++__LAB CAPITAL MANAGEMENT 9/20/2024

OPERATING PLAN

GOALS AND OBJECTIVES

The goal of LAB Capital Management is to profit from the markets by developing and implementing a disciplined trading
approach based on discretionary and systematic techniques that exploit known market structures. Consistency will be
valued over magnitude of gains. In addition, consistency in following this plan will be valued over the actual trading
results.

INSTRUMENTS TRADED

I will trade US Equities, American Depository Receipts, and US based Exchange Traded Funds (ETFs). When trading
slower moving stocks with Average Daily Range (ADR) below 3%, long options will be used. These securities will be
traded both long and short.

RESOURCES and TOOLS

For 2025, I will use INTERACTIVE BROKERS (IB) for execution. TC2000 will be used for scanning, charting and monitoring
trades. TRADERVUE will be used to track trades and journal. EVERNOTE will be used for documenting historical charts
and study. MARKETSMITH will be used for relative strength and fundamental data scans. BENZINGA PRO via IB, along
with free resources will be used for news. Systematic trades will be signaled using PineScript in Tradingview with
manual entry in IB. In addition, I will maintain my subscription to StockBee for continuing education and interaction
with other like minded traders and will follow a select number of traders on Twitter who trade similar styles as I do.

ACCOUNTABILITY

@svetp is a veteran professional trader and former portfolio manager with Stifel. Although he trades a different
methodology than I do, he is familiar with my methods. Each morning, we share ideas and interact throughout the
trading day. He receives a chart copy of entries and for his review and feedback. Working with @svetp has improved
my overall results and has given me greater satisfaction in my work.

STOCK UNIVERSE

The underlying characteristic of each of my trading methodologies is momentum. In short, I want to trade the strongest
names that meet my liquidity requirements. These stocks will be traded both long and short. Short set ups will be
employed after they break down from climax tops or establish stage 3 down trends.

LIQUIDITY CRITERIA:

 The stock must have a minimum Average Dollar Volume (ADV) over 5 days of $20m.
 Price must be greater than $2.50.
 The ADR of the stock must be above 2.7%.
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  We do include the slower mega cap names that show momentum. These stocks are typically traded using the
same set ups but are expressed with long options.

From the universe of stocks meeting the liquidity requirements, we will select stocks and ETFs showing the strongest
momentum and highest relative strength in the market over a broad selection of time frames. We will use TC2000 to
identify these stocks as follows.

 All stocks currently exhibiting the characteristics of High Tight Flags as defined by Bulkowski.
 The top 5% of all stocks in terms of percentage gains over the last week, month, quarter, and half year.
 Stocks showing the best fundamentals in the top performing Industry Groups in MarketSmith.
 Stocks that meet the Trend Template requirements of Minervini.
 Stocks that have experienced EP break outs over the past 3 months.
 IPOs from the past 3 months.
 Stocks that have shown signs of accumulation with ratio of 40 day / 250 day volume in the top 10%.
 Mega Cap stocks with liquid options.

Once complete, the list of the strongest stocks generally results in 350 names or less. Together these stocks make up my
Scan List.

From the Scan list, the following characteristics will be preferred when selecting stocks to trade.

 Stocks within high relative strength industry groups will always be the main focus.
 Stocks that have explosive weekly set ups.
 Stocks that have had recent game changing news.
 Stocks that have shown in the past that they can make large moves.
 Stocks that have institutional sponsorship.
 Stocks breaking out from first or second bases, i.e. not extended.

Time Frame

My goal is to swing trade using a combination of hourly, daily, and weekly charts whereby if I am right, I will have the
opportunity to sit in the trade for days to weeks or longer, and if I am wrong then I am stopped out same day. Each year
my goal is to do less and make more. This means being patient to wait for my pitch and resisting the urge to micro
manage trades. Sitting on hands is an edge.

CHART SET UP

The primary time frame for identifying set ups is the daily chart. I use the hourly chart for execution. On the weekends,
I will review all the stocks in my trading universe on the weekly charts. Lower time frame charts are used when trading
EP’s at the open.

The following indicators are used to support a weight of the evidence approach that allows me to stack variables in my
favor when deciding to take a trade. The more checks in favor the better.

 5,10ema,20ema,50,100,150,200 daily moving averages for trend direction and strength.

 9,20, 70 and 140 exponential intraday moving averages. (70 and 140 hourly mirror 10/20 daily)
 4,10,30 and 40 weekly simple moving averages.
 RSI 14 and On Balance Volume for divergences.

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  Volume at Price to identify likely support or resistance and air pockets for price to move within.
 TTM Squeeze to identify high potential consolidations.
 Bolinger bands to identify exhaustion areas and squeeze.
 Anchored VWAP from the prior swing high to identify buyer vs seller control. (Hvwap).
 Each of these indicators are used to help identify the best trading opportunities for the set ups that will be
described later. A sample chart is below.

Market Structure and Back Drop

The primary goal of my trading is to swing trade long the strongest stocks after they have pulled back or paused. Once
those stocks have completed their run, or the market turns bearish, these same stocks offer excellent shorting
opportunities. The primary vehicle for stock selection is the daily chart.

The market structures that I look to exploit include the following:

 Range contraction leads to momentum burst in the direction of the primary trend. (Stockbee)
 Momentum bursts generally last 3-5 days. (Stockbee)
 Trends tend to persist and should be followed. (Wyckoff)
 Stock prices are mean reverting. (Elliott Wave)
 Stocks typically exhibit 3 pushes to a high on all time frames. (Elliott Wave)
 Smart money is able to move price and will do so to exploit liquidity zones to their advantage. (Wykoff)
 Chart patterns represent timeless human emotion and repeat themselves again and again.
 The computers that trade the markets use Fibonacci retracements and extensions, moving averages, trend lines,
price ranges, and support and resistance levels to establish and manage positions.
 Stock price movement is generally due 50% to the market, 30% the sector, and 20% to the stock.

Wyckoff, like Stan Weinstein, describe market phases in terms of accumulation (Stage 1), mark up (Stage 2), distribution
(Stage 3) and mark down (Stage 4). But more importantly, he teaches how to evaluate price action within these stages
so that a trader can properly interpret the intentions of large operators and follow accordingly. Wyckoff does this
through the lens of price and volume. Understanding Wyckoff price action theory has been invaluable to my trading.

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Consistent with teaching of Weinstein and Wyckoff, Oliver Kell, who achieved a 900% return in the US Investing
Championship in the banner year of 2020, developed the above framework to describe market structure. The chart is
not meant to imply that stocks stay range bound, but to illustrate how stocks move overtime. It serves as the bases for
my trading. Each of the labels on the chart represents an opportunity to enter a position with a defined risk that offers a
more than acceptable risk to reward. I have adopted his labels as they more accurately describe the set ups that I have
been trading for years.

All of my set ups and those who may call them by different names are derived from variations of this chart. Stockbee
anticipation focuses primarily on Base and Break set ups where price action gets very tight. Kristian Quallamaggie’s
approach is also based on the Base and Break. Weinstein concentrated on major break outs from Stage 1 bases, which is
similar to the EP set ups taught on Stockbee. Minervini, after identifying what he calls a Volatility Contraction Pattern
(VCP) will buy as price breaks out of a multi week or month wedge. @Monis on X, trades primarily Reversal Extensions.
There is literally something for everyone. The important thing is to trade the set ups that make the most sense to you.

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The above is an illustration of the classic VCP pattern with the Wedge Pop entry noted. A VCP or wedge is simply the
tightening of price over time. For long trades, this wedge needs to be in the context of a higher time frame uptrend.
Ideally, VCPs incorporate higher lows, but commonly include 2 tests of a low or trend line followed by a reclaim of a
short term moving average. Kells’ more strict definition of a Wedge Pop requires that the 10ema cross up and through
the 20ema daily at the point the wedge is broken. It is the VCP or wedge that serves as the back bone of my trading.

Fractal Price Action:

Price action is fractal, meaning that the same patterns appear on all time frames. This concept is vitally important when
attempting to enter stocks with the very best risk to reward.

For example, let’s say you are interested in buying a stock that has pulled back on the daily chart. Using the higher time
frame weekly you observe that the stock is trending and is not bigger picture extended. You may observe that the
wedge on the daily is actually a basing area in an uptrend on the weekly. You can then drop down to the hourly. On the
hourly you can observe the nature of the pull back. We want to buy when momentum shifts from selling to buying.
This shift can be easily defined by a Wedge Pop on the hourly chart.

As you will see in the Set Up descriptions below, most of my entries are nothing more than Wedge Pops on the hourly.
The daily patterns as they tighten, create what could be considered a Weinstein Phase 1 base on the hourly. Then by
applying Wyckoff base analysis, I can time my entry as the hourly moves from Stage 1 to Stage 2. Just like on the VCP
diagram above, I want to see at least 2 tests of the lows, followed by a break of the DTL and a reclaim of the 20ema
hourly for entry. The 20ema hourly is my entry line in the sand.

Set Up: Wedge Pop Long Daily

This is my favorite and highest potential set up. These set ups do not come every day but when they do, they offer very
high risk to reward. They also tend to align you with large institutional buyers at the start of the Stage 2 mark up period.
The pattern should be obvious to everyone. The more obvious the better. There have been some incredible
opportunities with this set up over the years and if you catch a few good ones, it is really all you need.
Wedge Pops are distinguished from Base and Break flag continuation set ups (Stockbee and KQ) because they occur
from larger bases where the 20ema daily has been either flat or down for weeks to months. A series of lower highs is
typically printed forming a down trend line (DTL) on the daily. A Wedge Pop occurs when price breaks up through the
DTL on high volume with the 10ema daily crossing up and through the 20ema. This set up shows a clear shift of control
from sellers to buyers and can lead to explosive moves. The Wedge Pop is trend trade.

What I want to see is:

 Established uptrend on the weekly chart or a lengthy flat Stage 1 base.

 A series of lower highs, and higher lows that form a wedge on the daily.
 Volume at the bottom of the range should be higher than at the top as a sign of accumulation.
 Price should tighten in a series of narrow range bars.
 Volume should dry up.
 Ideally a trigger bar will form as a tight inside day, or a reversal bar at or near the 20ema daily.
 Price above the 5sma daily.

Entry and stop:

 Enter on a wedge pop or flag break on the hourly as price breaks the DTL on the daily.
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  Buy as close to the 20ema hourly as possible. But do not wait for the retest.
 Stop below a rising 20ema hourly or low of the trigger bar on the daily. You don’t want to get shaken out so give
it room.

Reasons to sell:

 Initial stop hit.

 Stock closes negative on day one.
 Sell third to a half at the target of the VCP highs.
 After the first dip on the hourly, construct a trend line at the lows and then create a parallel trend line at the
most recent break out high. This is the channel you expect the trade to trend in. Look to add on dips to the
lower trend line and look to scale on pops to the upper trendline. Adjust these trend lines as more information
becomes available.
 Be prepared to exit after 3 pushes to a high on the hourly. (Elliott Wave).
 Trail your stop under swing lows on the hourly. But do not stop out if a rising 10ema hourly is above a rising
20ema hourly unless it is after the third push to a high.
 If price breaks a prior hourly swing low and holds below the 20ema hourly for a few hours, exit.
 This is art not science. Try to ignore the indexes and focus on what your stock is doing.

Key Statistics for trading this approach over the past 4 years are as follows.

 Win rate 47.8%

 Avg winner = 5.58 x losers
 Average hold time winners: 17 days
 Average hold time losers: 1 day

Statistical Observations:

 Excellent results given the maximum favorable excursion (MFE) on the opportunity set.
 Need to more aggressively add following first pull back hourly instead of scaling first pop hourly.
 Adding to best set ups will exponentially increase returns.
 Have failed to retake too many opportunities where stopped out on first try. Need to be more patient on
entries and give more room on best set ups.

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Examples: IREN: Text book VCP. Note the volume dry up and price getting tight. Don’t get cute, get in.

BRKB: Slow mover but strong move especially after a market wide shake retested the Wedge Pop and took off.

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CVNA: This was both a valid VCP pullback and a Wedge Pop. Confluence of set ups makes for good trades.

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HOOD: One of our biggest winners of 2024. Confluence of set ups. Wedge Pop from IBD cup with handle

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GGAL: Another text book VCP. Again note the volume dry up after a higher low and then tight. No hourly data for this
trade.

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Set Up: Wedge Pop Retest

There is tremendous potential in Wedge Pops. But what do you do if you miss the ideal entry? Well thankfully there is
sometimes a second chance. Kell calls this trade an EMA Crossback. Stockbee calls it a Reversal Set up if the reversal
day results in a hammer candle. Call it what you want but it is nothing more than a break out retest.

As price moves up into its first resistance, likely defined by a prior swing high within the wedge, shorter term traders will
sell into those highs. Institutions will also sell into these levels to drive price back down to supply areas where they feed
on the liquidity available from retail traders who trail stops below key moving averages. Wedge Pop Retests are
especially likely if the wedge is multi month and descending.

As we will show in the examples, it can be hard to trust the Wedge Pop if it comes out of a slow gradual base where the
stock has printed lower highs for months. In supply and demand terms, there will likely still be underwater holders of
the stock who will look to sell into their breakeven price. If Hvwap from the wedge highs is above the Wedge Pop level,
then for sure there are trapped longs. It is this Hvwap level that often marks the high of the first leg of the Wedge Pop
and sets the stage for the retest.

This set up presents a great opportunity to not only buy into a prior Wedge Pop, but to add to an existing position.

What I want to see is:

 A valid Wedge Pop with 10ema above a rising 20ema daily.

 An orderly pull back of 3-7 days on decreasing volume.
 A test and clear rejection of the rising 10 or 20ema daily ideally with a hammer candle closing at the highs.
 A reclaim of the 20ema hourly.

Entry and stop:

 Buy as price reclaims the ema on the daily with stop at LOD.
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  Place stop at LOD.
 If price consolidates after the reclaim, and prints a wedge on the hourly, consider adding when this wedge is
broken. Move stop to below the 20ema hourly on the entire position.

Reasons to sell: (Same as Wedge Pop)

 Initial stop hit.

 Stock closes negative on day one.
 Sell third to a half at the target of the VCP highs.
 After the first dip on the hourly, construct a trend line at the lows and then create a parallel trend line at the
most recent break out high. This is the channel you expect the trade to trend in. Look to add on dips to the
lower trend line and look to scale on pops to the upper trendline. Adjust these trend lines as more information
becomes available.
 Be prepared to exit after 3 pushes to a high on the hourly. (Elliott Wave).
 Trail your stop under swing lows on the hourly. But do not stop out if a rising 10ema hourly is above a rising
20ema hourly unless it is after the third push to a high.
 If price breaks a prior hourly swing low and holds below the 20ema hourly for a few hours, exit.
 This is art not science. Try to ignore the indexes and focus on what your stock is doing.

Key Statistics for trading this approach over the past 2 years are as follows.

 Win rate 53%

 Avg winner = 4.18R
 Average hold time winners: 18 days
 Average hold time losers: 1 day

Statistical Observations:

 I have been way too aggressive taking profits into the swing highs that started the retest pull back.
 Have done a good job sticking with the trade but size too small for most of the move.
 Need to look for opportunities to add early in the trade using Wedge Pops and Base and Breaks on the hourly.

Examples:

SMCI: One of the best set ups of the year.

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PLTR: Wedge Pop that quickly stalled, retested and ripped.

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ASTS: Valid Wedge Pop followed by a text book retest at the 20ema. This was followed up by several Base and Breaks.

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TNA: Here is an example of why you have to check the weekly first. There were clear signs of distribution in this wedge
that formed after a significant run from the post covid lows. The retest was perfect but the trade failed. No hourly data
available for his example from 2021.

CCL: Also without hourly data. But clear retest of the EMA after a Wedge Pop

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Set Up: VCP Cheat Long

This trade is a form of Reversal. Unlike traders who buy support using limit orders, my preference is to look for a
pullback prior to a Wedge Pop as a cheat entry. These pull backs can occur as a test of a long term moving average,
trend line or horizontal support. I call this trade a VCP Cheat. It is a cheat because you are buying prior to the breakout
of the major structure (Wedge Pop daily). It is a range trade, meaning you are buying range lows and scaling into range
highs. Range trades in contrast to trend trades typically offer less potential for a home run. But if you can time your
entry using the hourly chart, the risk reward can make the trade more than worth it.

What I want to see is:

 An established uptrend on the weekly chart or prior Stage 1 break out.

 A pull back to a long term moving average, trend line or level on the daily chart.
 At the lows of the pull back, a range of 3-7 days with higher lows or divergence within the range. This range can
be considered a Stage 1 base on the hourly.
 Volume dry up in the range. With evidence of BTD at the lows on the hourly chart.
 Price above the 5sma daily.
 A wedge pop on the hourly with a reclaim of the 20ema hourly.
 At least 3R to most likely resistance.

Entry and stop:

 Enter on a wedge pop or flag break on the hourly.

 Buy as close to the 20ema hourly as possible. If extended wait for the retest.
 Stop below a rising 20ema hourly

Reasons to sell:

 Initial stop hit.

 Stock closes negative on day one.
 Sell third to a half at Hvwap if declining above.
 Sell most into prior highs or down trend line of wedge.
 Trail and exit on break of uptrend on the hourly.

Key Statistics for trading this approach over the past 4 years are as follows.

 Win rate 51.4%

 Avg winner = 3.45 x losers
 Average hold time winners: 13 days
 Average hold time losers: 3 days

Statistical Observations:

 MFE indicates I should sell more aggressively into VCP highs instead of “hoping” for early structure break.
 Need to more aggressively trail at hvwap and or VCP highs. Need to give back less open profits on trail.
 If there is a Wedge Pop after the VCP Cheat, you can add back shares.

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Examples:

LABU: had 2 recent set ups that I traded.

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NFLX: $545 was EP day closing price. It supported there and built a Stage 1 base with Wedge Pop on the hourly.

EAT: Another good example. Confluence of prior low and 100sma support. Bullish divergence and DTL break hourly.

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Base and Break (KQ style)

Once a stock breaks out of a wedge or base and establishes upward momentum, it will likely pause and provide an
opportunity for a low risk entry as it pulls into either a rising 10 or 20ema daily. These set ups offer quick payoff and
often solid risk reward. Base and Breaks offer a chance to add to an existing position and move your stop up for a
longer term trade. I prefer to trade these only out of the first base following a Wedge Pop. But in a market like 2020,

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you can take 2nd and even 3rd bases provided you consider the later stage base trades 3-5 day hold max. In Stockbee
terms, Base and Breaks should have the characteristics of 2Lynch.

What I want to see:

 A high volume Wedge Pop or break out of a multi month base.

 A catalyst that drove the break out.
 After the break out you want the stock to make an orderly pull back into a rising 10 or 20ema on decreasing
volume.
 Price should respect the 10 and 20 ema while printing higher lows.
 Patiently wait for the daily to reclaim a rising 5sma as your line in the sand.
 As price tightens, look for signs of buyers like hammer candles and engulfing bars.

Entry and Stop:

 Draw a Down Trend line at the pull back highs.

 After price has tested the rising EMA, wait for a tightening on the hourly. Ideally a trigger bar forms that is
either an inside day, or reversal bar that tests the ema and even better breaks the lower range for shake out.
 Enter either or a break of the trigger bar high or if present, a Wedge Pop on the hourly that reclaims the 20ema
hourly.
 Set stop below the 20ema hourly where it makes sense on the chart.

Reasons to sell:

 Initial stop hit.

 Stock closes negative on day one.
 Sell half at the target of the base highs.
 Stay in the trade as it trends on the hourly. Moving stops to hourly swing lows. Do not add to the position.
 If 20ema hourly rolls over (Wedge Drop) and price does not reclaim the 20ema hourly, cut the position.

Key Statistics for trading this approach over the past 3 years are as follows.

 Win rate 32.4%

 Avg winner = 2.68 x avg loser
 Average hold time winners: 14 days
 Average hold time losers: 5 days

Statistical Observations:

 Clearly my worst set up. So much more opportunity.

 Mind clarity issue with trend trade vs range trade.
 Need to be more aggressive selling strength.
 Need to more aggressively trail as 3-5 day set ups rather than hold for extended moves like Wedge Pop.
 Many opportunities most days in good market so must compound winners.
 Need to more aggressively cut losers day 1.
 Be more selective with set up criteria to improve win rate.

Examples:

HIMS

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NVDA with multiple narrow range Base and Breaks. Buy the first one and hold through ER with a cushion.

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FSM Gave one of the better KQ like base and break set ups of the year. Not many of these in 2024.

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Episodic Pivots (EP)

During all market conditions stocks trading on highly elevated volume based on a known catalyst will be
considered for swing trades long. Primary catalysts will be Earnings Reports and FDA approvals. In the past I
have defined the candidates for this trade too loosely. It is very easy to get caught up in the hype of trading the
wide definition of Stocks in Play (SIP). I have proven to myself that I am not a day trader. I have also established
that I want to minimize screen time during market hours. My stats show that I do not have an edge unless there
is a true EP and that the market back drop and chart set up are conducive to a multi month run.

What I want to see is:

 A game changing catalyst as defined by an 8% or more gap on at least 1 x Avg Vol during the pre or post
market.
 The stock should be part of an industry group with strong Relative Strength and the potential for big
moves. Think tech, bio tech, consumer discretionary.
 The gap should break the stock above any obvious resistance.
 It should gap above hvwap from the 52 week highs.
 It should not have run up significantly prior to the gap and ideally have been sold.
 The overall market should be trading above a rising 50sma daily.

Entry and stop:

 Buy during the premarket if there is a significant range that if broken will print new highs.
 If choppy, wait for a Wedge pop on the pre market chart and or buy the Wedge Pop Retest of the 20ema
5 minute chart.
 Once regular trading begins, buy on 2m ORB, retests of pre market support or any valid long pattern,
provided price is still above the pre market range.
 Place initial stop at LOD.
 Add to position on first two Base and Breaks on the hourly.

Reasons to sell: Initial stop hit.

Reasons to sell:

 Initial stop hit.

 Stock closes negative on day one.
 After the first dip on the hourly, construct a trend line at the lows and then create a parallel trend line at
the most recent break out high. This is the channel you expect the trade to trend in. Look to add on
dips to the lower trend line and look to scale on pops to the upper trendline. Adjust these trend lines as
more information becomes available.
 Be prepared to exit after 3 pushes to a high on the hourly. (Elliott Wave).
 Trail your stop under swing lows on the hourly. But do not stop out if a rising 10ema hourly is above a
rising 20ema hourly unless it is after the third push to a high.
 If price breaks a prior hourly swing low and holds below the 20ema hourly for a few hours, exit.
 This is art not science. Try to ignore the indexes and focus on what your stock is doing.

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Key Statistics for trading this approach over the past 2 years are as follows.

 Win rate 48%

 Avg winner = 3.59R x avg loser
 Average hold time winners: 38 days
 Average hold time losers: 1 day

Statistical Observations:

 Have trimmed on day 1 too many times. Best trades work straight away.
 My hold time is appropriate but position size for most of the trade is too small
 Look for places to add, not sell.
 Be more patient if stock sells early. Wait for S2 or at least 2 level pull back and get aggressive.

HOOD: Broke out of a huge base on of the highest volume days ever.

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TSM: One of the best EPs in a long time. Broke out of the entire structure. Great example of how to build a very
large position trading Base and Breaks and Wedge Pops on the hourly.

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ONON: Wedge Pop on the EP day.

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HIMS: EP gap up from cup with handle base.

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Back Side - Short

Because I am focused on the strongest stocks in the market, my universe of stocks occasionally present
opportunities to short the same stocks that I may have traded long. These stocks can be small or micro cap or
large growth names that have gotten extended. Think in terms of parabolic short, but waiting for the stock to
roll over. This set up presents the opportunity for a short term swing trade. It should also be noted that some
of the smaller cap names have limited shares to short. I have no plan to switch to brokers like Centerpoint in
order to find locates for these types of stocks.

The Back Side Short seeks to exploit the mean reversion tendency of extended stocks. This is a counter trend
trade and therefore will look to capture a quick multi day move. It also seeks to exploit the tendency of key
moving averages on strong stocks to act as support.

In terms of Oliver Kell’s Price Action Cycle, the Back Side short is designed to capture a MA Retest after a Wedge
Drop on the hourly for extended stocks. A Wedge Drop is the opposite of the Wedge Pop where all the same
concepts apply. Rather than defining another set up, the Back Side short can also be traded as a Wedge Drop
Retest on the daily. Unlike the Back Side Short on extended very strong stocks, the Wedge Drop or Wedge Drop
Retest is a trend trade with the same rules as the Wedge Pop. The Wedge Drop looks to enter at the transition
from Phase 2 Distribution, to Phase 3 Mark Down. I will provide some examples below.

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What I want to see is:

 The stock must be liquid with tight spreads.

 Minimum average volume of over 1m shares per day.
 The stock must have made an exceptional run and was considered extended as measured by RSI daily
over 80.
 The stock should have completed at least 3 pushes to a high on the daily per Elliott.
 The stock should have pulled back 2-3 days and then bounced on unimpressive volume.
 The stock should pierce its declining 20em hourly and fail.

Entry and stop:

 Entry is below the first hourly candle that loses the declining 20ema hourly.
 Stop is above entry candle on the hourly.
 Target is the rising 10 or 20ema daily.
 There must be at least 3R to the target.

Reasons to cover:

 Initial stop hit.

 Stock closes negative on day one.
 Cover three quarters at the first target and then trail a close above the 20ema hourly.

Key Statistics for trading this approach over the past 3 years are as follows.

 Win rate 44%

 Avg winner = 3.36 x avg loser
 Average hold time winners: 4 days
 Average hold time losers: 2 days

Statistical Observations:

 Stats are consistent with the opportunity set given entry tactics.
 I could likely improve the PL by using lower time frame charts to time the entry but I am not interested
in doing so at this point.
 Success of this set up is best when overall market is extended.

Examples: There were very few true hourly Back Side Shorts in 2024. But this set up can be traded off of any
time frame. Again, it is a Wedge Drop that kicks off the transition from Stage 2 to Stage 3 on your timeframe.

MARA:

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ANF – Wedge Drop on the daily

PTEN

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CRWD

FROG

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Systematic Trading System – ALGO QQQ

In the last iteration of this plan, I stated that I wanted to come up with a way to manage my 401k by trading the
QQQ. I had intended to come up with position trading rules and implement them. However, a close friend of
mine who has run his own managed futures trading firm for many years, encouraged me to consider systematic
trading. I had been resistant because I don’t know how to code and really did not want to learn.

But last summer I started looking into some simple rules-based systems and how I might employ them on the
Q’s. Then one day while on YouTube, a video popped up on my feed on how to code using Chat GPT. I was
skeptical but was pleasantly surprised that this approach actually works. It is not my intention to disclose my
Algo rules here, but to simply say that even the non-technical person can create an Algo. I used Pinescript on
Tradingview to code the system. Tradingview allowed me to back test the system over 20 years.

The backtest results were outstanding with a 67% win rate and worst case drawdown of approximately 30%.
The system hits lots of singles and significantly beat the market over time by trading short term long, trend trade
long, and short term short based on the daily chart. Signals are generated at end of day with entry at the open
the next day. The system goes all in and will go 2x for trend trades long.

I started trading the system in October of 2023 and the results so far have been encouraging.

RISK MANAGEMENT

Every trade must have a pre-defined stop loss level WITH a live hard stop.

 Trades will risk between 1.0% and 0.5% of equity per trade.
 No more than 4% of account will be risked at any one time on new trades.
 As a general approach, profits will be used to fund new positions. If no profits, trade small and build a
cushion.
 No position held overnight is to assume more than 25% of total equity.
 Position size will vary based on recent performance. If I have 3 failed trades in a row, I will cut size in
half. If I have 4 breakouts with follow through in a row, I may look to size up within a sector theme.

SITUATIONAL ANALYSIS (SA)

Being in synch with the overall market is critical to trading results. However, being in synch with your own
trading is more important than what the market is doing. If I am doing well, I will press. If I am doing poorly I
will scale back.

But in order to stay in rhythm I have developed a market timing model using the McClellan Oscillator derivative
on TC2000 called T2106. Unfortunately, T2106 is based on the NYSE and not the Nasdaq but it still provides
overall value. My model plots the 5sma of both T2106 and the NYSE which can illustrate periods of divergence.
I have attached slow stochastics to the oscillator and have observed that when the stochastics are oversold and
start to turn up, this offers the best tailwind for putting on risk. So my general approach is to get fully invested
as T2106 begins a swing and to be more cautious when T2106 is overbought.

This is more art than science but respecting this model has helped improve my results.

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DAILY PROCESS FLOW

Process is more important than goals. If you have the right process, and perform it consistently, achieving a goal
takes care of itself.

 Wake up around 545 am. Meditate and complete breath work.

 630 am spend time with my wife reading Bible devotional, listening, prayer time.
 715am stretch and work out. On non work out days get in Ice Bath.
 815am begin stock preparation process. Have a cup of coffee.
 Determine Situational Analysis by reviewing model, indexes and breadth.
 Review gap scanner for EP stocks gapping on volume and news.
 Create EP watchlist if any.
 Annotate EP charts with projected entries and stops.
 Review industry and sector ETFs for enhanced SA.
 For overnight positions, check for news.
 Review list of actionable stocks from prior nights analysis.
 Check pre market price action and determine which stocks to trade.
 Enter Buy Stop Limit orders for top candidates. Attach Sell Stop orders.
 Load top 5 names to multi chart layout to watch at open.
 Watch top 5 names for pull back entries on Retest set ups.
 Share names with @SvetP and he does same with me.
 Commence trading at 930 est.
 Upon entry and exit, screen shot daily and hourly and share on chat with @SvetP.
 After 11am the priority is to get away from the screen.
 Noon – eat, surf, get outside.
 Prior to market close, review all open positions for end of day violation of trailing moving averages and
close positions as appropriate. Move stops per rules.
 Each evening, review scans for tight set ups and EPs.

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  Check the QQQ for next day entry or exit to my Algo system for IRA. Enter next day OPG orders as
required.
 Review all stocks from weekend review, recent EP’s and IPO’s.
 Check WSJ for stocks moving after hours.
 Move to actionable watchlist anything tradeable for the next day.
 Research selected stocks for fundamentals and news via MarketSmith.
 Rinse and Repeat

WEEKEND PROCESS FLOW

 Delete all prior watch lists.

 Create Universe of Liquid stocks.
 Create list of stocks meeting Minervini’s trend template, above average volume and large caps.
 Create lists of strongest 5 % of stocks by week, month, quarter, and half year.
 Create list of High Tight Flags.
 Create list of stocks with strongest fundamentals from Marketsmith.
 Create list of new IPOs for week and add to list of those priced in last 3 months.
 Merge lists into a Scan List for running scans nightly.
 Review Scan list on daily and weekly charts.
 Add stocks that are setting up weekly to weekly watchlist. These stocks are the focus for the week.
 Sort all industry groups by TI65.
 Review stocks in top 10 groups, add to Scan List any with weekly charts setting up.
 Review the rest of the groups for groups crossing their 50 day Relative Strength line from valid bases.
 Review the stocks in those groups, add to Scan List any with weekly charts setting up.
 Re Read this Operating Plan to make sure staying on track and revise edit as necessary.

TRADE REVIEW

Each weekend I journal the prior week’s trades. This takes very little time as I am rarely opening more than a
few positions a day and generally less than 5-7 per week. At the end of the week, I write a weekly report card
and track how much if any losses resulted from emotional decisions or taking poor set ups. This last step is
probably the single most important part of my process. For each of the last three years I have reduced the
losses due to non-setup emotional trades by 35%. It does not matter how good your set up criteria is if you
don’t follow it.

PROJECTS AND KEY AREAS FOR GROWTH

“Without a vision, the people perish”. In addition to following well defined processes, any professional must
strive to improve. Therefore, trader development will be integral to ongoing success. As a result, the following
activities will be performed.

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  Everything I do should be viewed through the lens of do less and make more. The point being that I
want to focus on the best trades and to give them multi day chances to work.
 Continue my understanding of Wyckoff price action principles and apply them in my daily analysis.
 Refine my entry and exit tactics based on hourly charts for finding better stop placement.
 Perform quarterly reviews and assess overall rules and tactics.
 Continue to share and interact with @SvetP and @comito.
 Give back by mentoring. I will be mentoring my son and several of his friends this year.
 Have one improvement book going at all times, e.g. Atomic Habits
 Share your knowledge with others, either on the Stockbee forum or directly with those who ask.
 Support charitable organizations and honor God by giving back a percentage of my earnings.

Must read list:

Secrets for Profiting in Bull and Bear Markets by Stan Weinstein

Volume Price Analysis by Anna Couling

The Wyckoff Methodology in Depth by Ruben Villahermosa

Price Action Breakdown by Laurentiu Damir

Elliott Wave Principle by Frost and Prechter

Stocks on the Move by Andreas Clenow (systematic trading)

Parting Thoughts:

Trading is one of the most difficult skills to master. Many books have been written on why. My advice is to
build a firm foundation by first seeking to understand how stocks move. Understand market structure and you
will have a chance of making money in stocks. Pradeep Bonde and Stockbee helped give me that foundation
during my early years. But that was not enough. The key is to find your own way.

The answer to the test is open to everyone. The answer to every trading question is in the charts. You simply
can not underestimate the importance of studying the charts. The above mentioned books were pivotal in my
development as a chart reader. They teach market structure and truly opened my eyes to how the large
operators move the markets.

Technical knowledge is only the beginning. No measure of technical knowledge can on its own create mastery.
You have to first be able to master yourself. This is the real challenge. It is a challenge that never ends. But
with perseverance, humility and hard work, combined with God’s blessing, you can do it.

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