🧠 The Momentum Play Strategy
The Momentum Play strategy focuses on stocks that are moving with strong volume and directional conviction—usually triggered by news, earnings, or sector-wide moves. Traders using this strategy aim to enter trades when momentum is already underway and ride the wave for quick, scalable profits.
🔍 When to Use It
-
During the first 30–90 minutes of the trading session (when volume peaks).
-
On stocks with strong catalysts: earnings, FDA news, upgrades, etc.
-
When a stock breaks a key level (pre-market high, resistance, intraday range).
🛠️ Key Requirements
-
Volume Surge: At least 3–5x relative volume compared to average.
-
Clean Chart Structure: No major resistance immediately overhead.
-
Strong Tape Action: Fast bid support and large market orders sweeping offers.
-
News Catalyst: Optional but improves probability.
🔑 Entry Criteria
-
Entry near the breakout of a consolidation range.
-
Entry on retest of breakout level with continued volume.
-
Optional: Use VWAP reclaim as confirmation.
Example Setup:
-
Ticker gaps up on news.
-
Pulls back slightly after open, forms a flag/consolidation.
-
Volume increases on breakout of that range.
-
Entry on breakout with stop below consolidation.
🎯 Exit Plan
-
Partial Exit near 1R or key psychological levels.
-
Full Exit into extension (parabolic move or failed momentum).
-
Trailing Stop under higher lows or using VWAP.
⚠️ Risk Management
-
Tight stop: below consolidation or intraday support.
-
Avoid chasing if the move is extended without pullbacks.
-
Use smaller size if volatility is high.
📌 Notes
-
Works well in hot markets with retail momentum.
-
Be cautious of halt risk on small caps.
-
Can be combined with flow data and Level 2 for higher conviction.
🔗 Where to Use It
Use this strategy in The Next Trading Day under category:
📉 The Momentum Play Strategy