Momentum Scalping Setup — Step-by-Step Guide & Transcript

[00:01] bottom. I get it. You buy the low, you feel like a genius. Problem is, it's probably the worst trade on the chart. You're buying while everyone else is still selling. You're betting on a turn that hasn't happened yet. And then

[00:14] you're surprised when you get stopped out right before the thing finally runs. I stopped trying to catch the bottom a long time ago. Now I show up late on purpose, which is why I call this trade the fashionably late. I let the stock

[00:28] turn. I let the momentum prove it's really there, and then I step in while it's still building. There's basically one moment where that happens, where a stock stops fighting you and starts pulling you along with it. And today,

[00:42] for this very specific trade, I'm going to show you exactly where that moment is, how I get in, where my stop goes, where I get out, so stick around. Real quick on me, my name is Justin Spero. I've been with SMB since 2018.

[00:57] I trade momentum names every day, and this is one of the setups I look for almost every day. Couple ground rules before we get into the charts. This is a the move. You're not getting married to

[01:10] the stock. And the whole thing runs on two popular studies, the 9 EMA and VWAP. That's it. No 12 indicators stacked on top of each other, just two lines and one specific moment. Let me show you how it works. So, why do we call this the

[01:26] fashionably late? Why not just try and buy the turn off the bottom, like everyone else is trying to do? It comes down to momentum, and momentum is really just energy building. The longer and steadier something moves in one

[01:39] direction, the more likely it keeps going. Down at the low of the day, all the energy is against the stock. Smart money is still selling, but then it turns. And as it climbs back, that

[01:52] energy slowly starts to flip. Here's the thing though, I don't want to guess when that turn happens. Guessing the turn is exactly how you catch knives, churn and I want the turn to prove itself to me first. I want to watch the stock pick

[02:08] itself up off the low and start working back up. Let it prove it, then buy. The actual setup. Now, I want you to notice it's all intraday, just five things in order. First, the stock turns off the low of the day. It sells off,

[02:25] puts in a low, stops going down. That's the starting point. Second, momentum builds back towards VWAP. Quick definition, if you're newer, VWAP is the volume weighted average price.

[02:37] Basically, the average price everybody's paid for the stock today, weighted by where the volume actually traded. Think of it as the day's center of gravity. So, after the low, I want to see price grind its way back up toward that line.

[02:53] That move back is the momentum rebuilding in real time right in front of you. Third, and this is the trigger. Third, and this is the trigger. The 9 EMA crosses VWAP. The 9 EMA is

[03:06] just a fast, short-term moving average. It tends to hug price. It reacts quick. So, when that line turns up and crosses through VWAP, that is the entry signal.

[03:18] That's the moment. Fourth, you enter right there at the cross. You don't wait for the candle to close. You don't wait for three more bars to close so you feel sure about it. The 9 EMA cross is the confirmation. It happens, you're in.

[03:34] And fifth, your stop and your target come off the measured move. Simple. You measure the distance from the low of the day up to the cross. That distance is your unit. Your target is one full unit above the cross.

[03:50] Your stop is the third of the way back down toward the low. And that's why that math comes out clean. When you enter at the cross, you're entering right around VWAP. So, the distance from the cross down to the low is basically the same as

[04:06] the distance from VWAP down to the low. You're risking a third of that going for a full one unit. That's where the roughly three to one comes from. You risk one, you're looking for three. Real quick, everything I just said works

[04:22] the same in reverse for shorts. Fast line crossing down through a flat to rising VWAP, you're short. Same trade, you just flip the chart. Now, the cross gets you in, but not every cross is the same. So, here's what

[04:36] trust it. Biggest one is speed off the low, speed Not violent speed, we're just looking for a steady, a clean committed push

[04:48] back towards VWAP. Steady is the word there. Steady tells me the buying is consistent and is probably going to keep going. Once price crosses back above VWAP, I want it to hold above. If the action

[05:03] after the 9 EMA VWAP cross is choppy and slow, I'm out. Chop is noise. Lots of movement, no progress. After the reclaim, a stock chopping around without

[05:15] making ground is the market telling you it's probably not ready yet. And if price just sits there, pausing right at the entry, hangs around that cross for like 10 to 15 minutes instead of going, that hesitation tells me

[05:29] there's a lack of commitment. The clean ones just go, as you'll see in these examples coming right up. If after the turn, but before I get my entry, that 9 EMA goes completely flat, I don't take it. It's a no. A flat nine

[05:45] exponential moving average means the momentum stalled out. Okay, one more piece. This setup lives in two windows, the morning, roughly 10:00 a.m. to 10:45, and midday, 10:46 to 1:30. That's when

[06:01] there's enough movement and enough participation for it to actually work. Same exact setup outside of these windows, you'll often get a bad result. So, mostly hunting in these two pockets of time. Okay, quick but important note

[06:16] before we dive into these examples, I usually find these on strong stocks pulling back to a short-term moving average on the daily chart, mainly the five and 10 SMA. And we'll see these in just a second.

[06:31] Let me show you on some real charts so you can see everything come together. I pulled three examples that I personally traded. I'm going to walk you through the setup on real charts so you can see the read the same way it shows every

[06:45] trade. The first one's Rocket Lab, RKBL. Watch the bottom left. It sells off into the morning and puts in its low into the morning and puts in its low down around $115.50.

[06:59] You can see it grind up back toward VWAP. That's the momentum coming back. And right here, late morning, the nine EMA crosses up through VWAP around $120.

[07:13] That's the entry. All right, so do the math with me. Low to the cross is about four and a half points, so the target's one move half points, so the target's one move above near 124.50, 125. And the stop's a

[07:25] third of the way back down around 118, 118.50. We're risking about a buck 50 to make about four and a half dollars. And look what it does after. It doesn't stop at the target, it keeps running up towards $130 a share.

[07:41] That's the kind of move where if you're trailing your stop up a 3:1 can turn Second one, ALAB. Same exact trade. Low of day

[07:53] ALAB. Same exact trade. Low of day around 291. It turns, builds back, and right around 10:00 in the morning, so we're in that first window of time, the 9 EMA crosses VWAP near 303. From there, it works up towards 322.

[08:07] Same exact setup. And the third, QBTS. Little bit of a cheaper, faster name, under 30 bucks. So, you see the low around 2570. It turns, it crosses VWAP late morning

[08:22] It turns, it crosses VWAP late morning around 2660. We get that 9 EMA crossing through VWAP, which is our confirmation, and it pushes up towards 28. And notice this one fired in that midday pocket.

[08:35] See, cheap stock, expensive stock, mid-price stock, doesn't matter. numbers, too. From what I've seen, this setup tends to make money around 60% of

[08:47] the time, and the winners tend to pay more than the losers cost you, again, even better. So, you're still going to take some losers, and the edge is that payoff ratio holding up over many trades. So,

[09:03] let me put the whole thing back together start to finish. You find a stock that's turned off the low of the day. You watch the momentum build back toward VWAP. You wait. You wait for that 9 EMA to cross VWAP, and that is your entry signal.

[09:18] You set your stop and target off the measured move. A third down for the stop, a full move up for the target. You check your tells. Is volume starting to come back?

[09:30] Do we have a steady push from the lows? Is price holding the 9 EMA? Is price holding the 9 EMA? And if that EMA ever goes dead or flat, that's your red flag. That's it. That's the fashion we late scalp. You're not

[09:45] predicting the bottom, you're not bottom picking, you're not the hero buying the exact low, you're letting momentum introduce itself, and then we're showing up a little bit late on purpose while that

[09:58] stock is building momentum. That's it. Like and sub for more you in the next one. >> So, you're an active trader, not doing as you deserve, and you just can't

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