---
title: 'Ivan Sherman''s 3-Step Trading Strategy with 80% Success Rate'
source: 'https://youtube.com/watch?v=FtNZfP7eHAQ'
video_id: 'FtNZfP7eHAQ'
date: 2026-07-12
duration_sec: 976
---

# Ivan Sherman's 3-Step Trading Strategy with 80% Success Rate

> Source: [Ivan Sherman's 3-Step Trading Strategy with 80% Success Rate](https://youtube.com/watch?v=FtNZfP7eHAQ)

## Summary

This video explains a simple three-step trading strategy used by Iván Sherman, winner of the 2023 Trading Championships with a 491.14% return. The strategy trades the S&P 500 on a daily chart, buying during pullbacks within an uptrend and exiting when the price closes above a 5-period moving average. It boasts an 80% success rate and is designed for traders of all levels.

### Key Points

- **Iván Sherman's Achievement** [00:02] — Iván Sherman won the 2023 Trading Championships with a 491.14% return, outperforming the S&P 500 by 20 times and the second-best trader by over 200%.
- **Strategy Overview** [00:59] — The strategy is simple, with three easy steps, an 80% success rate, and trades trend movements using price action basics: impulse and pullback.
- **Rule 1: Uptrend Confirmation** [02:48] — The S&P 500 must be in an uptrend, determined by being above the 200-period simple moving average (SMA) on the daily chart.
- **Rule 2: Three Consecutive Bearish Days** [04:18] — Within the uptrend, the S&P 500 must fall for three consecutive days (three bearish candles). Buy at the opening of the fourth day.
- **Rule 3: Exit Signal** [05:42] — Close the position when the price closes above the 5-period SMA. Execute the exit at the opening of the next day.
- **Strategy Philosophy** [06:21] — The rules automate the impulse-pullback-continuation pattern common in the S&P 500, removing subjective analysis.
- **Stop Loss Not Specified** [08:07] — Iván did not specify a stop loss; traders must determine their own exit for losses. Possible methods include using ATR or a fixed risk/reward ratio.
- **Second Example** [10:16] — A second example illustrates the rules: uptrend above 200 SMA, three bearish candles, buy at next open, exit when price closes above 5 SMA.
- **Stop Loss Placement Ideas** [13:56] — Suggestions include placing stop loss below the entry candle's low or using ATR to set a volatility-based stop.

### Conclusion

Iván Sherman's strategy is a systematic approach to trading pullbacks in the S&P 500 uptrend, with clear entry and exit rules. While the stop loss is not defined, the strategy's simplicity and high win rate make it accessible for traders to adapt.

## Transcript

trading championships, the most famous trading competition in the world where 5,000 traders fight each year to be the best and with the longest history since traders from all over the world have been trying to win it since
only 40 years old, in addition to becoming the first Latin American to win this prestigious competition, obtained a return of return of 491.14%.  Which means having
multiplied the S&P 500's return by 20 during that same period in 2023. But that's not all; in addition to all this, he also outperformed
the second-best trader in the world by more than 200%. In this video, I'll explain step by step one of his best strategies, revealed by himself in one of his many seminars, with an 80% success rate. It trades
trend movements and is incredibly simple, consisting of only three very easy-to-follow steps that anyone can apply, even a beginner trader. Or even if it's not
philosophy behind this trading strategy by Ivan Sherman. Regardless of outlining three very strict yet simple steps, all it does is follow the basics of price action: impulse and
pullback. It uses the S&P 500 on a daily chart and waits for small pullbacks to form within a large upward trend, which is quite common for this asset, in quite common for this asset, in
trend. If we go directly to... As you may already know, the S&P 500 is one of the most important trending assets in the world, offering an annualized return of over 10 percent for many decades.
Well, it's an asset that, regardless of whether it forms large pullbacks at certain times or even generally tends to move in a
clear upward direction. In fact, if we look back, we'll see that the look back, we'll see that the S&P 500 tends to rise quite a bit, and at times when certain pullbacks form within that upward trend,
certain pullbacks form within that upward trend, Ivan Sherman applies three very specific rules to take advantage of each of these pullbacks and continue in the direction of the trend, waiting for
the price to form new highs. The first rule is that the S&P 500 must be in an upward trend. And how do we determine if we're in an upward trend, a downward trend, or a range? He simply uses
range? He simply uses the 200-session simple moving average. To do this, go to TradingView in the upper left corner where it says " Indicators," and in the search bar, type " SMA," the acronym for simple moving average.
Click on the first indicator that appears, and you'll automatically have the first moving average. But before...  Next, we need to configure it, so we need to configure it, so double-click on it and where it says "style,"
For example, I'm going to leave it blue, but make it a little thicker. Where it says "data input," you need to set the period to 200. Click "accept," and you'll have the 200-session simple moving average on the
daily chart. Using this moving average, whenever the S&P 500 is above it, it means it's in an uptrend, and whenever it's below it, it means it's in a downtrend.
Iván is only looking for buys during an uptrend, so when the S&P 500 changes from an uptrend to a downtrend, or when it's already in a downtrend, there's no
strategy. We're not going to trade the same thing, but in the opposite direction. Rule number two is that within that uptrend, the S&P 500 itself must fall for three consecutive days. When it falls for three days...  Following this,
forming what would be a kind of pullback, what he does is buy at the opening of the fourth day, for example. Here you can see how the S&P 500 is in a clear upward trend since it is rising and is above the
200-session moving average, and regardless of the fact that some bearish candles form, they are not three days in a row. Here we have a first, a row. Here we have a first, a second, and a third bearish candle, so
now we already have the structure we want: the S&P 500 in an upward trend above the 200- session daily moving average, and having formed three consecutive bearish candles. You might say, " Hey Alex, a bearish candle formed earlier as
well," and the reality is that a bearish candle did form, but the following candle did not close below the low of the previous candle. As you can see, it closed clearly above it. So what
Iván would do right now is wait for the opening of the next candle to execute a buy order. So, there would be a buy order at this level here, and step number three is to close the position precisely at the moment when...  The
price rises again, continuing its upward trend, and closes its upward trend, and closes above the five-session simple moving average. To do this, we go back to the chart, add the
five-session simple moving average, and when the price closes above it, as this candlestick here shows,
next day to close our position. But before giving another example, I want you to understand the basics of what's happening with this trading strategy because we're setting some very specific rules. These rules simply
attempt to automate, in a way, the reality of what's happening. And that is to trade the basics of price action: impulse, pullback, and continuation. In fact, if we use and look at the
example we just gave, what's happening is that the S&P 500 is in a clear upward trend, forming its impulses, its pullbacks, impulses, pullbacks, impulses, and pullbacks. And what Ivan Sherman does is... well, to avoid
going crazy and trading every impulse and every pullback, what I'm going to do is...  I'm going to set very specific rules for those pullbacks. I'm going to put conditions within that pullback
so I can execute the position and not be subjectively analyzing whether this pullback is worth it or not. But the structure, the reality of what's happening, is impulse, pullback, and continuation because, as is
typical in the S&P 500, after forming this corrective movement, what happens next is a more impulsive movement, continuing the trend. And this is precisely what
repeating pattern, which is simply a trend, an impulse, and a pullback, and stipulating very specific rules that don't require you to constantly analyze, consider, or decide if now is a
now is not a good time, if the stop loss should be here, if the stop loss should be there. You 've detected a pattern, and you set specific, tested rules to trade that pattern. And notice how the indicator isn't the basis of the strategy, but it's
used to support it and know exactly when to enter and when to exit. And having mentioned the stop loss, the reality is that  Ivan discussed this strategy in one of his seminars, but he didn't specify where to
specify where to place the stop loss, nor how to manage the position. He simply outlined the most important rules. It's a trading strategy that isn't 100% complete because
each trader would have to determine their own stop loss placement. This is which each trader would need to do to determine the best exit point for both losses and gains. We ca
n't execute positions without setting a stop loss; we always need an exit point. I haven't done a complete backtest, but it's true that this strategy has an 80% success rate, as he
himself mentioned through his own backtesting. However, that backtesting is based, I imagine, on a stop loss zone, and there might also be a position management zone. In that case, we would have to go a step
further, and that's something we can leave for another video to avoid making this one too long. can leave for another video to avoid making this one too long. place a stop loss to make this strategy more efficient, which
is also efficient, and as I said, we'll move on to a second example. subscribe if you're not already, and leave a comment more comprehensive backtest explaining where
a stop loss should be placed and how we should manage the position. Remember and in the description of this video, you'll find more trading strategies, income courses, tutorials, and training—all
100% free content so you can continue learning as a trader without investing your own money. With that said, I'm going to give a new example to review each and every rule in order so everything is quite clear. So
let's go directly to the chart, and obviously, we're still on the daily chart of the S&P 500. The trend is clearly bullish; I'm not saying this, the moving average is bullish; I'm not saying this, the moving average is
And if we zoom in a little, we'll review...  What's happening in Because we're seeing a slight slowdown. We've had one and two the third, so we haven't completed the pullback. The price keeps
rising, starts to slow down, and then forms several bearish candles. Would this work? The answer is no. Why? Because we have a first bearish candle, and depending on whether this candle here is red, and this candle here is
also red and bearish, if we focus on what happens in this middle candle, we'll realize that the close of the first candle falls here, and the close of the second candle falls here, so it's a bearish candle.
Yes, but through the gap, a session has formed that could be considered positive because the session of May 3rd is above the session of April 30th. This was a Friday; the market closes, there's the gap due to the
weekend news, etc., etc., and we open the market a new week, and this gap forms. So it's true that there are three red candles, true that there are three red candles, even four.  The last one, but what
we have is a gap that forms an upward movement, and the close of the second candle is above the close of the first candle. If we were to see a new bearish candle, then yes, we could understand that we already have one, two, and
we could see a third. That's not the case, but if we had seen a new bearish candle, then we would have formed that triple bearish candle in the form of a pullback. Since that's not the case, let's follow the price. It continues with the
upward movement: one bearish candle, two bearish candles. Now we should see a new bearish candle, and here we have, it seems correct, a third bearish candle. Now what do we have to do? What we would do is
wait for the opening of the next day to execute the market position. Here we have the next day. Obviously, since we aren't experiencing it in real time, we do n't know exactly where we could execute with 100% certainty, but what
is clear is that the price opens here. I don't know if it goes up as soon as it opens or if it goes down as soon as it opens. So I don't know exactly where the position would end up being executed, but it doesn't matter because I'm more or
less going  To set an intermediate point, this area here would be the target, and we'll mark it in a different color, blue, to indicate the entry point. blue, to indicate the entry point. Now we have the target above
the five-session simple moving average. This simple moving average here, the white one, is precisely what marks our exit point. So, let's see what happens here. We already have the close
above, and what we would have to do is wait for the next candle to close at market price. This candle opens here; I don't know again if it will go up or down, so I'm going to set the exit point in this area.
to set the exit point in this area. The take profit would be this point, and we would have gained this entire upward move. Of course, the issue here is this: If I execute a position here, where does the stop loss go? Where do
I place the stop loss? A very simple way is to place it below the candle or the low of this candle, but we are entering when we don't yet know what the low of the candle we are executing on is. It is very
risky to place it below the previous candle because this would mean that...  There can't be any volatility, so we'd have to find a way through... Well, the Average True Range (ATR), which is an indicator that marks the
average volatility in each session of an asset, a session of an asset, a moving average, a specific number of pips, to see exactly what the point is up to the moving average, and then set a
risk/reward ratio of 2 seconds, for example, something like that, and set a somewhat random stop loss. We'd have to set a specific rule; I don't know exactly what Iván's rule will be, but based on the strategy I'm
seeing, I think it will be an indicator itself that will determine the exit point or the way to exit. There are two options: using an indicator like the ATR, for example, which automatically knows the point based on
volatility where to place the stop loss, or calculating a specific loss based on a random drop, or based on... I say random because it would be different each time depending on the range of the bearish candles of the
previous pullback. Obviously, this is speculation, which is why I say that if you 're interested, we could look at different ways to exit.  and Also, remember that below, in the first pinned comment and in the
description of this video, you'll find more profitable trading strategies with all the rules, some more automated, others price action, others based on indicators. You'll find courses,
tutorials, training, and guides, as I said. All content is 100% free so you can continue learning as a trader without investing your own money. I'll leave this video liked it and that it was helpful, which is the important thing. If so, like,
subscribe, share it with friends and family, and I'll see you in the next video. family, and I'll see you in the next video. Goodbye.