Strategy
Our trading methodology and risk management approach
This page explains our trading methodology, why it works, and how it compares to other common approaches to managing risk in the stock market.
Three Ways to Protect Your Portfolio
There are three main approaches traders use to protect their accounts from big losses. Understanding all three will help you understand why we do what we do.
1. The Warren Buffett Way: Buy Cheap
The idea is simple — buy stocks that are already at bargain prices. If you buy a stock at $10 that's worth $50, it's unlikely to drop much further. The low price itself is your protection.
Pros:
- Low risk of catastrophic loss
- No need for stop losses
- Peace of mind
Cons:
- Requires deep fundamental analysis
- Takes months to years to play out
- You need to be right about value
- Ties up capital for extended periods
2. The Spray and Pray Way: Diversify Everything
This approach says: "I don't know which stock will win, so I'll buy 20-30 stocks and hope the winners outweigh the losers."
Pros:
- No single position can destroy your account
- Easy to understand and implement
- Feels safe because you're "spread out"
Cons:
- Dilutes your winners
- Hard to track 20-30 positions
- You'll always own some terrible stocks
- Requires constant monitoring
3. Our Way: Surf and Turf — Concentrated with Tight Stops
Our approach is different. We hold concentrated positions, buy stocks already going up, use very tight stop losses (typically 3-5%), and accept low win rates (20-40%) but with massive winners.
Pros:
- One home run can pay for 20-50 small losses
- Large position sizes amplify winners
- Clear, rules-based exits (no guessing)
- Works in any market (US, Korea, Japan, Taiwan)
- Fast feedback — you know quickly if a trade is working
Cons:
- Low win rate feels psychologically difficult
- Requires discipline to accept frequent small losses
- You must follow the process exactly
The tradeoff: Something has to give. We don't buy cheap (Buffett), and we don't diversify (Spray and Pray). Instead, we use tight stops as our protection. You must respect your stops. No exceptions.
Why Our Strategy Works
What Goes Up, Goes Up Further
Momentum is real. Stocks that have already moved up 50-100% in the past 3-6 months are statistically more likely to continue moving up than random stocks sitting at lows. This is counterintuitive — most people think "it's too high, it must come down." But in momentum trading, high is where the action is.
Defined Risk on Every Trade
Every trade we suggest has a clearly defined stop loss before you enter. You know exactly how much you'll lose if the trade doesn't work. This is not gambling — it's calculated risk.
The Math of Asymmetric Bets
If you take 10 trades with 7 losses at -0.4% and 2 wins at +3% plus 1 home run at +15%, you lost 7 out of 10 and still made +18.2%
The Two Setup Types We Trade
🏄 Surf Trades (Pullback to Moving Averages)
A Surf trade is when a stock with strong momentum takes a breather and drifts back toward its key moving averages (the 10-day or 20-day EMA).
What we look for:
- Stock has been in a strong uptrend
- Price pulls back to the EMA 10 or EMA 20
- Volume dries up during the pullback
- Stock is not too extended from the 50-day SMA
Why it works: Strong stocks tend to respect their moving averages.
🌱 Turf Trades (MA Reclaim After Consolidation)
A Turf trade is when a stock has been consolidating and its moving averages have "clumped" together. When price breaks above all three MAs at once, it often explodes higher.
What we look for:
- Stock had a big run-up previously
- Price consolidated for weeks or months
- EMA 10, EMA 20, and SMA 50 are all close together
- Price reclaims all three MAs in 1-2 sessions
Why it works: After consolidation, energy is coiled and ready to release.
Why Stocks "Look So High"
A common concern: "I looked at the stocks you recommend and they're all up 5-6x this year! Isn't that too high?"
→Momentum persists. Stocks that went up 5x are more likely to go up further than stocks that went nowhere.
→Institutional money is behind them. These aren't random pumps — real money is flowing in for a reason.
→Our tight stops protect us. Even if we're wrong about the continuation, we lose only 0.3-0.5%.
→The alternative is worse. Buying 'cheap' stocks that nobody wants means your capital sits idle for months.
We'd rather buy a stock at $100 that goes to $200 than a stock at $10 that stays at $10.