Speaker A
So right now, I'm waiting for that first touch of the 9 EMA because you see at this point right now, we're touching it. The bidders are stepping up.
Learn how to trade the 9 EMA continuation strategy for day trading with insights from SMB Capital traders Jeff Holden and Enrique.
Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.
Generated from the transcript and can be wrong — check the timestamp.
Key Takeaways
- Use the 9 EMA as a dynamic support/resistance level to time entries rather than chasing price.
- Focus on tape reading and buyer behavior to confirm trade setups.
- Manage risk with tight stops below recent lows and scale positions to avoid chaos.
- Different timeframes (2-minute, 5-minute) can be used to filter noise and improve trade quality.
- Patience and waiting for confirmation of buying programs increase the win rate of the strategy.
What the video covers
- Jeff Holden explains the 9 EMA continuation trade, emphasizing patience and waiting for price action confirmation before entering.
- The strategy focuses on using the 9 EMA as a guide to identify aggressive entry points without chasing the stock.
- Price action and tape reading, especially the behavior of bidders, are critical to confirming trade setups.
- Risk management involves placing stops below recent lows and sizing positions intelligently to build consistency.
- Enrique from SMB Capital shares his variation of the trade, using a 2-minute or 5-minute timeframe to reduce noise.
- Both traders highlight the importance of waiting for a pullback and confirmation of buying programs before entering.
- The video covers how to identify market edge by understanding who is creating it and how to read the tape.
- Jeff discusses the concept of the 9 EMA acting as an anchor tuned to the rhythm of key market participants.
- The trade can lead to multiple scalp opportunities if managed properly, often referred to as a 'hitchhiker' trade.
- The tutorial includes practical advice on when to exit trades and how to interpret volume and momentum signals.
Chapters
- 00:00Introduction and Waiting for 9 EMA Touch
- 02:30Avoiding Defensive Posture and Using 9 EMA as Aggression Guide
- 04:45Risk Management and Hitchhiker Scalping Concept
- 06:44Confirmation of Buy Program and Tape Reading Insights
- 08:34Trade Execution and Momentum Confirmation
- 10:43Discussion on Shorting and Market Context
- 12:49Understanding Moving Averages and Market Players
- 17:41Using 9 EMA as Market Rhythm Anchor
- 24:41Trade Scaling, Exits, and Volume Analysis
- 32:59Summary and Final Thoughts on Trading Strategy
Full Transcript — Download SRT & Markdown
Speaker A
Go from 60 to 70 and maybe skip from like 70 to 80, and then that's where I'll attack.
Speaker A
[music] [music] Hey everyone, Jeff Holden here from SMB Capital. So, you've been asking for this one for a while, and I finally sat down
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to make it happen. This is a strategy we've been trading for years, and it's one of those opportunities that's just a lot of fun to trade. It's clean, it's simple, and it's powerful when you understand what's really happening
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behind this. Now, in this video, I'm going to walk you through exactly how I trade it, and then we're going to bring in a trader from our desk to show how he trades it because he takes it a little
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bit differently than I do. Both of these opportunities work. He actually has a bit higher win rate on this trade than I do. So, it's important to hear how he trades it, and he uses a different time frame to look for this trade. So, we'll
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get into that as well, and what he's looking for. But everyone really wants to know how to identify edge. And this video lays it out cleanly, but we have to start with the process of building edge with some background about who is
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creating this trading edge for us in the market. And then we get into how to select your entries, how to manage risk, how to size your position intelligently so you can build consistency, not chaos, into your trading. The trade we're
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talking about today is the 9 EMA continuation trade, and there's a little bit of nuance to it. So, the NEMA, NEMA, 9 EMA is the trade we're going to talk about. That's the blue line on your chart. When you hear it from me, you're
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going to hear about why I took the trade, but we're going to use E from our desk, who's going to talk about why he takes it a little bit differently. And that's perfectly fine. I'm always watching when a stock makes a good move
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like this, especially out of a range with increased volume like what you just saw. I don't want to chase it. I'm not going to chase it. Chasing it puts me in a really bad spot. It puts me in a
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defensive posture. I don't want to be in a defensive posture in case it starts to pull back. I want to wait for an opportunity to be aggressive. So, I use the 9 EMA as that guide of when I can be
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aggressive. Does it mean that I'm going to buy it right into the 9 EMA? No. That is the way a lot of people take this trade, and that's okay. But I tend to pay attention to the price action as it
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comes into the 9 EMA, and I look at the interplay between the 9 EMA and the price action. What I'm really focused on is the left side of that ladder, the tape over there, where I'm seeing how the buyers are responding. I actually
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don't care as much about the offers at all. I tend to care a lot about what's happening to the buying and the buy programs as price comes in to test the 9 EMA. Right now, isn't it tempting to
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just buy this thing and look for it to go to higher prices? I think that used to be me. I used to buy some, and then it would drop out, and I'd be like, "What the hell did I just miss here? Where did
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all the momentum go?" But the reality is once I've learned to kind of bring it back and allow the price action to come back down and not just buy it blindly on the first touch of the 9 EMA, but
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clearly pay attention to the price action. Notice how we just dip below, noticing, focusing entirely on the bid.
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Do you see the bidders stepping up with a lot of clean price action? No. They're trying to lift, and the sellers are stepping right in. You can see it on the chart. You can see it even clearer on
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the bid. Does this mean that I am done looking for this trade? No. I'm actually focusing in on the bid even more. And if I see a reclaim of that 9 EMA and then the bidders stepping through, guess what?
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That's where I'm going to take that trade. That's what's going to signal to me I have an opportunity right now. This is where it's green light, go. You see the buyers stepping in, and the buyers are being pushed, and then they're
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stepping right back up. Now it's time for me to enter this trade. This is where I'm in on that reclaim of the 9 EMA because I'm seeing the buyers come back in. My stop goes right below the lows, and sometimes you get stopped out.
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And if you do, that's fine. But I have a very small risk to put myself in a position to capture what could be a great hitchhiker scalp. So often this 9 EMA turns into a hitchhiker that if you
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just allow it to play out, you can get two trades out of one focal point. And now we're looking for the break of the upside. You're getting that break. All this is telling us is that the buyers were there and willing to
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step in. That's what we're looking for. Now, we want to see, does it hold the highs? If it holds the highs, can we look for that continuation? Our stop is below the lows from that pullback low.
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And we haven't had a real good reason to sell anything yet. Again, we'll talk about the reasons to sell in a little bit. But this is what I'm looking for.
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We just had our entry. We're going to ride this price action higher. But don't just take it from me. Let's hear from Enrique from E, who took a very similar version of this trade just on a little different time frame. So talking about
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Jeff, where he waits for price to break below the 9 EMA. What I like to wait for, like he's saying, right, like he said earlier, the stock is on the up move. I'm not buying here. I'm just
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waiting for a pullback and an area for me to define my risk on. So what I use the 9 EMA is a confirmation that the buy program is there. But I, I, I want to see it touch, bounce, and then that's where
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I'm buying. And you're using a two-minute? I'm using a two-minute. So I take this trade using the two-minute and the five-minute depending on how— Why not the one minute?
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The one minute for me is just a little bit too much noise. Yeah. In my eyes.
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This is one of the things that I love about this entire experience is so many people say it's too much noise. And I understand that and I respect it. It's a busy chart. But for me, the noise is the
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information. When it dips below the 9 EMA and then the rebid, that's information. I don't need it to line up perfectly with the EMAs. I will actually use the interplay around there as a source of opportunity.
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Yes. Because for me, I like to wait for the confirmation that the buy program is there. Yep.
Speaker A
Because at times, like in the one minute, it breaks below it and then it just never comes back. Correct.
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So then for me, I just like to skip that step and then just focus on it. Are we bouncing? If so, then that's the right moment for me to hit it. For this moment, I'm just looking at the tape, and
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I'm building this level. Like, if it breaks below like 3150, I know the whole idea is strong.
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So, right now, I'm waiting for that first touch of the 9 EMA. I'm waiting for it to tap it, kiss it, however you want to see it visually, just touches it, and then the volume should just pick up right after that.
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And it's a quick two to three-minute decision that you have to make there.
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Because you see at this point right now, we're touching it. The bidders are stepping up. So, I'm using like that 20-cent risk. If it breaks below 50, I'm out. But at this point, I'm just waiting for confirmation. It's touching it.
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Have you gotten in your position already? Not yet. Interesting. So, this is my decision comes in this candle.
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Okay. If right now I see the bidders stepping in, go from 60 to 70 and maybe skip from like 70 to 80, and then that's where I'll attack. Like I'll just hit the bid, hit the offer. Like I want to be in because
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I know that my stop right now is break below 3150, especially since you have those three large green bars at the beginning of the open. And now this is where I'm getting interested, like right here I'm hitting it like—
Speaker A
So you're buying after you see the momentum, after I see the momentum shift inter—
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It's technically like a lot of demand at that point in time that it should just bring it up instantly within the next 2 minutes. So this is a trade that as soon as you get that first touch of the nine,
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it should just keep going and not even look back. So, you're waiting for that first touch of the nine and then the confirmation of the buyer stepping higher after it's bounced off of the nine where I'm playing against that
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interplay of what's happening around the nine. So, my riskreward might be much better than yours, but the probability of my trade working out is a lot lower than yours sometimes.
Speaker A
Probably. Yeah, probably. Yeah, because for me, like you see, it never broke below it. It just touched it, tapped, and the next candle, the green bar. So then this is the also an area of decision like what am I going to do
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here? If it breaks below the 90 EMA for me the trade is done. I'm I'm not even going close below the 9 EMA or a break. It doesn't break any break any break any break below. Okay.
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So right now at this point it's the way that it broke from 9:40 and now you have the first touch of the 90 EMA around like 9:45 950 a.m. give or take. So then that for me that signals there's a buy
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program that got turned on and we should just keep going minutes into that buy program for maybe 30 more minutes.
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Okay. Because when I first started taking this trade I'm like oh it's working right away it's giving me it it gave me 30 50 70 cents in my favor. Let's take some off. Right. And then an hour later I
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look back I'm like it gave me three point move. So that's something that um building a system around it or like where am I entering like on the first touch where's my exit at this point like I'm improving on a day-to-day to the
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point that this is like one of the best trades that I take to the long and the short and I'm building a system that if I'm taking this trade in the two-minut the trailing system for it should be on
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the five. Interesting. So you'll flip the time frame of your trailing stop. Yes. Okay. So this way, especially since I remember this one, this one had a catalyst. It was breaking out of a range. So there should be more buyers
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involved, more shorts getting stuck. We heard people trying to short RGTI, RGTI short. And this is one of those moments where like, yeah, the short might be in play, but not right now at this point in time because you see the buy program is
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just it's working. It's consistent. That's that's what you want to see. You want to see moments where there's a moment of indecision almost or a little bit of a moment of pause and then that buy program kicks on. And by programs inherently are
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interesting because they the buy program starts but unless somebody's really in a tough spot, they're going to adjust to their ability to get filled. So if they have a really easy ability to get filled, guess what? They're not going to
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be so aggressive. But if they have to chase a little bit, then they'll start to chase after that. A buy program will respond most of the time to the way the stock is responding to additional buying. So as price goes up, it has to
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get more aggressive. If price comes right back down, it doesn't have to be as aggressive. Early in the buy programs, a lot of times you'll have a little bit more back and forth, but those buyers will be sustained. And then
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as that move accelerates, the buying will get more and more aggressive because it kind of has to. If it stays methodical, that's the best case scenario for all of us because that buy program's just there and it'll probably
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end with a pretty epic blowoff. Yes. And like like you said, when it's ending with an epic blowoff, like that could be a reason for you to exit or like, oh, you know what? This trade is coming to an end after 30 to 45 minutes.
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So, that's something that I've noticed with this trade, it works for about 35 to an hour.
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Okay? So, don't sell anything. If you're buying from 9:45, just hold it for you've got your stop. Leave it there. a good entry signal, which is something that you really need to focus on a very good entry signal. Make sure that you
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have a a rule to follow, but it sounds like you're using the 9 EMA. Are you using it on a 5m minute or a 2minut to exit? So to exit, it will be a 5minut.
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Okay. So a cross of the 9 EMA on a fiveminut chart. Yes. Or I I'll just wait for a 5m minute bar to that closes below the 9 EMA.
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Okay. Yeah. For me to exit because at times like this whole, let's say this whole move went from, oh, where is it at now? Third. Oh, wow.
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That's that looks clean. You see? Yeah. Yeah. And then it seeing the bar like that makes you take want to take some off because it's just like, oh, I'm already up a dollar on the trade, give or take, right? You're afraid to
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come back because often times that does happen. But it that's also when you uh when you have the catalyst when you have the setup that just makes the trade work even better because if this trade was on like day one earnings on a 52- week gap
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up like GM another example that I took this the last month it just worked perfectly. Rivian is another one that well I missed that one but it's similar similar idea where it just keeps going.
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It just keeps going and going and going and the buy program doesn't know that the stock's up that much. It just knows how much it has to buy. It doesn't care because it's usually higher time frame participants, big players that need to
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buy a ton of stock and they're trying to buy it for a longer term hold. So, do they care if the stock's up 1% or 3% or 5%? Nope. They have an order. They have to get it filled. And this is a great
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trade to allow that to play out. Yes. Because one of those good examples will be GM on day one earnings and like you said, we'll take a look at that in just a second. Yeah. got turned on when uh it
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broke pre there's like several rules in order to get that 90 MA continuation to work.
Speaker A
What are some of those rules? So, it needs to be breaking above the pre-market highs uh above yesterday's highs or ideally a over a 5day range or in a better case scenario would be a 52- week breakout like GM 52- week breakout
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on a double or triple beat. I don't remember the earnings score at that at this point in time, but it had that price action where it gapped up. I don't remember it was like it was more than 3%
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that's when my scan my script picked it up but then it had that like gap give and go type of price action or down through open and it broke through pre-market highs on volume came into the nine and then it just it never looked
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back and then if you look at the stock right now it's up like 10 points from that from from day one. So let's take a minute and let's understand a little bit more about moving averages and why we
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settled on the 9 EMA as a really important guide and then we'll jump into another example. So when executed well this approach gives us a fast reward and quick wins and the best part your stop is tight your reward is real. We're
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always talking one to two, one to three, sometimes even one to six or eight riskreward entries that show up every single week. It's not about guessing direction. It's about recognizing opportunity in real time and reacting with that discipline.
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So much of our trading is just pattern recognition. But to be able to recognize the pattern, you have to understand the pattern. And that's what we do here. We don't guess. We understand. All right, here's the honest truth. If you don't
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understand what's on your screen, it is not helping you. At SMB, we've got one rule about indicators. Don't put anything on your chart you don't fully understand. It's not about minimalism.
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It's about clarity. Because an edge isn't something you hope for. It's something you understand. You've got to know what the signal means. You got to know who's creating it and why it's showing up when it does. So, let's dig
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into the foundations of one of the most misunderstood tools in trading, the moving average. And just because this is how we understand anything, let's take it to the extreme.
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Most traders have heard of the 200 day moving average, right? It's on every like big CNBC chart. It's the line long-term investors swear by. Above the 200, we're in a bull market. below it, we're in a bare market. All right, fine.
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But what does that line actually mean? Let's start with the 200 day simple moving average or the 200 SMA. The 200 SMA is just the average closing price of the last 200 trading days. It's roughly 10 months of market action, right? Each
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day counts equally in a simple moving average. Day one and day 200 have the exact same influence off over that average. That's 20 weeks ago. and yesterday. Those two dates are treated and weighted as if they matter equally.
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Let's put that in perspective. That's like a coach evaluating this week's starting quarterback by averaging every throw he's made since last season's opener, every practice, every scrimmage, every game, all weighted exactly the same. That's a lagging signal, right?
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Completely by design. That's a lagging signal. It does smooth out all the short-term noise and it gives you the big picture of what's going on. And that's great for like pension funds, mutual funds, and some big money players
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who need it to anchor portfolios. They're not trying to catch a five-minute move. They're trying to manage multi-billion dollar exposure, usually across different assets, so they can use it as a guide. But here's the catch. That equal waiting means it's
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slow. It is painfully slow. It doesn't care about recent order flow. It's basically the market's rear view mirror.
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By the time the 200 SMA starts turning up, the new trend's already been in motion for weeks, sometimes even months.
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That's why when you see a huge reversal off the lows, but the 200 SMA still points down, it's not wrong, it's just late. When we take it to an extreme again, but now talk about the 200 day exponential moving average, it's the
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same lookback window with completely different DNA. So the exponential moving average, the EMA, uses exponential waiting. It gives more importance to recent prices and fades older data exponentially. The waiting factor, the alpha for a 200 period EMA is this
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equation. It's roughly 1%, right? That means the most recent day gets about 1% of the total weight while each of the previous day contributes slightly less than the one before it. This is decaying in a geometric curve that approaches
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zero. Now this is where it gets fascinating. That curve gives the EMA a halflife.
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The point where a past price still contributes half as much as the newest data for the 200 EMA. That halflife is about 69 days. So think about that. The 200 EMA is really responding most to the past two to three months of price
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action, not the entire 200 day window equally. It's technically a 200 day average, but it feels like a 70day memory. That's why the 200 EMA starts to turn faster when the market shifts. It catches that change in momentum sooner.
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the SMA, it's still daydreaming about what happened four months ago. The difference in responsiveness is everything. So, if the 200 SMA is like steering an aircraft carrier, slow, deliberate, it takes miles to turn, then the 200 EMA is like steering a
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destroyer. It's still big, it's still stable, but it reacts when you move the wheel. Imagine applying that logic to short-term trading. Remember, we took it to an extreme. Now we're bringing it back. So when you move from a 200
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average to a nine average, you're not just speeding up the math. You're aligning your tools with the actual decision cycles of the traders creating your edge.
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Institutional execution algos operate in a window of minutes to hours. They don't execute over months. They adapt participation based on shortterm momentum. just like how the 9 EMA responds within three bars instead of hundreds.
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So when you're trying to scalp or you're trying to capture a continuation move, you need a signal that reflects right now, not a moving average still weighted towards last quarter's CPI print. The 200 SMA will tell you the overall
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climate. The 200 EMA tells you how that climate is changing. But the 9 EMA, that's the weather radar right above your head. It's the read on the wind direction this very second. So when I look at the 9 EMA that's on my charts,
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I'm not just seeing a line. I'm seeing a live pulse of recent order flow. I'm looking at the flow of execution traders and execution algorithms that are forced to act now. They are forced to respond to the way price is behaving right now.
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They may have to buy something because they work for clients who will hit them up on a Bloomberg message and say, "Get me 100,000 shares of XYZ stock. Hit me back when it's done." For the execution trader or the execution algo that's
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being implemented to work, it has to read the order flow and respond accordingly. Can they call the clan back or message them back and say, "Hey guys, we tried to buy it for you, but we weren't able to." the stock ran away
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from us. So, we hope it pulls back tomorrow and we can buy it for you.
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Would that be okay? No, not if they want to keep their jobs. So, they need to adjust to what's happening right now and they need to do it fast. So, the EMAs, those exponential moving averages and we found the 9 EMA to kind of be a sweet
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spot. This becomes a fast responsive measurement of how the traders driving this move are behaving right now, not how they behaved previously. Playing off the information now is where true edge comes from. Because once you understand who's creating that edge, who's
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pressing, who's defending or who's fading, you can anticipate how they'll act next. That's why the 9 EMA has become my anchor. It's tuned to the rhythm of the traders that matter. The traders playing the game for me right
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now. They are the ones setting the tone. They are the ones creating acceleration. They are the ones making this market move. So, Enrique is going to show us his trade in just a second, but I really want to take a moment and highlight how
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important this trade is to me and a moment that a lot of people miss. I see this all the way back at the beginning of the day. So instead of looking at where the chart is now, let's take a
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look and jump back to 934. This is a really important moment. You see how we reclaimed the 90 EMA on the 1 minute. This is a spot where we had that distinct low put in and a distinct change. And again, I'm looking at the
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left side of the tape and I'm really focused on the buyers. And if I can see these buyers hold higher, that's my opportunity. You see how those buyers kick on right there? That's my entry.
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This to me is a 9 EMA reclaim from the open. I don't care that it happened later. This is a big gap up already. So, I'm taking advantage of the opportunity.
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I'm using the same context of what we were talking about before and just thinking about players playing on a higher time frame and they started buying early and we could pick it up.
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Now, Enrique, let's hear your trade because I know your trade comes later. I'm not saying one's better or worse, but I always want to start where the trade started for me. And when you see that reclaim of that 9 EMA, it turned
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into something special for me. So, we'll jump back ahead to like that 945 area and let's hear Enrique's trade.
Speaker A
So, for me, the pattern recognition will be the first touch of the 9 EMA.
Speaker A
Yeah. So, but you need to see it you want to see it extend from the 9 EMA.
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Yes. But there are times like especially in this trade, I got involved in the down through open just smaller size because uh you know the the the ideal stop for it will be the low of day. Yeah. But since I knew
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this one, day one earnings, I could just cheat it a little bit. Just start small.
Speaker A
But my ideal trade, I was just waiting for that continuation higher. The 90 MA the 90 MA. And then with this one, uh, since this was was a 52- week breakout, I was watching it using the two-minut and the 5m minute to see which one would
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give me an entry point. You don't care which one gives you an entry point. You have you have a two-minute and a fivem minute up next to each other. Okay. Interesting.
Speaker A
Yes. So, yeah. on my screen. It's I have the two, I have the five, and I have the 15 and the 30 just to see the like all my levels bigger picture pre-market because at times like I'm too zoomed in
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in one idea that it was just I tend to miss what's going on the left.
Speaker A
But help me understand because it feels like this is going to run away. It feels like it's never going to give you your entry.
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There's going to be some times where it just runs without me. It just never touches the nine.
Speaker A
How many how often does that happen? One out of 10. One out of No, I will probably say two times out of 10 that that they just keep on going. A good the amount of energy that we spend
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worrying about that happening, two out of 10 is is surprisingly small number. Yes. Uh especially since for example on like Tesla, I think on September 11 or 12, one of those days, it had that type of breakout that it just broke and then
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never pulled back into the nine. like the buy program was just so strong that it probably would have worked for you in the one minute but for me I was looking at in the two and it just never gave me a price or
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so then right here if you go back into the chart at this point in time I think we already broke the pre-market highs and then I'm just waiting for little you want to see it break pre-market high first
Speaker A
correct and then pull back to the 90 EMA yes or or there's going to be different variations of it where it breaks the pre-market highs, it comes back into the pre-market highs, it holds, and then at often times price aligns with the 9 EMA.
Speaker A
Interesting. So VWAP and the pre-market kind of align. So then that for me is just like I use that as double confirmation because you have oh shorts looking like, oh, my stop is the pre-market highs. It breaks the
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pre-market highs, you get that pullback. So you have shorts covering running for the exit and then that's the point in time right here where it touches the nine and the biders just step out.
Speaker A
Where's your entry here? So it's coming back to the it's coming I'm waiting for that first bounce. I wait for the first bar to close above the 9 EMA after the first touch. So I'm buying here. I'm buying into this candle using
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20s 30s 6530s and my stop is the break of 65. Okay. So at this point in time like for this second uh entry point that I have I'm buying the 6440 6450 and if it breaks the high of day on on increase
Speaker A
in volume I'll add another lot or make this into a A+ because my risk is so defined that if it goes against me I'm only losing 20 30 cents.
Speaker A
Okay let's uh speed the chart up. But right here this is where I'm buying into this 30s and 40s.
Speaker A
Okay. And my stop becomes like two bar break at this point. And you're really looking for the buy program to just continue to drive. At this point, I should do a better job of just stepping away after I'm in and then just let the trade work.
Speaker A
You have a stop. I have a stop in place at all times. Like I always one thing to also note is once I see the the trade setting up, I'm always asking myself where am I stopping out or where if where is this trade
Speaker A
wrong? And if price falls below the 65, like I I don't want to be involved anymore. So for me, it's I'm risking 20 to 30 cents at this point in time. But I know that automatically I'm buying this
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the second or the third green bar depending on how the bits react. And then right here, this is where I'm adding like full size. It's not a chase for me because I know how the trade should react, especially after that
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first touch of the 9 EMA. So I'm not literally buying the breakout. I'm buying the continuation of after a breakout.
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So, you're making a continuation trade. And this is an important thing because there can be reversal trades or reversion trades. There can be breakout trades and then there can be continuation trades. And this one's a continuation trade. You're not taking it
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as a breakout. You're actually taking it as a continuation of a pre-established move. And then at the same point is now I took this trade in the two. It's working.
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It's we're in the trade for 2 4 6. Let's say 10 minutes. Let's flip it over to the five. And now at this point in time, you could just say, okay, we could do a two bar break on the 5m minute. So on
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that red little dot or red bar that you have, you could just set your stop two 10 five cents below it or just wait until price closes below the 9 EMA using the 5minute chart and then I was just
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watching it, let it do its thing and then oftent times like I get the urge to just sell some because it's like it's up too much, it's up too much. But I was like I always tell like this is
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something that I just started doing like 2 3 months ago is letting it work out and don't sell anything for the first 30 minutes after after you get in after you're in.
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Set a timer. Just set a timer, go for a walk or do something. But something that's it's always been an issue with me like after I started taking this trade cuz I feel like I've mastered this trade already especially
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with the entries but I'm still working on when to exit and actually capture the real EV of the trade.
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What are your exit rules? You said breaking break two or like a uh if using the two-minut or the five minute I want I want to see a price break below the 90 MA. Okay. on the 2-minut or the 5minut
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chart or if it goes parabolic increase in volume into a whole number after it's up let's say two three four points that's usually a blowoff top and then you just want to get off like get off the ride because that this
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is essentially you're riding the 9 EMA like you're continuing that breakout so there's a continuation to the breakout and the way to stay with it is just trailing the nine and something that I found out is if I'm taking the trade in
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the 2-minut trailer on the five and then that should usually just let me just collect my profits in 45 minutes.
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So, I have a little bit more discreetness in my rules and I'll share those in a second. But I appreciate you talking through the rules that you have and that's one of the things that's so interesting. We both know this trade. We
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both understand this trade. We take this trade a little bit differently. You have a higher win rate than I do and you've learned how to make this trade yours a little bit differently than I have.
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Is one of us right and the other one wrong? No. I mean, maybe you're right because you win a little bit more than I do, but for the most part, we can both make a lot of money trading this trade
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simply because we understand what's really driving it. What's really driving this trade entirely is the price action and that interplay around that 9 EMA which is showing that aggressive buying.
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It's showing that even regardless of your time frame, whether it's a five minute or a two minute or a one minute, that look back period that gets so truncated, that half life period gets so truncated on the 9 EMA
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really gives us a source of edge because we can really observe how the other players that are playing on that time frame are behaving. And that's really what tells us the story and gives us a lot of insight into how this stock
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should respond. Here's how you actually use this in your playbook. Our three-step process at SMB for continuation trades. You use context.
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You start with your bias. What's the setup? You get a trigger. You watch how price behaves around the 9 EMA after a distinct move into it. Does it hold? Do the bidder show up? Do you see volume on
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the acceleration? That's confirmation. The third step is execution. When you see that next acceleration, when you see that tape light up green, those buyers step in again, that's your entry. You wait for that to happen. After our three-step process for entry, then we
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manage it dynamically. We should have buyers stepping in. They should be buying with aggression. Here are three possible exits to use, and I'll talk about which one I tend to use. One, worst case scenario, something stuffs and takes out the low of the candle of
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my entry price. I'm stopped out. Okay, fine. Trade didn't work. Move on. The second would be acceleration after an acceleration away from the 9 EMA. So, the price grinds up, the buyers are stepping in, and then it accelerates and
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it accelerates more. Take half off and then flip to this final one. I always like to take that acceleration piece off where a lot of people will say just use the third, but I like to do it because
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sometimes it just is the end of the move and that's fine. All right. But the third and most consistent way is just trail a stop using a close below the 9 EMA as a full trailing stop. Once I
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simplified and mastered this, my trading changed. I stopped fighting the market and started more dancing with it. I wasn't reacting emotionally. I was reacting to strength. The 9MA taught me something bigger than trading. It taught me that clarity beats complexity every
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single time. The amateurs want 10 signals before they act. I did too when I was starting out. I wanted everything to line up perfectly. The pros just want one thing that they trust. That's the line between us and them. So, here's my
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challenge to you in practice. Not when you're trading live, but while you're practicing, strip down your chart. Just put on the 9 EMA, the NEMA. Replay your last 10 continuation trades, and watch what price does around that line. You'll
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start to see what I see. You'll see that invisible tugof-war between buyers and sellers. Visible only when you stop cluttering your screen with all sorts of different things that you don't even understand. Just focus on that little interplay and the responses around that
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9 EMA. And then if you want to take it even deeper to actually see this setup play out in real time, join our next free SMB training. We'll walk through a different continuation trade. We'll show different edges that show up. Not just
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what shows up, but why they show up. Just like we taught here with that 9 EMA. Because when you understand the 9 EMA, you're not just reading a line.
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You're reading the heartbeat of the market. We don't guess, we understand. I'm Jeff Holden. Thanks for joining us today. Stop watching charts all day hoping for trades. Our Wall Street scanner alerts you minutes before a profitable setup triggers just like it
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Topics:9 EMAmoving average tradingday trading strategytape readingrisk managementSMB Capitalmomentum tradingscalpingtrading psychologytrade entry
