Trading comes in many different flavors: swing trading, day trading, catalyst trading, short selling, the list goes on…
There’s not one trading style that leads to success. Different approaches work for different people.
Example: I scale out of my trades and take profits quickly. That’s my style.
Others in our community have very different risk tolerances. They hold positions longer because they know what works for them.
You’ve gotta know yourself and trade according to who you are.
But regardless of your style, three things never change:
- You need a repeatable chart pattern that works.
- You need the risk/reward math to add up.
- You need the discipline to execute when the setup arrives.
That’s why I’ve been focusing on one specific setup.
A setup that can completely transform your trading for one reason…
You can lose on more trades than you win (and still come out in the green)…
The Pattern That Changed My Trading
The pattern I’ve been focusing on: VWAP Pullbacks.
They work like this…
Step 1: Find a Stock Trending Up
You want to see a stock showing strength early in the day. Higher highs. Higher lows. The stock is showing momentum and making moves.
Step 2: Wait for a Pullback to VWAP
After the stock pops, it often pulls back toward the VWAP line. This is a cooling-off period where early buyers take profits and the stock consolidates.
Step 3: Look for a Hold (and Bounce) at VWAP
This is your potential entry point. You want to see buyers stepping in, a green candle or reversal pattern forming, and volume picking up again. This confirms the pullback is holding and momentum is returning.
Step 4: Enter Small, Define Your Risk
Buy a small position near VWAP. Set a tight stop just below it. Give it a little room, but not much. If VWAP doesn’t hold, you’re out fast.
Step 5: Set Your Price Target
Target the recent high of the day or a nearby resistance level.
The Math Behind The Risk/Reward
Math isn’t fun (unless it can make you money).
So here’s some fun math.
When you’re trading this pattern…
Every setup needs a minimum 3:1 risk-to-reward.
Risk $100 to make $300.
Win 1: +$300
Lose 2: -$200
Net: +$100
You only need to win on 33% of your trades to come out positive.
Win 1 trade, lose 2 trades? Still profitable.
And high-probability Smart Money setups can win more than 50% of the time.*
#TrustTheMath.
The 3 Ways This Pattern Works
The strength of this pattern lies in the risk profile.
Entering at a key support level (with a defined stop-loss) places the trade in one of the best risk/reward spots in the market.
By waiting for the stock to come back to support, you won’t get stuck holding a false breakout.
And you’ll never be chasing an overextended move.
1. Patience to wait for the best level.
2. Strong risk/reward on every trade.
3. Discipline to follow the plan.
Your risk tolerance determines your exit strategy.
Some of my colleagues like to hold trades for weeks.
I scale out quickly.
Neither is wrong.
The only “wrong move” is trading someone else’s style and trying to pass it off as your own.
How To Crush This Pattern
I keep a desk sign in front of my monitor that says:
- Plan your trade.
- Trade your plan.
- Define your risk.
- Prepare for the worst-case scenario.
The pattern works. The math works.
And I’ll show you how to execute it, day after day…
We’ll cover all of this (and much more) in my Trade To Live
Bootcamp, TODAY and TOMORROW…
*Past performance does not indicate future results
