doing the smaller price or biotech technology and the other thing is three sectors make the big uh three sectors is where best follow through happens biot technology technology and consumer discretionary so that's what uh and then I anticipate some of these breakouts I anticipate so so uh if I anticipate then I get into this but this high price stocks is like really my bread and butter in terms of this kind of moves all day I can trade moves like this 2.54% I put a stop at half of the day's range and it goes up 31% into three or four days so that's and I trade them both long and short but more on the long side than short side that in ense is the totality of what I do I do anticipate some of these things so if a stock is setting up nicely I would be like in looking at so these are the stocks which I'm monitoring for say now simra neoen um which are setting up I would be in them this already had a breakout but like di sporting good now this is the kind of high price stock uh which I like to trade basically so with that over to you in terms of whatever questions you want to ask yeah for momentum burst could you also go through your two Lynch criteria which is okay yeah good good question uh let me like an do this uh okay so let's see uh for selecting a stock I'm going to use a two Lynch criteria right and basically in the case of like breakout right and if there is a breakout let's like and let's go to a example of this it's a good example which is like chiple Mexican Grill which I traded um some multiple times but this particular example I'm going to take you to because that is a good example of that kind of was thinking right and so so here like and if you see the stock had this first leg move and then it had this breakout so this is what we call that two Lynch so for two Lynch what I look for is the stock should not be up two days in a row right it should be linear I like to trade stocks which are very smooth which are Trends I don't like to trade stocks which are all the time jumping all over the place uh right and you you have some stocks which just like chip Mexican Grill moves very linearly whenever it moves Auto Zone moves very linearly so I like those kind of stocks I don't like stocks which jump all over the place uh then uh negative or narrow day prior to breakout day so the day before the breakout should be either a negative day or a very narrow range R so we want to buy at the start of a swing move right so that's the thing and uh close uh the consolidation quality the consolidation which happens before the breakout should be orderly there should be low volume it should have like an volatility contraction in the direction of the breakout and the last criteria is whenever I'm buying if I'm buying it at 10:00 11:00 or at 2:00 the stock should be closing near high so that's the tool lch criteria now there are variation of this criteria also if you have a stock which has like in a basically gone sideways for I like consolidation this consolidation I like the consolidation to be less than 10 days because I seen if the consolidation is less than 10 days then the stock the breakouts tend to work well if the break the consolidation becomes longer than 10 days especially if it becomes 1 month two months kind of a consolidation then even though it looks very attractive the stock has a breakout and it fails so I have a criteria for buying those kind of breakouts where we have 2 Lynch plus CV which is it should have a high volume search so it should have 1.5 two times the 50-day moving average volume and it should have a catalyst I have seen if you buy a consolidation breakout without a catalyst it tends to fail so I look for CV which is a catalyst plus volume for these kind of things so that's the thing on uh momentum burst y yeah excellent um I I think that's super helpful um one thing I want to ask you and this is more of like uh advice for people watching this when they're studying these setups for themselves they're studying big movers to try to find and build setups um I know you every week you take a look at the the stocks ahead the big moves that week could you kind of talk about that process and um you're thinking behind that yeah so in fact I do it daily so every day I look at stocks these are stocks which have gone up 20% plus in last 5 days right so every day in the morning when I come to my office I look at these stocks which I made 20% plus move and see okay why have this stock made the move what what was the see this is n right and what is the thing which happens at the beginning of the move what really starts moves of 20% plus right because that's my I want to capture like moves of 8 to 20% so I to study the moves of 8 to 20% it's like if I want to become a millionaire I will study millionaire in my town and find out why they are millionaire same way so you see that typically they have 4% breakouts right uh then I look at their capitalization uh you'll see that their capitalization and if you do this study over a large period of time you'll see that most of the stocks which will make 20% move in a short period of time they capitalization below 10 billion most of them in fact will have a capitalization below 1 billion so that's another thing so I always look at these stocks same way I look at stocks which are down 20% for the week and I studied them also because you want to see on the short side what works right and basically so that's another thing which I look for and the 9 million EP I trade it on the short side also so this was a 9 million EP on the short side also just for example and I also look at a stock which are of $20 plus right these stocks are of $20 plus because I trade high price stocks in last five days so I focus on Netflix I actually had a position I sold because uh it hit my stop but I bought Netflix on this particular day and it made a move small move so I trade these high price stocks so I look at anything which is up 20% plus then I look at what really drives them what happens at the beginning the move and I'm very happy that I found this oral I found uh I also traded smci from this La last week so that's a very good week when I find trades I made showing up in this particular list right and basically so that's a good idea uh then I also study on the weekend I study stocks which are up 50% Plus in last two months so these are stocks which are up 50% Plus in last two months so I go and do a deep di on them I look at what Catalyst was there or how did the move start what is the capitalization again you'll see that capitalization below 10 billion if I had to give one advice to anybody who's starting out focus on stocks which are capitalization below 10 billion right and second advice if I had to give you is news because almost every one of these stocks which I made a 50% move had a catalyst so news moov stocks chart pattern doesn't really matter if there is a news Chui had a news because of that it made each of these stocks had a news and because of that they made a move 50% move if you want to find in short period of time focus on news not chart patterns means chart patterns are important but like why did the stock move because there is a catalyst and then try and find out what Catalyst Mak stock go up why there is a catalyst here right so catalyst is very important capitalization is very important those are the two things which I think are the ense of understanding news news pay attention to news excellent and I want to ask you uh to expand a little bit more on situational awareness and how you develop it um just cuz I think it's so important and you emphasize it so much um so could you talk a little bit about what the concept is maybe touch on the market monitor that you keep and just in general how you track uh you know how aggressive you're going to be what type of setups you're going to focus on all of that would be great okay so I'm just going to erase this uh particular page so that it's easy and it doesn't become all mixed up uh but like let's go a new page and then look at situational awareness so situational awareness is a overall filter on all my trading basically it's a overall filter which is going to determine whether I'm going to buy breakouts or not going to buy breakouts whether I'm going to be like getting very aggressively on margin or whether I'm going to be like any putting in lot of trades or whether I'm going to go in in first five 10 minutes 15 minutes I'm going to put a trade or not so this is a filter which basically allows me to calibrate how aggressively I want to trade basically so it's aggressiveness filter basically I call it an aggressiveness filter for that reason so in order to do that I'm just trying to answer every day in the morning one question and which is are breakouts likely to work right and if breakouts are likely to work then I want to buy breakouts if breakouts are not likely to work I might see lot of breakouts in my uh scans but I'm not going to do a breakout so in order to do this uh I have multiple fil multiple sources of information which allows me to develop situational awareness one of the tools which I use is what is called as a market monitor uh which basically monitors Market breadth at a very simple level like this is a tool which I developed many many years ago 20 years ago or more than 20 years ago which every day looks at whether there's a buying coming or selling coming what is the buying pressure selling pressure in the market on different time frames right so when you see here in the last 1 2 3 4 5 6 seven days there was more selling than buying you also see that there are number of stocks 25% in a quarter there are more stocks down than up there are 104 stocks which are down or 126 on this day uh then up 25% in a month so there is a selling coming into the market right so as a result there are only select stocks which are working and there are lot of stocks which are breaking down so this essentially when all four columns are green when all four columns this 1 2 three and four columns are green it's good time to buy breakouts if any one of these columns is red you're going to get a choppy Market condition to simplify like we can go into more details of this but it's going to be a long time so I'm just simplifying it for people right whenever these four columns are green your breakouts are likely to work so that's one of the things right I look at the other thing I look at is this 20% study which I talked about so this what I found is this 20% study is like a oscillator so if the 20% study has low numbers if the numbers are like below 20 if the numbers are 10 14 15 then you see lot of buying comes into the market and for next 5 six days breakout work very well if these numbers go about 100 then you see that the market tends to get hit with selling uh so this is another thing which I look at it the other thing which I do is like an for we didn't really get time to talk about anticipation but like I have a anticipation method which I have discovered which is more like rather than me discovering the members have discovered and I use it nowadays so I monitor these stocks which are up 15% Plus in last 10 days to look for a second leg on them so these are stocks which are up 15% so I go through all these stocks and when I go through these stocks I see that this stock instead of setting up nicely as a continuation setup has failed right so that gives you an idea when you start looking at this or you see like the breakouts are not really having three to five days moves many of them are just like and not really going and following through so here like there was a first leg established but it failed so that gives me a hesitation or it tells me look and a breakouts not really working so combination of this is going to determine this in addition to this whenever I look at this 15% study or whenever I'm looking at any one of these things I'm always looking at what is what theme is working what kind of stocks are working uh what sector is dominating this because this is stocks which I made 15% mov in last 10 days any time during last 10 days right so I know what sectors are working I know like can you look and this semiconductors was working AI related was working biotechnology so then I know what to focus on so that allows me to focus on certain things right uh so as a result of this there are times when I'm very aggressive and there are times when I sit on hand right and then uh all that it does is it allows you to not get see if you get chopped it's very frustrating and as a result of getting chopped uh you start changing your me methods a lot of time when people start getting chopped they start dropping their holding time period soon they become dat Traders and soon they become scalpers and then they cannot get back to doing swing they cannot get back to holding three to five days so I try to avoid that and I try and trade more aggressively when situation is in my favor and chopped when it is not in favor plus uh the where I am in my life situations and conditions today I don't need to trade every day um to make money right and I mean I am I if I don't trade anymore ever in my life I'm fine so I am very selective I'm trying to like avoid all times of like all under all conditions what I'm trying to avoid is getting chopped or getting into negative this things so that's why I have a philosophy which I operate with nowadays and which is find a situational awareness where you can find free money right where your breakouts are working you know things are working looking that's where you go aggressive rest of the time just like can I close the shop don't get tempted and sit on hand or like can I do something else and would you say this is one of the common uh problems or mistakes that Traders make is they're they're trying to always be the same level of aggressiveness despite whatever the market condition is H yeah they're all trading or they are like in a trading in Market condition where breakouts are not likely to work and they get get chopped and they get chopped and then as a result of that they lost confidence and I see it all the times right this works both ways right uh you can get chopped but there are times when I see my 20% plus study is going very like to 100 and all and that time people are overconfident because five six seven days in a row breakouts have work like CH so they are like thinking oh I'm a genius I moved my account 20% in last 10 days I'm going to buy an island on island I'm going to have bikini clad woman waxing my ear and polishing my Ferrari and then the coconut falls on their head and so as a result this lack of situational awareness is what in the beginning years or for a lot of Trader creates uh the swings swings in their Equity or their mood right and if your mood is uh swinging your Equity C swings right right so that's mean these are all see in retrospect sitting here I can talk about these things because I provide and I develop these things right and but for uh beginner he doesn't even understand this is his problem so even if you tell him that this is his problem it's very difficult for them to even accept that this is the problem they have right so right for for Traders who are watching this who may be you know very early in their in in their learning and and with regards to trading um do you have any advice for them in terms of you know develop veloping a system uh you know becoming more profess uh process focused um you know a particular setup that they should focus TR my number one advice would be to find something which is structural in nature mhm right which is something which is like the Newton's law is structural right I if I throw this bottle it's going to come down right and it's not going to go up find something which is structural in the market momentum is structural in the market right mean people have done phds on this or PS which is post earning announcement drip which is basically the idea EP is like going based on that right or uh whenever there's a volatility compression volatility compression resolves with a range expansion that's a very fundamental structural nature of the market so if you our news moves stocks is a fundamental thing right and that's like every week you look at the stock which made a big move it will be based on news so this is so fundamental or structural to the nature of Market if you base your trading based on that you will increase your profitability potential or your probability of becoming successful second is uh I talk to a lot of Traders as you know I run a site and I also talk to people outside the site and a lot of time I talk to people every week I talk to people and I will tell you 80% of the new Traders don't have a setup and they don't know that they don't have a setup so first find a setup and for that I would advise the easiest way to find a setup is to just copy shamelessly copy shamelessly some setup which has worked for someone that's the easiest way because uh you don't want to reinvent the will just like do it and over a period of time then you can like can you develop your own style I copied seamlessly the mark butcher method and then I developed my own things based on that right uh All actors when they start acting they copying some famous actor right that's why and then later they develop their own style or the Chinese copy us ideas and just like any pass on to us and sell to us right so same way copy shamelessly and the other thing is basically do a deep di do a deep di go and like if you're going to be trading breakouts 35,000 6,000 10,000 20,000 breakout before you put $1 on a breakout if you want to trade EP study 100 200 300 500 8,000 EPS before putting one money into it right uh and then that will give you the the real expertise in trading is not going 5T deep is not going 50 ft deep if you can go 500 ft deep if you can go 1,000 ft deep you can go 5,000 ft deep then you start understanding right I study 20% plus every day I've been studying it for so many years right and I discovered a pattern on the short side which I didn't see it in retrospect when I see it I like how did I miss that right so there is always something which are going to find when you go deeper into things and I don't know of any Trader who's been successful who has he may not use the T dive but the methodology which they used was something similar to Deep dive where they studied past winners they studied they dive deep into it and that is the success which is their that is why they're successful right and is that how you de you notice and develop the different variations on your setups and how they're changing over time or yes uh so like this 9 million EP And Delay reaction Epi developed by studying the 50% plus moves in 40 days because when I looked at them I saw like there high volume spikes high volume Spike or when I studied these big winners in a short period of time the only thing common with them was news and high volume Spike so I said okay what is the magnitude of that spike is it 5 million is it 6 million I notice that it's around 10 million so I gave it a room to run off 9 million and I decided to focus on that so everything which I do comes from my deep Di and continuous learning from the market basically it's the same thing like I see every day people telling each other that stocks which hold up the best are the one which go on to make a move if you do a 50% study uh you'll debunk that in 5 minutes because the stock which go on to make the biggest move they don't come from the stocks which are holding up well they come from the stocks which are beaten down the most right now that's what creates an age because otherwise if you're taking a secondhand age and just like saying the same thing others are saying then you're not going to believe that but when you look at the stocks which make 50% move they all have one thing in common they are news and they are coming from a weakness they're not coming from a strength right they are not coming from strength most of the them they come from some place where like and they were like beaten down and then they suddenly make a 40 50% move and this is a very common pattern you're going to see gme nobody was paying attention to it comes from nowhere right so the more the stock is neglected the more likely it is going to make a 50% move now that's a age which you can develop by doing a deep dive which you are never going to do by just reading books on trading fantastic I think uh that that's all the questions I had for you prep but first of all I want to I want to thank you for taking the time to walk us through both of your setups very in depth I really appreciate it I think um what you presented was very dense so for everybody watching um I'd recommend watching multiple times because you're going to get something out of each time that you watch this um but prep thank you so much is there any kind of final message that you want to leave everybody with today yeah I think I in order if you want to become a profitable Trader have self leadership because this is a game of self- leadership uh you have to be really motivated to do this this is not for everybody unless you self leadership you'll not make it in this business great well we'll leave it that at that thank you again prip for for your time and for putting this together uh to everybody watching make sure you leave a like down below subscribe if new to the channel [Music]