The Momentum Method: How I Actually Trade

I've spent close to 10 years trading small-cap momentum, and over the last 5 years I've taught more than 10,000 traders. This is the real system I use every morning. Not theory, not a highlight reel of my best days. It's simple on purpose, because simple is what survives.

One honest note before we start. Trading is risky and most people who try it lose money. Nothing here is a promise that you'll make any. It's the process I follow to stay consistent, and the first thing I tell every trader is to prove it on a simulator before you risk a dollar.

The one-line version

I trade one thing, small-cap momentum, for two hours, from 9 to 11am. I keep the chart simple: price, VWAP, and a couple of moving averages. I take tight-risk entries where the buyers prove themselves, I scale out into strength, and I follow the same rules every single day. Everything below is just the detail under those sentences.

I trade one thing: small-cap momentum

The fastest way to stay mediocre is to trade everything. Stocks, options, futures, forex, crypto, every market cap. If you try to do it all, someone who specializes in one thing will take your money.

So I specialize. I trade small-cap momentum, and that's it. Every night I post a free watchlist. Out of maybe five names on it, usually only one actually meets my criteria at the open. That's the one I trade. I don't spread my size across four weak setups hoping one works. I put my focus on the single most obvious runner, the one with the heavy volume and the clean chart, and I leave the rest alone.

I only trade the first two hours

I trade from 9 to 11am, and then I stop.

Around 80% of the market's volume happens in the first hour, from 9:30 to 10:30. That's the most active and most predictable part of the day, so that's where I want to be. I take about 95% of my trades in that opening window, and I step away from the desk by 11am no matter what my profit or loss is for the day.

Here's the pattern I see kill people. On a green morning they lock up and quit at 11, which is right. On a red morning they won't accept it, so they keep trading into the afternoon and expose themselves to more risk on exactly the days the market isn't cooperating. That's backwards. The schedule protects you from yourself, so keep it on your worst days, not just your best ones.

I keep my chart simple: price, VWAP, and moving averages

Most new traders bury their chart under indicators, RSI and MACD and Bollinger Bands stacked on top of each other. That's not analysis, it's paralysis. I trade price action and two tools.

The first is VWAP. It tells me who's in control: buyers are above it, sellers are below it. It also tells me my risk, because the further price is from VWAP, the more room it has to fall back to it. So I buy close to VWAP for tight risk, and I don't chase a move that's already extended far above it.

The second is moving averages, the 9 and 20 EMAs for the short-term trend, and the 90 EMA as my key support line. I only trade the front side of a move, when price is above the averages and the 9 is stacked above the 20. The moment the 9 EMA crosses back below the 20, the easy part is over and I step away.

My setups: where I actually enter

I trade a handful of the same setups over and over. They're all variations of one idea: get in where the buyers are defending a level, with my risk pinned tight underneath it.

The 90 EMA pullback. The runner surges, pulls back to the 90 EMA, and holds. I enter right off the average with a stop just below it, often only a couple of cents of risk for a move that can run multiple dimes or dollars.

The VWAP flush and reclaim. Price flushes down to VWAP, then gets aggressively bought back above it. That tells me the shorts are trapped and the buyers stepped in, so I take the reclaim with my risk under the low.

The pre-market high breakout. Price breaks the pre-market high, pulls back, and confirms support off the 90 EMA before continuing. I want the pullback and the hold, not the first stab through the level.

Volume confirmation. This is the one that separates a real breakout from a fake one. I don't buy the first candle of the open. I wait. The second candle needs to break the pre-market high on higher volume with a strong close, and the third needs to show aggressive buying stepping in above a key level. When the volume confirms, I take it. When it doesn't, I pass.

The rule that matters most: let the buyers prove themselves

If you take one thing from how I trade, take this. I buy weakness and sell strength. I don't buy strength directly into overhead resistance, because that's how you become the liquidity that the sellers up there are unloading into.

In practice that means waiting for confirmation instead of chasing. The traders who lose the most are the ones who jump into the very first green candle out of the open. I let price prove that buyers are defending a level first, a green candle flipping off support, a reclaim of the 90 EMA, volume stepping in. If the follow-through is weak and the candle tops out with a long upper wick, I take my small win or cut it immediately. Chasing weak breakouts is the fastest way to hand your money to someone else.

Market open beats pre-market

I used to put a lot of focus on pre-market, but pre-market makes you guess. There's no established structure yet, so you're anticipating how news will react. The market open hands you structure: real pre-market highs and lows and VWAP liquidity zones you can trade against. When I got back to basics, that meant shifting my focus off speculative pre-market trades and back to the open, where the setups are higher conviction.

How I manage risk

Risk management is the whole job. Everything else is just finding the entry.

My stops are tight, usually a few cents, pinned under a confirmed level like the 90 EMA or VWAP. That's what gives me asymmetric trades: a couple of cents of risk for a move that can run far further. My position size stays basically constant, because oversizing on a trade you feel strongly about is exactly how the outlier blowups happen.

Two rules I never break. I never cut a trade early out of fear before it hits my planned stop. I've watched a stock I bailed on run 40% the second I sold, because I got scared of giving back profit instead of trusting my stop. And I always trim into strength before a circuit-breaker halt, because in a choppy market a halt can resume straight down, and you can't manage risk while it's frozen.

You'll be wrong about a third of the time. There is no 100% win rate, and chasing one is a fantasy. So on the roughly 30% of trades that lose, keep them small, respect the stop, and move to the next one with a clean slate.

How I take profits: base hits first

Trading isn't a string of home runs. It's mostly break-evens and small wins and small losses, until a clean, high-conviction setup gives you a real winner. Base hit, base hit, base hit, home run.

So I scale out. As a trade confirms my thesis, I trim partial size to lock in profit and make the rest of the position risk-free. That early cushion isn't just about the money, it takes the psychological pressure off the rest of my morning, so I'm not trading scared or trying to force the next trade to fix the last one.

Reading the market: hot versus choppy

The same setup doesn't work in every market. In a hot market, momentum breakouts run and follow through. In a warm or choppy market, those same breakouts stall and trap you, and buying them turns you into liquidity for the sellers.

So I read the environment and adjust. When the chasers are gone and moves are popping and dropping instead of running, I trim faster into the initial pop instead of holding for a multi-dollar squeeze. And when something stops working, my fix isn't to do more of it, it's to do less of it. I review my own recorded trades like a football team watching game tape, I look at the data on what's working and what's not, and I do more of the first and less of the second.

The five mistakes that end most traders

After coaching thousands of traders, I see the same five psychological mistakes end careers.

Overconfidence. A few good trades and you feel like you can't lose, so you start ignoring your stops. The market gives that ego and takes it back just as fast. The next trade doesn't know or care what the last one did.

FOMO. You see a stock taking off and you have to be in it. The one time chasing works will never make up for the nine times it blows up. There's always another opportunity. Trade your plan.

Revenge trading. You take a loss, you get angry, you try to win it straight back. Losses are part of the game. Keep them small, accept them, and move on.

Confirmation bias. You decide before the open that you're trading a name no matter what, then force it even when it never meets your criteria. Let the setup earn the trade.

Lack of discipline. No routine, no rules, inconsistent size, no schedule. This is the big one, and it's the sum of the other four.

And don't try to be an emotionless robot. You're human. You'll feel the FOMO and the tilt and the buzz after a big win. Suppressing it just makes it worse. When you feel it, step away from the screen, and only trade when your head is completely flat and calm.

How I scale: earn it first

If a vending machine eats your money, you don't shove twenty dollars in next. You test it with one. Trading is the same.

Start small, 5 to 100 shares, risking only a few dollars a trade. Prove you can do it. If you can consistently make 10 dollars a day, you can grow that to 100 and then 1,000 by increasing your share size, but do it gradually and don't expect it to be linear. Size brings its own friction, because fills and slippage get worse the bigger you trade a small-cap, so the process has to keep proving itself at every step. And I only scale up when my numbers earn it. The benchmarks I want to see first are a win rate around 65 to 70% and a profit factor of 1.3 to 1.5 or better. Until the track record is there, the size stays small.

A morning that shows the whole method

Here's one runner that put it all together. TRNR was the cleanest chart on my list, a cup-and-curl out of the pre-market highs on heavy volume.

I took the first pullback off the 90 EMA at 59 cents, risking two cents to 57, and scaled out near resistance. Then price flushed to VWAP and got bought back over the 90 EMA, shorts trapped, so I took the reclaim at 60 cents risking two cents. Then it broke the pre-market high, pulled back, held the 90 EMA, and I took the breakout at 64 and a half cents risking a cent and a half, and it ran to 71.

One runner, the obvious one. Tiny risk pinned under confirmed levels. Entries only after the buyers proved themselves. Profit scaled out into strength. That's the entire method in a single name.

Frequently asked questions

What is momentum day trading?

Momentum day trading means buying stocks that are already moving hard on high volume, aiming to ride part of the move and close the same day. You're trading strength that's confirmed by buyers and volume, with tight risk, not trying to predict a bottom.

What time of day should you day trade?

For momentum, the first hour to two hours after the open. Around 80% of the market's volume happens in the first hour, so that's where the cleanest setups are. I trade 9 to 11am and step away, and I'd tell any newer trader to do the same rather than grind all day.

What indicators do you use?

Very few on purpose. Price action, VWAP to see who's in control and how much risk a trade carries, and moving averages, the 9 and 20 EMAs for trend and the 90 EMA as support. Piling on more indicators adds noise, not edge.

How much can you make day trading?

The honest answer is that most people lose money, and no daily number is a target you should count on. What you can control is your process and your risk. Start small, get consistent, and let your size grow with a proven track record. Anyone promising you a guaranteed daily income is selling hype.

When should you increase your position size?

Only when your results earn it. I look for a win rate around 65 to 70% and a profit factor of 1.3 to 1.5 or better before scaling up, and even then I do it gradually by increasing shares, not by jumping to a huge account overnight.

The bottom line

There's nothing exotic in how I trade. One market, two hours, a simple chart, tight risk, confirmed entries, and the same rules every day. It's boring on purpose, because boring is repeatable, and repeatable is what compounds. Learn the process, prove it small, protect your capital, and go do it again tomorrow.

This content is for educational purposes only and is not financial advice. Trading involves significant risk and may not be suitable for all traders.