Every winning trade I make starts in the same place.
Not from a hot tip. Not some industry headline. Definitely not from social media chatter…
Every stock that I trade starts on a list I build myself.
And the process is simpler than you’d think…
Have you ever stared at the market with no idea what to trade? This is the fix.
Traders who skip this step are the same ones who chase green candles at the top and panic-sell at the bottom.
I’m going to walk you through exactly how I narrow down thousands of tickers to a handful of names worth our precious cash.
Step 1: Trade With The Trend
I’m a top-down trader.
That means I start with the direction of the market. Then I drill down to the hottest sector. Then down to the individual stock.
Three out of four stocks follow the market. So if I’m fighting the larger momentum, I’m already trading at a disadvantage before I’ve clicked a single button.
When the market is bullish, I want bullish stocks. When the market rolls over, I flip my bias.
This trader turned $2,000 into $3 million, just following the trend…
My job is to read what’s in front of me and align my trades with it.
That sounds obvious. But you’d be surprised how many people load up on puts in a market that won’t stop ripping higher, or buy calls into a downtrend because the chart “looks cheap.”
Cheap stocks get cheaper. Strong stocks get stronger.
Step 2: Define Bullish
A “bullish” stock isn’t some arbitrary word that I use. I have a rule.
A chart is bullish when the 8 EMA is over the 21 EMA, which is over the 34 EMA, all on the daily chart.
That’s it. Three moving averages stacked in order.
8 EMA > 21 EMA > 34 EMA
When those three lines stack on top of one another, the trend does the heavy lifting for me.
If the EMAs are tangled, crossing each other, or stacked in the wrong order? I pass. There are thousands of stocks out there. I don’t need to force a trade on a messy chart.
Step 3: The Sector Confirms The Story
A bullish stock inside a bearish sector is a coin flip.
A bullish stock inside a bullish sector is a tailwind.
Like SpaceX, IPOing inside a bullish space sector…
Once I’ve found a name with the EMAs stacked correctly, I pull up the sector ETF and run the same check. The same three EMAs on the daily chart in the same stacking order.
If both the stock and its sector ETF are bullish by my definition, that name earns a spot on my watchlist.
This single filter eliminates a huge amount of noise.
Step 4: Where I Actually Buy
Finding the name is half the job. Knowing where to buy is the other half.
Never jump the gun. Always let the price come back to our risk level.
My buying zones are the same three EMAs:
- A starter position at the 8 EMA
- More size at the 21 EMA
- The biggest piece at the 34 EMA
Why heavier as it pulls back? Because my stop sits right below the 34 EMA. If the price closes underneath that line, the bullish structure breaks, and I’m out.
The trade thesis is dead.
That structure gives me defined risk on every entry. I know exactly where I’m wrong. And I know exactly how much I’m willing to lose before I admit it.
This is the part most people skip. They find a hot name, buy it at the highs, and then have no clue where to bail when it pulls back.
The watchlist is a list of tickers with pre-mapped entry zones and a pre-mapped exit.
Put It All Together
Here’s the full filter:
- Bullish market backdrop
- Stock with 8 > 21 > 34 EMAs on the daily
- Sector ETF with the same EMA stacking
- Price pulling back into the 8, 21, or 34 EMA
- Stop loss below the 34 EMA
That’s the entire watchlist process.
Patient people take money from impatient people. And patience starts before the trade… It starts with a list of names you’ve already vetted, sitting and waiting for the price to come into your zone.
When a hot stock in a hot sector dips to the 21 EMA, I’m not scrambling. I’m not second-guessing. I already did the work.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
