THE 6 MOMENTUM TRADES EVERY TRADER NEEDS TO KNOW

The Problem with Strategy Names [0:00]

• Many traders collect numerous strategy names without truly understanding them.
• Most "different" trades are actually variations of a few fundamental mechanisms.
• Seeing the underlying mechanisms simplifies trading, rather than complicating it.

  "The list gets longer, but the trading doesn't get better because almost all of these are not actually different trades."

Deconstructing Strategy Names [1:05]

• Traders often mix four categories: location, trade mechanism, visual shape, and market behavior.
• VWAP pullback: VWAP is a location, the trade is a pullback continuation.
• High of day break: High of day is a location, the trade is a breakout.
• Bull flags describe the shape, not the mechanism or location.

  "Some of these names are just describing a location. Some are actually describing a trade mechanism, and some are describing just a visual shape."

The Asset Protocol Framework [3:02]

• A "stock in play" identifies the catalyst and why big players are involved.
• The "setup" provides the larger context (trending, range-bound, etc.) using higher timeframes.
• The "momentum trade" is the specific price action mechanism (the six core trades).
• The "opportunity zone" is a specific area where the trade might occur (VWAP, 9 EMA, high of day).
• The "trigger" is the price action event confirming the trade is happening.

  "The setup will tell you the larger context. Is the stock trending? Is it breaking out of a range? Is it making a second-day move? Is it reacting to news?"

Momentum Trade 1: Breakout [5:37]

• The core question: Can price escape a defined trading range and expand beyond it?
• This involves moving through a meaningful boundary like high of day, pre-market high, or resistance level.
• The level itself is not the trade; the act of escaping and expanding is the momentum trade.

  "A breakout only occurs when price moves through a meaningful boundary and begins expanding beyond that."

Momentum Trade 2: Breakout and Retest [9:11]

• Price breaks a level, then pulls back to test that level, proving it has changed function.
• Resistance becomes support, or support becomes resistance.
• The trade is confirmed when price holds the retested level.

  "Now we're asking, what happens when price comes back to the $50?"

Momentum Trade 3: Pullback Continuation [12:32]

• An established move temporarily retraces against the trend.
• The counter-trend move fails to cause structural damage, and the original direction resumes.
• Examples include first pullback, second pullback, 9 EMA pullback, VWAP pullback.
• The 9 EMA or VWAP are locations, not the mechanism itself.

  "The momentum mechanism is existing momentum pauses through a price retracement, structure holds, and the momentum resumes."

Momentum Trade 4: Consolidation [16:30]

• Price moves sideways, digesting a move primarily through time rather than price.
• Sellers are unable to push price meaningfully lower after a strong move.
• Examples include bull flags, bear flags, pennants, and flat-top continuations.

  "The market's digesting the move primarily through time rather than through price."

Momentum Trade 5: Trend Continuation [19:21]

• The broader directional move itself is the primary source of the edge.
• Characterized by higher highs and higher lows (uptrend) or lower lows and lower highs (downtrend).
• This strategy is used in trending environments and channel trading.

  "Buyers are repeatedly winning auctions at progressively higher and higher prices."

Momentum Trade 6: Reclaim [22:00]

• Price loses an important level (e.g., VWAP, prior close), sellers seem to have control briefly.
• Price then recovers that level and establishes control back on the original side.
• This is different from a breakout and retest, as the level was already lost and then recovered.

  "Price loses that level. For a little period of time, the sellers seem like they have control. But then price recovers that level."

Applying the Framework [24:22]

• A chart example shows a stock trending (setup) with a pullback continuation (momentum trade).
• The 9 EMA is the location, not the trade itself.
• Understanding these mechanisms simplifies trading by stripping away hundreds of strategy names.

  "The purpose of understanding this framework, of understanding these different momentum trades, isn't to make trading more complicated."