Every Saturday we publish a new edition of High Probability Trades.
This week, many charts look interesting, and some tickers have left us some clues.

So if you want to be prepared for the next leg up and be ready to catch the opportunities, this one is for you.

This is my performance from previous years.

I’ve shared my complete strategy.

Copy it and start trading these high-probability trades with context:

High Probability Trades

Full list of tickers generated by my custom scanners:

Read more

So what is risk of ruin?

Risk of ruin is a statistical concept that tells professional traders the probability of them losing their trading account.
Basically, it calculates your chance of losing your trading account with your current strategy.
That's HUGE.
Imagine if you knew you had a 99% chance of losing your money with what you're doing, would you continue?
Of course not, it's just a matter of time until you blow up.
Risk of ruin doesn't necessarily mean you have to lose your entire account balance.
It can be 50%, 80%, or 100% of your account, depending on everyone's risk level.

The math behind risk of ruin

Let’s take an example with 2 traders, Alex and Maya, who both learn the same trading system.

The system wins 56% of the time and has equal average wins and losses.

Both start with $15,000 in risk capital, and “ruin” means losing all of it.

• Alex risks $3,000 per trade, giving him 5 units of risk($15,000 / $3,000).

• Maya risks $1,500 per trade, giving her 10 units of risk ($15,000 / $1,500).

Alex gets ruined after just 5 consecutive losses.

Maya needs 10 in a row to be wiped out.

I will use Perplexity here to visually show you what I mean.

Both traders use the exact same system, same capital, same win rate. The only variable is position size, yet their probability of blowing up differs by more than 3x.

BUT 9% Is Still Too High

Even Maya’s 9% risk of ruin is not acceptable for a serious trader.

Any probability above 0% is essentially a guarantee of eventual ruin, given enough trades.

Think of it this way: if you flip a coin that comes up “ruin” 9% of the time, you will eventually land on it.

Join a community of swing traders united by a single goal: Freedom! +2,918% cumulative return (Jan 2024 – Jan 2026)

How I reduce my risk of ruin below 1%

Now mathematically I know it is not possible to be 0.

However, you can bring it down to 0.4%, which, when rounded, does become 0 percent.

There are 3 ways you can reduce your risk of ruin:

Let’s introduce a third trader: Tom

Alex, Maya, and now Tom all trade the same system: 56% win rate, equal average win and loss, $15,000 in risk capital.

The only difference between them is how much they risk per trade.

Tom simply divides his $15,000 capital by 20 instead of 5 or 10, giving him $750 of risk per trade.

Same system, same edge, but a radically different probability of surviving long enough to let that edge pay off.

You see how just through the simple action of reducing your position size you lower your risk of ruin.

Going from 5 units to 10 units cuts risk from 30% to 9%.

Going from 10 to 20 units cuts it again from 9% to just 1%.

divide your risk capital by at least 20 to get your maximum risk per trade.

For a $15,000 account, that means no more than $750 per trade.

For a $10,000 account, that is $500 per trade.

Alex might generate larger dollar wins when trades go his way, but he carries a 30% chance of blowing up before he ever builds a track record.

Tom wins less per trade in dollar terms, but he has a 99% chance of staying in the game long enough for his 56% edge to work consistently over time.

Successful trading requires you to treat capital preservation as the first priority.

Method 2 - Improving your win rate

With the same 20 units and a 1:1 payoff, bumping your system’s accuracy from 56% to 60% has a massive effect:

Tom at 20 units with a 60% win rate effectively reaches below 1%

0% risk of ruin.

a higher win rate means losing streaks long enough to cause ruin become statistically near-impossible.

Method 3 - Improving your risk to reward ratio

The risk to reward ratio (average win divided by average loss) is arguably the most powerful method of all, because it works even when your accuracy is only 50%.

• 1.1:1 to 1.4:1 payoff ratios still carry meaningful ruin risk (3% to 19%)

• 1.5:1 and above drives risk of ruin to effectively 0%, even at a coin-flip 50% accuracy rate
  
  This means making $1.50 on winners and losing $1.00 on losers is the threshold where survival is mathematically near-certain at 20 units

A warning to traders

Every trader has a statistical risk of ruin, yet most do not know it.

Most are ignorant.

You should not trade, because it is guaranteed you will go bust;

you just do not know when.

It is just a matter of time until you blow up your account.

Please do not start trading until you reduce your risk of ruin to 0%.

You have no chance in this. Please!

How to calculate your own risk of ruin

We will take the exact statistics of our strategy that we use at Freedom Trades and I will use here a tool that I literally found on the first search on Google.

We will define risk of ruin as a 50% drawdown and we will simulate these calculations 1000 times to make sure they are accurate.

These were the results.

Basically, after 1000 simulations we have a chance to hit a maximum drawdown of 33% with an average drawdown of 18%.

Even though our win rate is low, 28%, our reward to risk ratio is high.

That is, when we lose, we lose little, but when we win, we win big.

Now imagine how much profit you could generate if you improved the win rate even further.

This is why I always say, do not focus on strategies that have a high win rate.

The ones that have a low win rate are much more robust.

You can improve the strategy so much further.

NOW

How do you calculate your own risk of ruin?

Very simple, in this tool or table you include

All of this is possible to calculate if you have a trading journal.

That is why I keep saying, journal your trades.

Without knowing your stats, you cannot succeed in this field.

It is the first step.

Remember that.

You have just seen how risk of ruin works and how small changes in risk per trade can be the difference between survival and blowing up.
If you do not want to figure all of this out alone, this is exactly what we work on every day inside Freedom Trades PRO.

Plus, you get:

If you are thinking about joining the community, right now is the best time to do it.
The yearly plan is 49% off.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

High Probability Trades

Read more

You will stop guessing how many shares to buy.

Most importantly, you will know how to protect your account so one bad trade does not hurt you badly.

I have used this method through winning streaks and losing streaks.

It is the one thing that has kept my account alive and growing.

First, I will show you the biggest mistakes traders make with position size.

Next, I will break down the simple formula I use on every trade.

Then I will walk you through real examples so you can see it in action.

Finally, I will give you a free indicator that you can use before every trade.

What is Position Sizing?

The size can be how many shares, contracts, or coins (in the case of crypto) you buy.

Many traders are obsessed with finding the perfect entry or perfect target point, but there is something far more important: proper position sizing.

Position sizing is, first and foremost, the primary and fundamental way to manage risk.

The biggest mistake traders make

There’s a saying, “Price will hurt you, but size will kill you.”

New traders tend to oversize a trade, hoping to “hit big.”

They want to get rich quick.

They have the mentality: “I just need one 100x, bro, and I’m done.”

When in reality, money is made over time with a steady equity curve.

If you use all your capital on a single trade, you expose yourself to a risk called the “overnight gap.”

An overnight gap occurs when a stock or financial asset opens a new trading session at a significantly different price than the previous day’s close.

This creates an empty, “dead air” space on the price chart because no shares were traded at the intermediate prices while the market was closed.

If you put 100% of your capital into one position and it gaps down 10% overnight, you’ve just lost 10% of your capital…in a single session.

That is not sustainable, and believe me, it happens more often than you’d like.

Oversizing leads to the most serious problems in trading: poor risk management, large drawdowns, and, eventually, blown accounts.

So what is the fix for oversizing??

How to Properly Size Your Trade

Before I share the formula I use, I want you to understand a simple concept.

Your position size MUST be determined by the risk you are taking.

So we always calculate size based on the percentage we are willing to risk.

The risk percentage you use should come from your risk‑of‑ruin calculation plus the Kelly-criterion optimal betting size (I’ll discuss this in detail in a future post).

The higher the percentage risk you choose, the greater the probability of blowing up your account , effectively draining all the cash from it.

That’s what beginners, myself included, didn’t understand at the start.

There are two components we need to consider when determining our position size:

1. The percentage we want to risk.

2. The stop-loss (The level at which our initial thesis becomes invalid.)

These two components will determine our position.

Since we already know number one, I’d like to explain a bit what I mean by number two.

Your strategy will define the stop-loss.

Let me give you a few examples.

If you use support and resistance, your level will most likely be just below the resistance line.

If we take this example on AAPL on the daily time frame:

You notice that price has reached a key level and has just printed a reversal with volume.

Your entry is at 276, and you place your stop loss right below the resistance, at 274.

Now that we have a stop loss and know how much we’re risking, let’s calculate.

With a 10,000‑dollar account and 0.5 percent risk per trade, you can risk 50 dollars on this AAPL setup.

The distance between entry at 276 and stop at 274 is 2 dollars per share.

If you divide 50 by 2, you get 25 shares, that is your correct position size for this trade.

Whether you use support and resistance, moving averages, or highs and lows, you need a level to anchor your stop loss.

Now that we have the components, I’ll show you what I personally use.

How I Implement Position Sizing

As I was saying, we need these two components to determine our position size.

We start with the first one: what percentage of our capital we’re risking.

I’ve built a little framework to explain this better:

As you can see, my risk percentage per trade is dynamic.

It changes based on my performance and my market awareness.

However, if you’re just starting out, I recommend keeping it fixed, because you want as many simple components as possible in your trading.

You’ll run into plenty of problems that you need to solve first, so there’s no point in making things more complicated at the beginning.

Now let’s move on to point 2:

Where do I place my stop loss?

My stop loss is either at the low of the day if I’m in a long position, or at the high of the day if I’m in a short position.

On a chart it looks like this:

Using the 5‑minute opening range breakout tactic allows me to get extremely tight entries.

That way I can size up (even if you have a relatively small trading account) while still risking a very small percentage of the account.

This is how I managed to make 7,140 dollars while risking only 247 dollars.

I wrote about this in more detail here.

This is the secret: you want tight entries so you can size up while risking very little.

Naturally, if you use a wider stop, you WILL HAVE TO reduce your size.

There is a direct relationship between your stop‑loss level and your position size.

Here’s another real example:

Distance between entry and stop is 5.71 dollars, which is about 2.02 percent, and a 4R target would be at 305.52 dollars.

This means you could already have taken profits within 30 minutes, because you would have made four times what you initially risked.

See the power of tight stops and how the math works in your favor?

You’re already looking at a 4x risk‑to‑reward.

And in swing trading, you can reach 40–50R, or even monster trades like 80R

The indicator that automatically calculates your position size

In my attempt to bring as much value as possible to this community, I’ve created an indicator that does all of this automatically.

It calculates your position size based on the low of day and high of day, and on the percentage of capital you want to risk.

And the best part?

It’s completely free.

On the chart, it looks something like this.

The indicator asks for the following inputs:

1. Your account size

2. How much you want to risk per trade

3. Your max position size

Then it displays in real time on the chart the low of day price, the high of day price, and the recommended size for both long and short.

All of this is done automatically, in real time.

It saves you a ton of time and simplifies your trading while keeping your position size consistent, an absolutely essential trait for a beginner trader.

While the free indicator will save you a lot of time and help you keep your position sizing consistent, applying everything correctly in real market conditions is a completely different story.

Many traders still struggle with knowing exactly when to size up, how to adjust risk based on market environment, where to place their stops in live trading, and how to manage the trade once they’re in it.

That’s exactly why I built Freedom Trades PRO.

Inside the community you’ll get:

Instead of applying position sizing alone, you’ll see exactly how it’s used in real trades, with full context.

If you are thinking about joining the community, right now is the best time to do it.
The yearly plan is 49% off.
Click the button, join Freedom Trades PRO with the yearly plan, and come trade with us, in real time.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

High Probability Trades

Read more

First, I show you what “trim into strength” really means.
Then I give you the exact rules to trail the rest of your position.
Last, you get a real example, step by step.

What does “trim into strength” really mean?

The goal is to lock in some profit and lower risk without fully exiting a trade that still has room to run.

Why do we do this?

Because if you don’t sell into strength, you will be forced to sell into weakness.

To know exactly when to sell, we first need to define what strength actually means.

How do we define strength in a stock?

My definition of strength is:

First of all, the condition that price is above the key moving averages is very straightforward and leaves no room for discretion.

The Price is either above them or it is not.

Now let me explain the second point, namely: “when that stock is extended from the 50MA.”

We also need to make this quantifiable, because in our selling rules there should be no room for discretion, as this will affect your decision‑making and ultimately your trading account.

The way I calculate this is by taking the Average True Range percentage (ATR%) of each stock and the percentage gain of the price from the 50MA, and then dividing the latter by the ATR%.

But you don’t have to do all of this manually.

There is an indicator that can do it for you, created and shared by Jfsrev (the one who popularized this thesis), and the best part is that it’s free.

And in real time, the indicator looks something like this on the chart.

In this example, QLYS is extended 11 ATR% multiples from the moving average.

As you can see, its average ATR% is 4.22%, and if you divide the percentage gain from the moving average, which is 47.09%, by 4.22%, you get 11.17 as its ATR% multiple.

Those small black dots above the candles on the chart are printed once the stock exceeds 7 ATR% multiples from the 50MA.

Why above 7? Because, according to backtesting, that is the point at which most stocks tend to experience a pullback.

I will talk more about this backtest and share it with you in a future edition.

So, to summarise before we move to the next part:

We define a stock as being in strength when:

it is above the key moving averages (20MA, 50MA, and 200MA), and

it is above 7 ATR% multiples from the 50MA.

How to Sell a Stock into Strength – Trade System

Now I’ll share with you the exact system we already use in the Freedom Trades community to protect our profits.

And I’ll walk you through how I personally manage a trade depending on which day I’m in the position.

Let’s say I’ve just initiated a new swing trading position.

Day 0 to 4

In the first few days, I start taking 1/3 once the trade reaches more than 3R (R is a unit of risk).

I also take off the first one-third if the move reaches three times the ADR% measured from my entry, because at that point the stock has already delivered a meaningful expansion and I want to pay myself early.

So at least one of these conditions has to be met for me to sell the first third of the position.

By doing this, I eliminate the initial risk I have in the trade and, essentially, the trade becomes risk‑free – meaning that if my stop loss gets hit, I will not have any loss, because I already sold one third.

The goal here is to offset the initial risk.

After Day 5

Once the trade gets past day five, I become more systematic with the exit and sell 10% of the position at each higher multiple when ATR% stretches above the 7x multiple versus its 50MA reference.

After that, I trail the rest using the 10MA as my main stop, and if the stock closes below it at the end of the day, I can close the remaining position.

If momentum is still very strong and I am already sitting on at least a 30% unrealized gain, I can give the trade more room and use the 20MA instead.

I’ve even made a visual for you so it’s easier to understand the tactic.

This system only works well when position sizing and trade selection stay tight, so I cap any single position at 25% of the total portfolio and avoid biotech names because of the higher overnight gap risk.

If a stock is already above 5R, I can move the stop to breakeven.

I also avoid entering a stock that has fewer than five trading sessions left before earnings, and above all, I stay selective and never allow a profitable position to turn into a loss.

A real-trade example of selling a stock into strength

Now I’m going to show you how I made 28R while risking just a single unit of risk.

In practice, I risked $247 and made $7,141, almost 29 times my initial risk.

Below you can see a visual representation of how I managed this trade in HPE stock

And now I’ll show you what the ATR% Multiple from MA indicator looks like.

You can see how, on each strong push higher, it was signalling that it was time for me to trim.

At the peak, the indicator was showing an 18x multiple from the 50MA, so you can clearly see how overextended it was.

And if you look at the HPE chart now, the stock has dropped about 36%.

You absolutely do not want to give back 36% of your profits to the market.

I’ve written in detail about how I managed this trade here, if you want to read more

When you put all of this together, you stop guessing when to sell and start following a clear, repeatable process.

If you are thinking about joining the community, right now is the best time to do it.
The yearly plan is 49% off.
Click the button, join Freedom Trades PRO with the yearly plan, and come trade with us, in real time.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

High Probability Trades

Read more

And that signal has been working for hundreds of years.

It is called The Follow Through Day.

By the end of this article, you’ll know exactly how to spot it, what it means, and how to use it to enter the market with confidence, right as a new uptrend begins.

Why You Should Listen

I’ve been swing trading US stocks for over 4 years and an investor for 10 years.

I turned a $2,000 account into six figures, and I’ve lived through bull markets, crashes, and everything in between.

The Follow Through Day is one of the few signals I trust completely.

It kept me out of bear market traps.

It put me in position for some of my best runs.

Here’s What We’ll Cover

First, we’ll break down what a Follow Through Day actually is and where it comes from.

Then I’ll show you the exact criteria I use to confirm one.

And finally, I’ll walk you through how to build your watchlist around it, so when the signal fires, you’re already ready to act.

What Is A Follow-Through Day?

Meaning real buying strength appears after a period of decline or consolidation.

Think of it like this, the market has sold off, then it starts to stabilize and show the first signs of a rebound.

A follow-through day is the moment that rebound gets confirmation, not just a random bounce.

What Is A Follow-Through Day Made Of

Before we can spot a follow-through day, we need to understand what it is made of and in which scenario it appears.
To identify it, we need the following components:

What A Follow-Through Day Looks Like

Now we will go straight to the charts, because it is much easier to explain and understand visually.

We will use as an example the most recent market correction in QQQ, the one from April 2026.

Observe how it had all the ingredients we talked about above.

It had a market correction of about 13 percent.

Day 1 came on March 31, 2026, with higher volume than the previous day and a gain of roughly 3.4 percent.

On day 6 we got the follow-through day, a move of more than 2 percent on strong volume.

After that, QQQ went on to rally around 31 percent.

For the follow-through day to occur and remain valid, price must not undercut the low of day 1.

Once that low is intact, we wait until at least day 4.

Why. Because historically this window allows the market to stabilize and prove that the initial move is more than just a simple bounce.

And next, I will show you a clear example of a failed follow-through.

What A Failed Follow-Through Day Looks Like

This example is from April 7, 2025.

It has:

1. A market correction of around 25 percent.

2. An attempted rally on April 9.

Important, day 1 of the rally was April 9, not April 7 or April 8, because those days did not manage to show real follow-through, even though the low of the day was not broken.

So the count reset, and day 1 became April 22, 2025.

From that point, the market went on to rally another roughly 57 percent into the next phase of consolidation and correction.

The Benefits Of Spotting A Follow-Through Day

This concept can make a huge difference in your trading performance and long term profitability.

BECAUSE

identifying a follow-through day:

Also, according to William J. O’Neil, these are the key follow-through day statistics you can use to your advantage.

• Distribution on days 1 or 2 after a FTD fails 95 percent of the time.

• Distribution on day 3 after a FTD fails 70 percent of the time.

• Distribution on days 4 or 5 after a FTD fails only 30 percent of the time.

Improve Your Edge With The Follow-Through Day Signal

You can combine the follow-through day signal with market breadth so you can be even more confident in the signal.

You can do this directly with TradingView.

What I did was create a watchlist and add the following tickers from the screenshot.

You can copy them too: NDTW, MMTW, R2TW, S5TW, NDFI, S5FI, R2FI, MWFI, R2TH, MWTH, NDTH, S5TH.

Basically, these tell you how many stocks in the S&P 500, Russell, and Nasdaq are above their 20 day moving average, 50 day moving average, and 200 day moving average.

If you see that more than 50 percent of stocks are above the 20 DMA, it means breadth is improving and the majority is participating in the rally.

If they are below, it is the opposite.

You can also track how the sectors are behaving.

In the same way, you can create a free watchlist on TradingView with the following tickers, XLY, XLC, XLRE, XLP, XLI, XLF, XLB, XLV, XLU, XLK, XLE, MAGS.

And finally, track the leaders from each sector or group.

They are the first ones that will break out from the consolidation bases they have built.

If they are performing well, that is a very strong signal.

When you put all of this together, you stop guessing market bottoms and start following a clear, repeatable process.

You wait for a true follow-through day, you confirm breadth and sector leadership, and you focus on the strongest names breaking out of proper bases.

If you are thinking about joining the community, right now is the best time to do it.
The yearly plan is 49% off.
Click the button, join Freedom Trades PRO with the yearly plan, and come trade with us, in real time.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Some updates and good news for the High Probability Trades newsletter.

This month, I focused heavily on improving the algorithms that detect our setups. As some of you noticed in the Discord server, the AI-generated signals have been paused, so over the past two weeks you have been receiving signals only from me.

Soon, with an estimated relaunch at the beginning of July, I will bring this service back online.

I am currently in the final stages of testing, and I can confidently say the model is significantly better than what we had in previous months.

Now for the good news.

Here is the plan going forward:

The newsletter will include two categories of high probability trades.

This is exciting for me because my goal is to make this model smarter and more efficient than I am.

In a way, I will be competing directly with the AI.

For you, this means more high-quality tickers to choose from.

Looking further ahead (TBA), I plan to launch this application online, where you will be able to scan over 10,000 tickers based on the specific setup you are looking for.

Currently, there is no swing trading screener in the industry that scans directly for complete setups.

This tool effectively incorporates our entire strategy and can save hundreds of hours per year.

I am very excited to bring this to life, especially after working on and researching it for the past six months.

High Probability Trades

Read more

Some you’re aware of. Others you don’t even realize you’re making.

This article will save you years of unnecessary losses and thousands of dollars thrown away on mistakes I already made before you.

Why should you listen to me?

Because I’ve been through all of these.

I started with a small account, made every mistake in the book, and survived them all.

I didn’t read about them in a book. I lived them, paid for them, and pushed through them.

Today I trade profitably as a swing trader. Not since yesterday. For years.

Here’s what we’ll cover:

I’ll walk you through the exact mistakes traders make in each stage, so you can spot them before they cost you money.

Let’s get into it.

Year 1: You’re the King of Ignorance

Everyone starts here.

You don’t know what you don’t know.

And that’s exactly what makes you dangerous.

Methodology Mistakes

Someone tells you a stock looks good.
You buy it.
Sometimes it works, most of the time it doesn’t.
You’re just gambling.

You hear earnings came in strong.
Next day you go long.
You get stopped out at a loss.
Why? Because the market already priced in that news.
By the time it reaches you, it’s old.

Your broker, your friend, your family. If they’re not trading full-time, their opinion isn’t worth more than yours.
Nobody knows better than you what’s in your portfolio and why.

You buy at $6.60. The stock drops to $6.00.
You tell yourself it’s an opportunity and buy more.
Now you’re twice as exposed.
If the stock keeps falling, your loss doubles.

It doesn’t cross your mind that you can lose until it’s too late.

Every mistake above comes from the same place: no plan.
Without a plan, you’re just a gambler.

Risk Management Mistakes

In Year 1, your only concern is having enough money to enter a trade.
The concept of risk management doesn’t exist for you.
You don’t know what risk of ruin means.
You don’t know how much you can lose on a single trade.
This is the most dangerous blind spot of the entire first year.

Psychology Mistakes

Trading gives you a feeling that normal life doesn’t.
Even when you’re losing, you want to place another trade.
That “next trade” always seems exciting.
That addiction costs you money.

You lost. You’re angry. You want your money back immediately.
You enter again, no plan, driven by emotion.
The market doesn’t know you and doesn’t care.
You’re the only one who loses twice: in your account and in your ego.

Year 2: You Know a Little, But You’re More Dangerous Than Ever

You survived Year 1.
Good. Now you think you know something.
And that’s exactly why you’re a danger to yourself.

Methodology Mistakes

If it’s written somewhere, it must be true.
Wrong.
The only thing that makes a trading idea valid is your own testing.
Nobody else can do that for you.

You discover indicators, patterns, signals.
You think that’s all you need.
But technical analysis without risk management and psychology is like a car without a steering wheel.

If one indicator didn’t predict the move, you look for one that would have.
You fill your chart with lines and colors.
That’s called curve fitting and it’s a trap.
More indicators don’t mean more clarity.

The problem is simple: there’s no emotional pressure.
You can erase a losing trade and say you “missed something.”
I’ve never met anyone who lost money paper trading.
Everyone loses with real money.
The only real school is the market.

You want to know where the market is going.

You look for systems that promise you that.
Elliott Wave, Gann, cycles.
They all sound good in theory.
The reality is the market doesn’t follow a predetermined pattern.
By the time you figure that out, you’ve lost time and money.

The market hits a new high.
You want to sell. Seems logical.
It’s not.
Traders who sell extreme strength and buy extreme weakness without confirmation lose consistently.

You have a stop.
The market gets close to it. You move it further to avoid getting taken out.
The fear of being wrong costs you more than if you had accepted the loss upfront.
Moving your stop loss is the signature of a weak trader.

On one hand you don’t respect your stops.
On the other hand you take profits too fast.
You’re a bad player on both sides.
The secret is the opposite of what you do instinctively: cut losses fast and let winners run.

You’re tired of losing alone, so you copy someone else.
The problem is you don’t understand why they enter or exit.
When things go wrong, you have no idea what to do.

That’s why at Freedom Trades PRO we do it differently. You get the full methodology so you always know what you’re doing right and what you’re not.

When something doesn’t work, you change something.
The methodology, the broker, the market.
You don’t realize the problem isn’t out there. It’s you.
The real issue is always risk management.

Risk Management Mistakes

You now know something called risk management exists.
But you’re still risking too much per trade.
You’re overtrading relative to your account size.
You know the theory. You don’t apply it.

Psychology Mistakes

The adrenaline becomes a habit.
You look for trades that don’t exist just to have something to do.

You don’t wait for your setups.
You enter any move. You keep losing.

You’ve seen ads promising “500% returns per year.”
You think that’s normal. That pressure pushes you toward bad decisions.

SPY dropped, that’s why you lost.
You miscounted the waves.
The cycle inverted.
There’s always an external reason. It’s never you.

Year 3: You Survived, But Your Ego Is a Time Bomb

If you made it to Year 3, respect. You’re battle-tested.
But you’re still dangerous.
You think the market owes you money.
Your ego has taken too many hits. That’s a toxic combination.

Methodology Mistakes

Determination is both your strength and your weakness.
It kept you in the game, but it also keeps you tied to a methodology that doesn’t work.
It took me a full year to walk away from all the indicators I believed would predict the market, MACD, Stochastic Oscillator, Elliott Wave, all of it.
Don’t let pride cost you as much as it cost me.

You look for complex systems.
You study geometry, financial astrology, secret formulas.
You forget that at the core, every trade is simple: somewhere the market finds support, somewhere it finds resistance. That’s it.

Analysis tells you where the market might go.
Your trade plan tells you how to profit from that.
They’re two separate things.
Most traders jump straight from analysis into a trade, with no clear execution plan. Expensive mistake.

You trade to make money, but you don’t know how much your system earns per dollar risked over the long run.
Without that number, you don’t know if you have a real edge or you’re just getting lucky.

If you make money, you think the system is good.
If you lose, you think the system is bad.
Neither one is a proper validation.
You need an objective process, completely separate from your ego.

You don’t track your trades.
So you have no idea what your profit factor, expectancy, or win rate actually is.
Remember: what you don’t measure, you can’t improve.

Risk Management Mistakes

You’re still risking too much per trade.
You know you should trade conservatively, but it feels boring.
You want fast results.
Small positions and patience don’t feel like real trading.
And that’s exactly what keeps you stuck.

Psychology Mistakes

Profit is an outcome.
It’s not something you can directly control.
What you can control is the process: your setups, your execution, your risk management.
Focus on that and the profits follow.

You enter and exit almost randomly.
You move stops on impulse.
You don’t follow the rules you set for yourself.

You’ve lost a lot.
You’re exhausted.
The conclusion feels logical.
But the market isn’t impossible. Your approach just isn’t working.

If others are winning, they must know something you don’t.
There are no secrets. There’s process, discipline, and proper validation.

It’s not.
The biggest risk is your health.

It matters, yes.
But it’s not the biggest obstacle.
The biggest obstacle is not having a validated system with real positive expectancy, applied with proper risk management.
Psychology fixes itself once you trust your system.

You’ve probably seen yourself in at least one of these stages.

Maybe even all three.

And if you’re honest, you already know where you are right now.

That’s the good news.

Because once you can see it clearly, you can actually fix it.

If you are thinking about joining the community, right now is the best time to do it.

The yearly plan is 49% off.

Click the button, join Freedom Trades PRO with the yearly plan, and come trade with us, in real time.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Read more

How I catched the stocks before they explode.

First, you need a scanner, something that feeds you ideas.

I use 5 different scanners, and together they give me between 100 and 200 tickers.

The one that gave me this idea is the same scanner we use inside the Freedom Trades PRO community.

Here are the filters:

Those who are PRO already have access to it.

The stock where I made this money is called HPE, and it appeared on my scanner list on March 25 when it printed a daily candle with 52M shares traded in volume.
At that time, the chart looked like this:

What drew me to it was that it was in a 10-month base.

It had managed to break above the 200MA, earnings growth was in double digits, and volume was increasing.

Plus, it was in a hot group called “Computer Processing Hardware,” which is part of the AI theme right now.

The RS Rating at that time was also above 80, and it was not overextended from the 50MA.

So what I did was put it immediately on my focus list.

The Entry

Obviously, that was not my entry. I could not chase the gap up on that trade.

So I waited, patiently, for that compression to happen.

Watch what happens 3 weeks later:

Immediately after I see that very dry volume day combined with an inside bar and price contraction over the last 5 sessions, I know it’s time to buy.

It was important for me that the next day it would break above the previous high set on April 15.

Let’s look even deeper on the 5-minute timeframe so you can see my exact entry and stop.

Immediately after I notice that the stock is offering a 5-minute ORB, I enter a position at $24.99 with a stop at the low of day, and it gives me a 3.71% unrealized profit, the cushion I can use to hold overnight.

IMPORTANT

You need to understand that yes, this was a high-probability trade, but I had no idea if this would be the big one that brings me 29R.

That’s why we need as many shots as possible.

And if we risk 10%, 5%, or even 2% of capital for each trade, that’s too much.

There is only a matter of time before we blow up our account.

Can you imagine? 0.20% risk to make over $7,000.

This is the power of risk management.

I do this to manage the risk of an overnight gap.

But again, if you have a 25% position and your stock gaps down by, say, 10%, that’s a 2.5% loss.

Yes, it sucks, but it’s still a manageable drawdown that you can recover from.

Trade Management

Okay, let’s continue.

On day two, I already had a 6R trade, meaning I can sell 1/3 of the position to offset the risk and essentially make this a risk-free trade.

BUT

Watch what happens next.

The stock explodes.

This is how I managed the trade:

What is even crazier is that it offers another setup, another small base with contraction where you can add to your position.
Unfortunately, I did not add to my position, but if I had, this would easily be a 5-figure trade.

BUT
Please notice how I sell into strength.
You’re probably wondering, how do I know when to sell?

Well, I simply use an indicator that calculates how overextended the price is from the 50MA.
And it looks like this:

And the last piece, I just let it run until it closes below the 10 MA.

And that happened only on June 10, 2026.

If you want the indicators I use, I created a post here where you can copy all of them for free.

Trade Psychology

Here’s a factor I want to mention:

HPE was not a perfect trade.

BECAUSE

I did not manage to buy the bottom or sell the top.

And that will be the case forever.

And you need to get used to that and become comfortable with it.

And Maximum Adversity will make your life hell.

You need to understand that you will never be satisfied.

Like I said, HPE offered me another setup where I could add to my position.

I did not do that.

Automatically, I left money on the table.

• If I had not trimmed my position, I would have made way more money.

• If I had ignored my selling rules, I would have made more money.

• If I had been oversized, I would have made more money.

So you see,

I can find so many reasons to be unhappy.

And this will mess with your trading.

It will make you change and bend your rules and destroy your edge.

INSTEAD

What you can do is think about how many times your rules saved you.

Saved you from oversizing, blowing your account, and kept your mental capital intact.

REMEMBER that.

This trade is not a one‑off.
This is exactly the kind of work we do every day inside the PRO community on our Discord server.

Plus, you get:

If you are thinking about joining the community, right now is the best time to do it.
The yearly plan is 49% off.

Click the button, join Freedom Trades PRO with the yearly plan, and come trade these setups with us, in real time.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Read more

I already explained in detail when you should get aggressive and when you should get defensive in this post.

But here is the part that most traders completely miss.

The days when everything is selling off are critical.

This is when the market quietly separates the leaders from the laggards.

And I will show you exactly what to do so you are prepared to make a lot of money when we get back into an “easy money” market.

What relative strength really means

Relative strength is not just “the stock is going up.”

Relative strength means the stock is behaving better than the market.

For example:

The index gives you the context.

The stock shows you where the money actually is.

Why relative strength matters most on red days

On green days, almost everything goes up.
You do not have a real edge.

On red days:

This creates clear separation between leaders and laggards.

Your job is to study that separation.

How to spot leaders in real time

When the market is selling off, scan for stocks that:

A real leader resists the selling.

Here’s a recent example on DOICN

Often you will see things like:

Here’s another example.

While the index did this:

These are your clues.

What to do with that information

The point is not to buy everything that holds up on a down day.

The point is to build an A‑list watchlist.

When the market turns back up:

That is where the big money is made.

AND
Not in guessing bottoms.

BUT
In being prepared.

What weak traders do instead

Most losing traders do the exact opposite:

So when the market finally bounces,
they are stuck in the weakest names.

A simple plan for red days

On red days, your job is not to be a hero.

Your job is to:

This is the real work of a swing trader.
The actual entries come later.

If you learn to think like this,
you will stop chasing moves that already happened.

You will be positioned in the leaders before the big moves start.

AND

This is exactly what we do every day inside the PRO community on our Discord server.
We constantly hunt for opportunities and share stocks with great relative strength with our members.

If you do not believe me, here is a message we got just this Monday.

If you are thinking about joining the community,
well, right now is the best time to do it.
The yearly plan is 49% off.

Get 49% Discount with Yearly Plan

See you inside :)

Trade Setups of The Week

Copy My Watchlist for this week

Here are the stocks, sectors, or trends I’m watching closely.

Access my entire watchlist for free here:

My watchlist

Want more than just a watchlist?

Join a community of like-minded individuals who are committed to achieving financial freedom and taking control of their future.

Upgrade now to get the full experience!

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Right now, these are my positions:

Read more

AND

I am still holding positions with unrealized profits (like HPE, RKLB, ALAB, and others).

Transparency is important to me, so here is my broker activity statement.

*it’s actually more if you count the unrealized profits

I am not showing you all this to brag about how good I am.

ACTUALLY,

I want to show you exactly how I made this money.

In May, I took a total of 51 trades, averaging about 2 trades per day.

Look at the net daily P&L and notice how the losses are small and the gains are large, measured in R units of risk.

This means that one of the secrets is that I cut my losses fast and I hold on to my winners.

I’ll be more specific and show you the EXACT setups and trades I took to make this kind of money.

Here are 3 examples to learn from.

Base breakout - HPE

So this stock keeps paying me because it simply does not want to drop below the 10 MA.

For context, HPE had formed a 10‑month base that I was watching very closely.

As soon as I see this kind of price contraction forming, I immediately add it to my focus list.

On April 16 I initiated a position with a stop loss at 24.68, an extremely tight risk.

The stock moved in my favor from day one with a 5% return, then on the second day it already hit 3R, so I sold one third and it basically became a free‑risk trade for me.

After that the stock formed another small base; that was the opportunity to add to the position, but I did not take it.

Then I started selling into strength, as you can see on the chart above.

Right now, the stock has given me a huge realized multiple of 23.8R, and the position is still not fully closed, so most likely it will end up over 30R.

So this single trade paid for roughly 30 losing trades.

Just imagine for a moment the power of this kind of risk management.

20 MA Undercut and Rally Trade - CIEN

The stock touched the 20 simple moving average perfectly, undercut it, and then rallied on volume.

This allowed me to use a very tight stop at 486.22, with an entry at 493.61.

I sold one third of the position on the second day, because the trade had already reached 3 units of risk.

Then I sold into strength six days later.

After that I sold when it closed below the 10 MA, and finally the last portion when it closed below the 20 MA.

This allowed me to lock in a 7.29 R multiple.

As you can see, after I sold, the stock offered yet another similar setup.

And before this, on March 27, there was one more valid setup.

Base Breakout Setup - PWR

PWR was a classic base breakout setup.

The stock undercut the base and the 50 MA, and then it started to move.

My entry ($585.29) was only after the stock price got back above the 10 and 20 MA and broke out of the base it had been forming since February 19.

SL was at $576.48.

I sold the first one third of the position on April 22, after the stock reached 3 units of risk.

Then I got a gap up into earnings, and seeing that the stock was about 9 times extended from the 50 MA, I sold into strength.

After another two days I literally sold at the top.

Finally, I sold the last remaining shares on the day it closed below the 10 MA.

This trade generated an 8.10 R multiple for me.

You can achieve this too.

After walking you through these trades,

you can clearly see that this is not about lucky bets.

it is about repeatable setups, strict risk management, and the discipline to execute.

If you want to level up from random trades to a structured swing trading process, I built Freedom Trades exactly for that.

PRO is your next step.

And right now is the best time to take it.

The yearly plan is 49% off.
If you’ve been sitting on the fence, this is the moment.

Get 49% Discount with Yearly Plan

Trade Setups of The Week

Copy My Watchlist for this week

Here are the stocks, sectors, or trends I’m watching closely.

Access my entire watchlist for free here:

My watchlist

Want more than just a watchlist?

Get an understanding of the screener, so you know exactly what to watch.

Gain access to my trading strategy!

Join a community of like-minded individuals who are committed to achieving financial freedom and taking control of their future.

Upgrade now to get the full experience!

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Right now, these are my positions:

Read more

To the next market wizard.

It will grow your account exponentially.

And your drawdowns will barely be felt.

It is simple.

BUT not easy.

That is why today I am going to show you my tactic.

And not just mine, but also that of 3 other market wizards who have a very strong grasp of this concept.

Let’s start with the masters, those who have decades of experience in the market.

When to Get AGGRESSIVE (according to market wizards)

Mark Minervini

- Your last 4-5 trades are working (open profits/close profits)
- Follow-through day occurs and market turns up
- Setups are visible AND bearing results
- Market is in “easy dollar” environment with stocks above 50/150/200-day MAs

William O’Neil

- Major indices trading above rising 50-day and 50-week MAs
- Market in definite uptrend (CAN SLIM “M” criterion)
- Price/volume action on indices confirms strength

Qullamaggie

- $QQQ above 10 EMA and 20 EMA, MAs trending up
- Your trades are working (progressive exposure)
- Leading stocks breaking out with volume

When to Get DEFENSIVE (according to market wizards)

Mark Minervini

- win rate drops below 50%
- Market conditions are weak/volatile
- Your trades are not working (getting stopped out repeatedly)
- “Hard penny” environment where fakeouts are common

William O’Neil

- Indices below rising 50-day MA
- Market in correction/downtrend
- Most stocks follow general market pattern down

Qullamaggie

- You’re in a drawdown
- Breakouts failing, more false moves

Ok, that’s what they say. Here’s how I turned that into a concrete system.

How do I get aggressive or defensive

I have created my own system.

It looks like this.

And it all starts with my last 5 trades.

Did they perform well, or did I get stopped out on all of them?

Okay, let’s say I got stopped out.

Why did that happen?

Is it because the market environment is unfavorable for my strategy, or is it my execution, a psychological cause?

Then, after I identify the root cause, I apply corrective measures.

So just like the masters, it all starts with your PnL.

Your performance on your last trades is the best indicator.

How much risk do I take

I have 3 risk thresholds based on performance and market awareness.

To keep things practical and not just conceptual, below you have a small “Risk Management Cheat Sheet” that translates the aggressive / defensive idea directly into risk percentages per trade.

In short, we use two axes: account performance and market context combined with setup quality.

On the left side, “Performance Based”, risk per position varies depending on the state of the equity curve:

• Between 0.70 – 1% per trade when the account is at all-time highs and the market environment is favorable. Here we are in controlled aggressive mode, letting recent profits finance the larger exposure.

• 0.5% is the “normal” size, when we are neither in euphoria nor in a significant drawdown.

• 0.25% is defensive mode, used when the account is roughly in a 10% drawdown or recent performance is weak; we automatically reduce position size by half.

• 0.125% is ultra-defensive mode: account in roughly a 20% drawdown and an unfavorable environment; positions become almost symbolic, the focus is exclusively on capital protection.

On the right side, “Market MA + Setup”, we adjust risk based on pattern quality and SPY’s position relative to its moving averages:

• 1% risk only for an A++ setup when SPY is above the 10 MA, meaning a top-tier pattern in a very bullish market.

• 0.5% for an A setup with SPY above the 20 MA, moderate aggression in a still positive context.

• 0.25% for a B setup with SPY above the 50 MA, we are trading, but with a clearly defensive approach.

• 0.125% for a B setup when SPY is below the 200 MA, a mediocre pattern in a weak market, exactly where we want to be almost fully in cash.

With these settings, it is guaranteed you will not blow up your account

AND

you will have enough time to experience multiple market cycles.

Multiple market cycle experience

If you manage to go through a drawdown and experience multiple cycles,

something almost magical will happen.

You will develop the ability to feel and understand when the environment is favorable and when it is not.

That will help you know when to press the accelerator and when to hit the brakes.

For example, in March it was so difficult that almost every trade I entered ended in a stop loss.

As a result, my win rate was only 22%.

However, in May, at the time of writing, my win rate is 46% and will likely go above 50% as I take more profits.

So what I want to say is, do not get discouraged if it does not work out from the beginning.

You need time in the market.

AND

This does not come easy.

It comes with losses, frustrations, and a lot of perseverance.

And this is exactly what separates a trader who just participates from one who starts compounding consistently.

knowing when to press the accelerator and when to lift your foot.

That is exactly what we build inside PRO, not just trade ideas, but the context, the execution, and the real-time adaptation to what the market is actually doing.

You will see exactly how I size, when I scale, and when I step aside.

If you want to see how I apply this system day by day, on real trades, and be part of a community

PRO is your next step.

And right now is the best time to take it.

The yearly plan is 49% off.
If you’ve been sitting on the fence, this is the moment.

See you inside.

Get 49% Discount with Yearly Plan

Trade Setups of The Week

Copy My Watchlist for this week

Here are the stocks, sectors, or trends I’m watching closely.

Access my entire watchlist for free here:

My watchlist

Want more than just a watchlist?

Get an understanding of the screener, so you know exactly what to watch.

Gain access to my trading strategy!

Join a community of like-minded individuals who are committed to achieving financial freedom and taking control of their future.

Upgrade now to get the full experience!

If you think this newsletter could help your friends, share it with them so it can reach as many traders as possible.

And here’s the fun part: when you share it, you can unlock special rewards + you will look smart in front of your friends :)

“One trade closer to freedom.”
Vladislav

(*Only realized profits are included here, unrealized profits are not counted in the final calculation, which may result in lagging performance statistics).

This is my performance from previous years.

To better understand the strategy we are following and not to buy blindly without any context, please read and analyze my strategy carefully:

Right now, these are my positions:

Read more

They watch the stock flush below a key level, hit their stop, and then stare at the screen as price immediately reverses and runs 30%, 40%, 50% without them.

It feels like the market is personally targeting you.

The truth is, it kind of is.

And today I am going to show you exactly how to be on the right side of that move.

The setup is called the Undercut and Rally (U&R), and it has made me tens of thousands of dollars.

One of the trades was NVDA.

NVDA had been trending beautifully, then pulled back hard through the 20 SMA. Every holder who had their stop just below that moving average got flushed out in a single session.

I had marked the level the night before.

I waited for the reclaim. I entered.

The stock ran over 20% in the following two weeks without ever looking back.

That one trade paid for months of losses.

That is the power of understanding what is actually happening beneath the surface of price action.

What Is the Undercut and Rally?

In simple terms, the Undercut and Rally is a failed breakdown.

It is a classic shakeout where price dips below a major key level, shakes out the weak holders by hitting their stop losses, and then snaps back above that same level with strength, typically confirmed by volume.

This setup most commonly appears during short-term corrections and pullbacks in otherwise uptrending stocks.

The beauty of it is that it gives you a clean, well-defined entry point with a very tight and logical risk.

Why This Setup Exists: The Psychology Behind It

Before you can trade the U&R with conviction, you need to understand why it happens in the first place. It is not random.

When a stock trades at a key level for any period of time, every trader watching that chart places their stop in roughly the same place: just below that level.

Support levels, moving averages, prior highs turned support, they are all visible to everyone. That means stops are clustered in a very predictable location.

Institutions know this.

Large players who want to accumulate more shares at a better price have a simple playbook: push price briefly below the key level, trigger all those stops, buy the shares that get dumped onto the market, and let price snap back above.

The retail trader gets shaken out at the exact low.

The institution fills their position at a discount. Price then rallies hard because the weak hands have been removed and only strong holders remain.

This is not a conspiracy. It is just how markets work.

And once you see it, you cannot unsee it. The U&R is simply your way of recognizing that flush in real time and positioning yourself alongside the institutions rather than against them.

How to Turn This Into a High-Probability Trade: Add the High Volume Close

The real edge multiplier is combining the U&R with a High Volume Close (HVC).

A HVC marks a level where significant institutional activity happened.

When price later undercuts that exact HVC level, you are triggering the stops of traders who entered on that high-volume candle.

The subsequent rally back above it signals that the institutions are still in control and defending their position.

The MU chart is an outstanding example of the HVC combined with U&R.

Multiple High Volume Close candles are annotated at a key support zone around $334 to $370.

Price made an initial U&R at that level (labeled “another example of U&R”), held, and then in April broke down hard, undercutting the key support level.

That undercut shook out the late holders and triggered stops on both sides.

What followed was a clean rally all the way from the lows near $318 back through $540 and beyond, labeled clearly as “rally” and “strength” in the volume panel.

Advanced U&R Technique: Combining the 20 and 50 SMA

The real edge of this setup comes when you layer moving averages on top of each other.

When price undercuts either 20 SMA or 50 SMA.

The more confluence you stack, the higher the probability.

Give more weight to the 50 SMA over the 20 SMA.

The 50 SMA attracts more institutional attention, which means more stops are clustered there, and a successful U&R off the 50 SMA typically produces a stronger and more sustained rally.

Bloom Energy (BE) is probably the most visually clean example.

The stock trended from the high $30s all the way to $140 in a powerful, uninterrupted Stage 2 uptrend.

Along the way, two separate U&R setups are annotated on the chart.

Each time price dipped below a key moving average or support level, it quickly reversed and continued higher.

The 20 SMA acted as the key trigger, and the rebound from the "key level" around $86.50 produced another powerful rally leg to $140.

The HVC annotations on the volume panel show exactly where institutions loaded up, and each of those levels later became a springboard for the continuation.

How to Play the Undercut and Rally

Once you spot a potential U&R setup, execution is everything. Here is the step-by-step process I use:

1. Identify the key level in advance
Do not wait for the setup to happen and then react.

Mark your key levels before the market opens.

You are looking for prior support zones, high volume close levels, and the 20 or 50 SMA.

2. Wait for the undercut
Price needs to break below the key level with conviction.

This is the shakeout.

Weak holders are getting stopped out.

Do not buy the breakdown. Do not try to catch the falling knife.

Your job at this stage is to watch and wait.

3. Wait for the reclaim
This is your trigger.

You want to see price push back above the key level it just undercut.

The reclaim can happen intraday or on the next candle.

The faster the reclaim, the stronger the signal.

A slow grind back is less convincing.

4. Enter on the reclaim
Your entry is the moment price closes back above the undercut level, or you can enter aggressively as price is reclaiming it if volume is already confirming.

A strong close near the high of the reclaim candle is ideal.

5. Place your stop below the undercut low
This is the beauty of the setup.

Your risk is extremely well-defined.

Your stop goes just below the lowest point of the undercut.

If price goes back down there, the setup is invalid and you exit without hesitation. No exceptions.

6. Set your target based on ATR.
A clean U&R off a key level typically targets the prior high or the next major resistance zone.

Use the ATR of the stock to gauge how much room you have.

As a rule, you want at minimum a 3:1 reward-to-risk ratio before entering.

(revisit our strategy so you know exactly when to sell!!!)

7. Manage the trade as it moves
Once the trade is working, trail your stop behind the 10 SMA or the prior swing low.

If the stock is a strong momentum leader, do not rush to take profits.

Let the position breathe and give the move room to develop.

The best U&R setups on large-cap momentum stocks can run for months.

Here’s an example on NBIS

NBIS provides a clean example of a U&R off an HVC level in a strong momentum stock.

An HVC occurred around the $57.50 area, setting a key reference level.

Price later pulled back and undercut that HVC level, then snapped back above it in a textbook U&R.

From that U&R entry, NBIS rallied sharply, reaching near $70 before the most recent pullback.

The volume panel shows the massive spike on the most recent session, which is the current HVC being set now.

This is a stock that had already proven itself as a momentum leader before the setup triggered, which is exactly the criterion you want.

The Core Checklist for a High-Probability U&R

Here is how to stack the edge in your favor before taking any U&R trade:

• Price undercuts a major key level (prior resistance turned support, a high-volume close level, or a key moving average)

• The undercut is followed by a reversal and reclaim of that level, preferably on the same day or within 1-2 sessions.

• Volume on the reversal candle is above average, ideally confirming institutional absorption

• The stock is a proven momentum leader with strong prior price action, not a random name.

• The U&R aligns with the 50 SMA (weighted higher than the 20 SMA) for maximum confluence.

• The undercut level coincides with a prior High Volume Close, making it the most powerful version of the setup.

The bigger the market cap, the more respected these levels tend to be.

Large-cap momentum stocks have more institutional participation, which means more stops are clustered at key levels, and the U&R shakeout is more predictable and more explosive when it resolves.

Want to Go Deeper?

Today’s newsletter gave you the full framework.

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Inside Freedom Trades, I share my live watchlist every single week, post real-time alerts when I enter and exit trades, and break down every setup I am tracking with full context.

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Vladislav