Short lessons on momentum trading, every day.

“In our research, we found there was a very low correlation between the P/E ratio and the best-performing stocks.” -William O’Neil

Cheap stocks are not automatically winners.

Low P/E does not mean high returns.

And many of the biggest leaders looked “expensive” before their best moves.

What actually matters?

Strength.

Demand.

Institutional accumulation.

Leadership.

The market does not reward what looks cheap. It rewards what is being aggressively bought.

That is why the best stocks often trade at higher multiples. Not because they are overvalued. Because they are being accumulated before the crowd understands why.

If you are still screening only for low P/E, you are filtering out tomorrow’s leaders.

If you are a momentum trader or growth investor searching for high-performing stocks, P/E has little value in your scans.

“Three out of four stocks will move in the same direction as the market.” William O’Neil

You already know this is true.

Most stocks rise and fall with the indexes. Even great companies struggle when the market is weak.

But here is the edge.

The stocks that do not break when the market does are often becoming the next leaders.

They hold up during corrections. They break out while the market is still consolidating. And in bear markets, a few even make new highs while indexes make new lows.

That behavior is not random. It is relative strength and institutional accumulation.

I just published a breakdown with real chart examples showing how to spot leadership early.

Read it here 👇

https://tradingmomentum.substack.com/p/why-most-stocks-follow-the-market

Why Intelligence Does Not Make You Money in Trading

Victor Sperandeo once told a story in Market Wizards that every trader should read.

He described two people he trained.

One was a former phone clerk. Aggressive. Alert. But shaped by trauma from Vietnam. He was always afraid of losing. In trading, that fear made him cut losses quickly and protect capital first.

The other was a genius.

A 188 IQ.

Amazing performance on Jeopardy.

And in five years of trading, he never made a dime.

Sperandeo’s conclusion was simple:

You cannot train people to trade by just giving them knowledge. The key to success is emotional discipline.

Making money has nothing to do with intelligence.

Think about that.

Wall Street is full of brilliant minds. If intelligence were the edge, far more people would be consistently profitable.

But markets do not reward who is smartest. They reward who can manage fear, control ego, and execute under pressure.

You can be extremely intelligent and still fail. You can know very little and succeed if you act with discipline.

In trading, your biggest advantage is not what you know. It is how you behave when it matters.

Why Some Traders Lose on Purpose and Do Not Even Know It

Most people think losing in the market is about bad strategy. Wrong entries. Wrong timing. Wrong indicators.

But Dr. Van K. Tharp said something most traders are not ready to hear.

When asked whether some people actually want to lose on a subconscious level, he replied: “Half the traders I work with have problems of this nature. I think it’s very common.”

That is not a technical problem. That is a psychological one.

Ed Seykota said the same thing in different words: “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”

Read that again.

Some traders are not losing because they lack knowledge. They are losing because losing fulfills something inside them.

For some, it confirms a belief that they are not meant to succeed.

For others, it provides drama, excitement, or emotional intensity.

For some, it avoids the responsibility that comes with consistency.

The market becomes a mirror.

Not of your strategy. Of your identity.

Until that is confronted, no system will save you. No indicator will fix it. No better setup will change the outcome.

Because the real trade is not just on the screen. It is inside you.

If your results never improve, ask the harder question. What are you actually getting from the market?

Sometimes the path to success is not technical. It is psychological.

Why I Believe Focus Beats Diversification

Most investors are taught that diversification is safety. Own more. Spread risk. Hold everything.

But William O’Neil saw it differently:

“Diversification is a hedge for ignorance. I think you are much better off owning a few stocks and knowing a great deal about them. By being very selective, you increase your chances of picking superior performers. You can also watch those stocks much more carefully, which is important in controlling risk.”

That is the real point.

Owning more does not make you safer if you understand less. Spreading attention across dozens of names often means you are not truly managing any of them.

When you own fewer stocks, you can study them deeply. You understand their behavior. You recognize when something changes. You can react quickly instead of hoping.

Selectivity increases your odds. Attention improves risk control. Knowledge replaces blind diversification.

If you want better results, stop trying to own everything. Own less. Know more.

Why Giving Away a Trading System Rarely Changes Anything

Most people think success comes from “the secret.”

The setup. The indicator. The method no one else has.

But Linda Bradford Raschke said something that cuts straight through that illusion:

“I truly feel that I could give away all my secrets and it wouldn’t make any difference. Most people can’t control their emotions or follow a system. Also, most traders wouldn’t follow my system, even if I gave them step by step instructions, because my approach wouldn’t feel right to them… And even if the patterns I follow changed, new ones would be created, and I’m confident I would find them.”

Most traders do not fail because they lack information. They fail because they cannot follow a system when fear, boredom, or ego shows up.

And even when they are handed a proven method, it rarely “feels right,” so they abandon it the moment discomfort appears.

The professionals understand something most never do.

Secrets do not make traders successful. Systems only work for those who can actually follow them.

Finding a system with an edge is the easy part.

Following it is the hard part.

The Market Is Already Talking. Most Investors Are Not Listening.

It still amazes me how many investors do not use charts.

Charts show what the market actually thinks. Not opinions. Not narratives. Not predictions.

Every indicator is built from price and volume. So why not study price and volume directly?

Charts show supply and demand in real time. They reveal crowd psychology as it unfolds. They make strength, weakness, and risk visible.

Price is the only thing that ever makes you money. And price is right there on the chart.

I am not saying fundamentals do not matter. They can help shape your thesis. But leaving charts out of the process hurts performance for most investors.

Because you are choosing to ignore the one thing that reflects all information, emotion, and decision making in the market.

I will leave you with this from William O’Neil:

“Most investors think that charts are hocus-pocus. Only about 5 to 10 percent of investors understand charts. Even a lot of professionals are totally ignorant about charts. Just as a doctor would be foolish not to use X-rays and EKGs, investors would be foolish not to use charts.”

Why Relative Strength Comes Before Every Big Winner

The most misunderstood edge in my entire process

Do you want to find leaders early?

Do you want to stop chasing late moves?

Do you want to stack probability in your favor?

Then this matters.

Many traders see a stock with high relative strength and think, “Well, it already ran. I missed it.”

No! That belief is backwards.

Relative strength is not the result of a move. It is often the signal that a move is coming.

The best performing stocks show leadership before the crowd ever notices.

William O’Neil studied this extensively and found:

“The 500 best performing stocks during the 1953 to 1985 period had an average relative strength of 87 before their major price increase actually began.”

Read that again.

Before the big move. Not after.

That means relative strength is not a late indicator. It is a filter for future leaders.

High relative strength tells you where institutions are already positioning. It shows where demand is quietly building. It narrows your focus to stocks that are outperforming the market while most names are not.

This is why relative strength sits at the core of my process.

I am not looking for what already exploded. I am looking for what is quietly leading while the market is still undecided.

Relative strength does not guarantee a winner, but it dramatically improves the odds that when a real move begins, you are already watching the right names.

You do not need more indicators. You need better selection. Start with HIGH Relative Strength.

Is It Intuition or Just Wishful Thinking?

The difference between professional judgment and emotional trading

Do you want to trust your instincts?

Do you want fewer emotional mistakes?

Then this matters.

William O’Neill once said:

“Gut feel is important… If it persists, then it might be a valuable subconscious analysis of some subtle information. Otherwise, it might be a dangerous sublimation of an inner desire for excitement… Be sensitive to the difference between ‘intuition’ and ‘into wishing.’”

That quote explains why most traders struggle.

Some of the best professionals do not suppress emotion. They become aware of it. Over years of experience, those feelings evolve into real intuition. Pattern recognition. Subtle signals. Calm conviction.

But for beginners, gut feel is dangerous.

What feels like instinct is often just excitement, fear, or the need for action.

That is when people enter too early.

Move stops when they should not.

Sell too soon and miss the real move.

That is not intuition.

That is emotion dressed up as insight.

Real intuition takes years to develop.

It is not a reaction. It is recognition.

Wishful thinking is different.

It pressures you to act.

It bends logic to match what you want.

The goal is not to eliminate emotion.

It is learning to become aware of it.

And eventually, to recognize whether what you feel is a true signal to act on or just emotion that should be ignored.

In markets, the most dangerous voice is the one that sounds confident, logical, and urgent while quietly pulling you away from reality.

For anyone who wants to go deeper on this, Dennis Shull wrote a powerful book called Market Mind Games. She is known as the real “Wendy” from Billions and worked as a performance psychologist for top traders. Her work is all about understanding how emotion, awareness, and decision making can actually drive results.

Intuition is real.

So is self deception.

An edge is knowing which one is speaking.

Stop Predicting. Start Profiting.

The one mindset shift that separates amateurs from consistent winners

Do you want consistency?

Do you want less stress?

Do you want long-term, professional-level performance?

Then read this.

Most traders are obsessed with predictions. Targets. Price forecasts. “Where will it go next?”

That feels right. It feels intelligent. It feels like control.

But it is the exact habit that keeps people from real performance.

The best traders are not trying to predict.

In fact, they know they do not have a clue what will actually happen next.

You see it everywhere. Endless market calls. Exact price targets. Confident opinions about the future.

And beginners feel comforted by that certainty.

But it is all wrong.

The real edge is not in being right.

It is in how you respond.

As Stanley Druckenmiller said it simply:

“I never predict. I just react.”

That is why I do not put profit targets on my charts.

I trade patterns that have shown positive expectancy over time.

I know that, on average, my winners are larger than my losers with these setups.

But any single trade could be a 1.5R outcome. A loser.

Or it could be a 10R outlier.

There is no way to know which one it will be in advance.

So I remove the illusion of control.

I enter knowing two things only.

My entry.

My stop.

That is it.

From there, I react.

If price breaks out, stalls, and collapses back into my stop, I am out. No debate.

If price moves higher and begins forming higher lows and higher highs, I move my stop to break even and trail structure.

If price goes vertical into a blow-off top, I sell into strength.

No hoping.

No forecasting.

No emotional attachment to a target that exists only in my head.

Just information. Then action.

Here is the truth most traders never accept.

You do not get paid for being right about the future.

You get paid for managing risk and acting on what the market is giving you right now.

Paul Tudor Jones explained this perfectly in Market Wizards:

“Don’t be too concerned about where you got into a position. The only relevant question is whether you are bullish or bearish on the position that day. Always think of your entry point as last night’s close. I can always tell a rookie trader because he will ask me, ‘Are you short or long?’… Next he will ask, ‘Where are you long from?’ Who cares where I am long from? That has no relevance to whether the market environment is bullish or bearish right now, or to the risk/reward balance of a position at that moment.”

This is the difference.

You stop hoping trades hit your prediction.

You stop fighting price because it “should” do something.

You stop turning small losses into large ones just to defend an idea.

You trade what is happening, not what you want to happen.

If you want better results, you do not need a new indicator.

You need a new relationship with uncertainty.

React. Do not predict.

The Five Rules That Built One of the Greatest Traders in History

Ed Seykota, featured in Market Wizards, distilled decades of elite performance into five rules that still define professional trading today:

1. Cut losses.

2. Ride winners.

3. Keep bets small.

4. Follow the rules without question.

5. Know when to break the rules.

Most traders fail not because they lack indicators, data, or setups, but because they violate one or more of these principles under pressure. They hold losers. They take profits too early. They oversize. They abandon discipline when emotion takes over.

And that final rule matters, but it only applies after years of experience. Knowing when to break the rules is something earned through real screen time, mistakes, and mastery of the first four.

These rules are simple, but extremely difficult to execute with consistency. Sometimes the easiest way to improve performance is to put more effort into following them.

This Is What Institutional Accumulation Looks Like

Here is a great example of a true leader digesting a major advance. Volume dries up as price tightens, forming higher lows and higher highs. Selling pressure fades while the structure strengthens.

As volume begins to move back in, demand returns ahead of the next powerful move higher.

SNDK also shows increasing fund ownership, confirming institutional accumulation. With a 99 Relative Strength rating, this is exactly the type of behavior you want to see in big winners before the next leg.

You are right. Many times the volume only fully shows up at the breakout. That can mean either missing part of the move or feeling pressured to chase once it is already extended.

But there are a couple of ways to handle that without relying on FOMO.

One option is to anticipate the move during the quiet phase. When volume has dried up, price is tightening, and a higher low is forming, you can enter early with a stop just below that most recent low. If price breaks down, the setup is simply invalid and you can always re enter later. Your risk stays clearly defined.

The second approach is exactly what David Ryan describes. He does not wait for the massive breakout bar. He looks for volume to begin turning back up after it has already dried up, often on the first push off a higher low. That initial increase in demand is frequently the real signal. Entering there lets you participate before the obvious breakout, with much better risk to reward.

Nothing works one hundred percent of the time. But combining price structure, such as higher lows and tightening ranges, with volume behavior, drying up and then re expanding, consistently improves both your timing and your odds.

I will add some examples directly to the post above to show how this played out in real time.

The key is choosing the approach that best fits your risk tolerance and trading style.

The Investor Who Treated Markets as a Survival Game

Gerald M. Loeb was a legendary Wall Street operator shaped by the aftermath of the 1929 crash. Trading in the same broad era as Jesse Livermore, Loeb became respected not for bold predictions, but for something far rarer at the time: surviving brutal market cycles with capital intact when many did not.

He viewed markets as environments where discipline mattered more than intelligence and where staying alive financially was the first objective. That survival-first mindset quietly influenced generations of traders and sits at the foundation of modern momentum and trend-following approaches.

It is remarkable that lessons learned nearly a century ago still apply today. Markets evolve, technology changes, but human behavior and risk do not.

“The realization of the danger is the important thing. Fools rush in, and in Wall Street that is fatal.”

The biggest edge in markets is not prediction. It is recognizing when risk is rising and stepping back.

Most losses do not come from being wrong. They come from ignoring danger signals and staying exposed anyway.

Great traders survive first. Profits come second.

If you want to go deeper, read his book The Battle for Investment Survival.

The Market Advisor Many Market Wizards Paid Attention To

Most market commentary is noise.

The best traders in Market Wizards agreed on that. They also agreed on who to listen to.

Richard Dennis. Bruce Kovner. Michael Marcus. Paul Tudor Jones.

All pointed to Martin Zweig.

Zweig did not predict. He measured risk.

His framework was built on a few non negotiables:

• Do not fight the tape

• Do not fight the Fed

• Press risk only when conditions align

• Cut losses without hesitation

• Stay flexible as conditions change

He believed big money is made by riding major trends, not by catching tops or bottoms. You can buy above the low and sell below the high and still capture the real move.

Ego was the real enemy. Small losses were acceptable.

Most of all, he understood patience. When indicators were unclear, he stayed defensive. When they became one sided, he acted decisively.

Doing nothing was a position. Often the right one.

That discipline is why the greatest traders listened then. And why his work still matters now.

If you want to go deeper, read his book Winning on Wall Street.

Stanley Druckenmiller on Risk, Reward, and Conviction

Stanley Druckenmiller is one of the most successful traders and investors of all time. From 1981 to 2010, he ran Duquesne Capital Management with a remarkable record, never having a losing year and generating average annual returns of roughly 30%. That kind of consistency across multiple market cycles is almost unheard of.

In The New Market Wizards, Druckenmiller distilled two lessons he learned from George Soros that sit at the core of elite trading.

First, on what actually matters:

“I’ve learned many things from him, but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”

This reframes trading completely.

Accuracy is not the goal. Asymmetry is.

You can be wrong often and still succeed if losses are controlled. You can be right frequently and still fail if losses are large. What matters is how much you make when things go your way versus how much you give back when they don’t.

Then he explains what separates the great from the merely good when opportunity is exceptional:

“Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you’re right on something”

Marty Schwartz’s 10 Rules for Trading Longevity

Marty Schwartz is one of the greatest traders of all time. He turned $40,000 into more than $20 million trading futures, while never suffering more than a 3 percent drawdown. 

In Market Wizards, he shared the rules that guided his career. 

Trend first

“I always check my charts and the moving averages prior to taking a position. Is the price above or below the moving average? That works better than any tool I have. I try not to go against the moving averages; it is self-destructive.” 

Relative strength matters

“Has a stock held above its most recent low when the market has penetrated its most recent low? If so, that stock is much healthier than the market. Those are the types of divergences I always look for.” 

Be intentional

“Before putting on a position always ask, ‘Do I really want to have this position?’” 

Manage success

“After a successful period, take a day off as a reward. I’ve found it difficult to sustain excellent trading for more than two weeks at a time. I’ve had periods where I can be profitable for twelve days in a row, but eventually you just get battle fatigue. So after a strong run of profits, I try to play smaller rather than larger. My biggest losses have always followed my largest profits.” 

Avoid bottom fishing

“Bottom fishing is one of the most expensive forms of gambling. It’s OK to break this rule on occasion if you have sufficient justification.” 

Define risk before entry

“That brings me to my next rule: Before taking a position, always know the amount you are willing to lose. Know your ‘uncle point’ and honor it. I have a pain threshold, and if I reach that point, I must get out.” 

Outwork everyone

“Work, work, and more work.” 

Money management above all

“The most important thing is money management, money management, money management.” 

Let winners run

“Let my gains run.” 

Trust strong positions

“If you’re ever very nervous about a position overnight, and especially over a weekend, and you’re able to get out at a much better price than you thought possible when the market trades, you’re usually better off staying with the position.” 

There’s a clear pattern here. 

Trend alignment. Risk control. Self-awareness. Relentless discipline. 

Schwartz didn’t win by predicting the future. He won by staying alive long enough to let edge compound. 

That lesson never goes out of style.

Ed Seykota’s Rules for Survival and Success

When Ed Seykota was asked a simple question in Market Wizards:

What are the trading rules you live by?

His answer was as concise as it was profound:

“a. Cut losses.

b. Ride winners.

c. Keep bets small.

d. Follow the rules without question.

e. Know when to break the rules.”

There is no fluff here. No complexity. No debate.

Every rule exists to keep you alive long enough to succeed.

Cutting losses protects capital. Riding winners allows edge to compound. Keeping bets small prevents emotion from taking over. Following rules removes hesitation and second guessing.

And then there is the final rule.

Knowing when to break the rules does not mean abandoning discipline. It means understanding context. Experience teaches when conditions are exceptional and when flexibility is earned, not forced.

Most traders fail because they violate the first four. Very few ever reach the point where the fifth even applies.

Seykota’s list is not just a trading system. It is a survival framework.

Simple to read. Difficult to follow. And timeless for a reason.

Bruce Kovner on the Hidden Risk Most Traders Miss

Bruce Kovner shared one of the most important risk lessons in Market Wizards, and it has nothing to do with entries or exits:

“I study the correlation of my trades to reduce my exposure. We do a daily computer analysis to see how correlated our positions are. Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.”

This is a mistake that quietly destroys traders.

On the surface, it feels like diversification. Multiple positions. Different tickers. Separate charts.

In reality, many traders are just making the same bet over and over.

Now, to be clear, if you are an O’Neil disciple, you already understand that concentration is not the enemy. Strong trends deserve capital, and pressing your best ideas is part of winning big.

This is not an argument against concentration.

It is a reminder that correlation still matters.

If your positions all move together, your true exposure is far larger than it appears. Concentration without awareness can quietly turn into unintended leverage.

And if your goal is diversification, correlation is the lens you must use to measure it. Different tickers do not automatically mean different risk.

Kovner’s insight reframes risk at the portfolio level.

Risk is not how many positions you hold.

It is how those positions behave together.

Gary Bielfeldt on the Traits That Actually Matter

Gary Bielfeldt shared one of the clearest summaries of what actually matters in trading, from Market Wizards:

“The most important is discipline; I am sure everyone tells you that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win.”

This is not theory. It is lived experience.

Capitalization shapes behavior. When traders are undercapitalized, fear dominates decisions. Winners are cut short. Losses feel unbearable. Discipline becomes impossible.

With adequate capital, patience becomes realistic. Courage is no longer forced. Losses are survivable, not threatening.

Bielfeldt also makes an important distinction. Wanting to win is not ego. It is commitment. It is the willingness to prepare, follow rules, and stay engaged through difficult periods.

Discipline keeps you aligned.

Patience keeps you in trends.

Capital keeps emotions under control.

That combination is what allows consistency to exist at all.