Audio available at the end of this post.
Last week, I discussed five parallels between Qullamaggie and Dan Zanger:
Focus on price and volume — not indicators
Find patterns for consistency
Just focus on leading stocks and setups
Earnings are the fuel for growth stocks
Spend thousands of hours studying
Though a good starting point, this list is far from exhaustive.
But perhaps my biggest omission is an area I personally still struggle with: knowing when to get aggressive. Being cautious and managing the downside come naturally to me. (It probably helps I’ve worked in data security for 6½ years.)
That’s a better position to be in than the reverse — at least I’m unlikely to blow up. However, as Mark Minervini says, you need to know:
When to go to cash, and potentially stay in cash for long periods; AND
When to press the gas when things are working.
To separate the wheat from the chaff, look for traders who can do both.
Coming back to Qullamaggie and Zanger, they both turned relatively small initial stakes into fortunes in a relatively short period of time, because they understood when to get aggressive, and when to step aside.
The same applies to many other traders who achieved legendary returns. They know when to ‘bet the farm’.
Consider, for instance, what Stanley Druckenmiller said in his The New Market Wizards interview (emphasis mine):
“I’ve learned many things from [Soros], but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. […]
“Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular.
“It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you’re right on something, you can’t own enough.”
However, as we’ve already established, trading aggressively isn’t my strength.
So, I asked Clement Ang — a much better trader than myself, and a USIC 2024 competitor — to help out with today’s stack, who kindly agreed!
Experience, deep dives and intuition
Clement explains:
“I think a large part of Qullamaggie’s and Zanger’s success boils down to the deep dives and screen time they’ve accumulated over the years.
“That gave them sharp intuition of when to ‘go for the jugular’, as they see pieces of the puzzle fit together in real time:
Market environment
Leading thematic/group setting up
Initial traction when probing trades
Etc.”
This strikes me as spot on. The two key factors to determine aggressiveness are:
Your own recent performance; and
Or, in Clement’s words from his guest post in June (emphasis mine):
“To create a smoother, nicely uptrending equity curve, you want to be out of the market when times are bad — based on the feedback from recent trades as well as your read on the market based on what the charts are telling you — and get aggressive on the heels of success.”
But you need experience for either to be a reliable ‘indicator’. You need deliberate practice, like doing those deep dives.
When you put in enough quality reps, you cultivate intuition — an unfortunately elusive but very real phenomenon, and a prerequisite to mastery in any field.
Without that ‘sixth sense’ — which doesn’t take talent, just a lot of hard work and deliberate practice — you won’t be able to consistently ‘bend’ with the market, stepping away and ‘going for the jugular’ when the occasion calls for it.
I’ve previously written about Qullamaggie’s intuition in action in this stack.
1. Your recent performance: are your setups working?
One of the presentations at the TraderLion 2024 Trading Conference was the panel discussion with Mark Minervini, Mark Ritchie II and Brandon Hedgepath.
All three traders have one critical question to determine whether to get aggressive:
Are my trades working?
As to specific gauges, Minervini put forward two questions:
Are there setups?
Are the setups working?
Put differently, just seeing setups isn’t enough to become aggressive. You also want to see them bear results. (That said, seeing more setups than you can buy is a good sign.)
Ultimately, it doesn’t matter what the rest of the world is saying or doing. As Ritchie put it: you want to be in your own trading echo chamber, and not listen to anyone else.
Distinguish between trading your P&L, and listening to your P&L
Trading your P&L
For example, you’re holding on to a stock, just because you ‘want it to go a bit higher’ — as opposed to believing it can go higher based on price action.
More specifically, you want it to go higher because of some personal need — so you can break even, get back to green for the day, make a new account high, etc.
I also covered this in my stack about execution (step 3), inspired by Tom Dante.
Listening to your P&L
Despite sticking to your plan and following your system, you’re repeatedly getting stopped out, and you’re in a drawdown. That’s a signal the market isn’t currently conducive to your style of trading, and you need to scale back.
Equally, if you’re following your system and find yourself comfortably green — and you’re seeing opportunity in the market more generally — that’s your P&L telling you to press the gas.
This distinction may be obvious to you, but I’ve received a reader question about this, so thought it was worth clarifying.
Taking historical post-analysis into account
Another factor worth taking into account to determine aggressiveness are your post-analysis findings.
As an example from the panel discussion, Mark Ritchie II conducted a study of his own best trades. He found that they shared the ‘classic’ characteristics:
Earnings and sales
Classic growth areas/themes
He then used that information to get more aggressive when he saw those characteristics, sizing larger on those trades.
This is a good example of why studying your own past results is important. If it’s worked for you before, and is repeatable by nature, it has every chance of working for you again.
I’ve previously discussed this type of journal analysis — with a view of determining how to allocate risk more effectively — in this stack, outlining specific Excel techniques.
Both Ritchie and Minervini also pointed out that you’ll have extra conviction if your findings correlate to what the ‘big names’ say, such as William O’Neil.
As Minervini put it: the result is bearing out the research.
If your own personal experience corresponds to your textbooks, it makes their wisdom hit so much harder. And with it, discipline becomes infinitely easier.
You’ll have far more conviction in best practices if you’ve seen them work with your own eyes, and will find it easier to size up when required.
2. Situational awareness: what is the market telling you?
Coming back to Minervini’s earlier questions — whether there are setups, and whether they’re working — are another way of saying ‘situational awareness’. What is your read on the market?
You can’t gauge market environment through indices alone, because they’re increasingly weighted towards a handful of stocks, rather than the universe of stocks you may want to trade.
What’s more, even if an index did reflect your universe of stocks, it doesn’t answer two critical questions:
Can you see your edge?
Is that edge working?
For example, if you’re a breakout trader, seeing stocks setting up and even breaking out isn’t enough to determine aggressiveness. You also want to see whether the breakouts are following through.
If they are following through, how are they following through? Are they making big, sustained moves? Are they making two- or three-day moves before coming back into the base?
Or maybe you’re only seeing follow-through in certain types of stocks. Just large caps, for example, or only in certain themes.
Figuring out the answers to questions like the above help determine:
Whether to trade at all;
If yes, how aggressively to trade; and
What specific tactics (that fit within your strategy) to deploy.
As Clement put it to me: “The signs are there.”
It’s about attention to detail.
Understand market cycles
Another thing to bear in mind is that ‘easy dollar’ environments are always followed by ‘hard penny’ environments. This is a fundamental truth about the markets — due to the way market cycles work — to keep in mind as you trade.
In a nutshell:
Understand the characteristics of different market cycles and environments. Know the signs.
Don’t just track your own trades. As Anthony Shi said: “If you only look at your trades, you don’t know what you’re not seeing.” So, keep a back-watchlist:
Track the biggest movers of the day, and add the interesting-looking names to a separate watchlist. (This is what Qullamaggie does, too.)
Go through this watchlist daily. Are you seeing follow-through? Are you seeing stocks giving all their gains back? Are you seeing those stocks setting up? Whatever it is you’re seeing, it’s valuable information.
Watchlists and chart-flipping
You may also find it helpful to take a chart-flipping approach like Clement. Go through lots of charts during the weekend, add them to different watchlists, then (re)categorise stocks daily.
In Clement’s words:
“[This] is my deliberate practice that allows me to get my reps in, while simultaneously create my daily plan for the next trading session.”
In summary, keep abreast of what’s happening in the markets. This is important no matter where you are in your trading journey, but of extra importance if you’re a less experienced trader.
What to do if your discretion isn’t good enough yet
For experienced traders, P&L is a key gauge for aggressiveness. It comes back to that key question posed earlier: are my trades working? If yes, press the gas. If not, reduce exposure.
And therein lies the challenge. If you’re a beginner or intermediate trader, your P&L isn’t the most reliable gauge.
A struggle I’ve personally had — and I’ve heard similar stories from many others — is getting back into the market in the middle, rather than at the start, of a swing cycle.
It does mean you’re making easy money.
But it also means that, if you increase exposure after those first few trades mid-swing cycle, you’re trading larger in late-stage cycles, when fakeouts are more common, and you’ll struggle to gain traction, giving back a good portion of your early gains.
Chart-flipping and back-watchlists are vital tools for any serious trader to determine aggressiveness. But if your equity curve isn’t smooth yet, they may be the only gauges you have for determining aggressiveness.
That said, this is a difficult topic, with few black-and-white answers. If you have further ideas, please share them in the comments below!
How do you get aggressive?
Clement said to me:
“When we had the small cap rotation in July [2024], I read that Druckenmiller ‘went for the jugular’, going long $IWM calls with a massive position. [Chart below.]
“At the same time, I reread Minervini’s Think & Trade Like a Champion, and how he pyramids into positions without increasing risk. [I.e. progressive exposure.]
“Personally, I find Druckenmiller’s approach to aggressive trading, to some extent, reckless. To me, Minervini’s way is better, because he controls risk while potentially doubling his position size.
“My biggest take-away is that everyone trades ‘aggressively’ in a different way.”
And, like most trading-related matters, you have to figure out what works best for you.
Mark Minervini and progressive exposure
In an interview with Richard Moglen, Minervini explained that he uses progressive exposure on both intraday and daily time frames. In his words (30:25):
“I’m always […] progressively exposing and decreasing my positions based on the traction that I’m getting.”
Minervini followed this up with a simple explanation of what this might look like.
If you buy one or two stocks (5–10% positions each), which then go up 7–8%, you can buy one or two more positions. You may also sell a position to bank, say, a 10% profit.
Assuming your stops don’t exceed 5%, that profit finances two more trades. If you then get stopped out on both those new positions, you’ll break even. But if those positions end up working, you can bank more money and get more aggressive.
Minervini calls this “bending with the market”. You’re “leveraging up”.
Clement is about to share one of his own trades from earlier this year, detailing what he was seeing and what made him ‘go for the jugular’. But before he does, a quick request.
Since you’ve made it this far, chances are you find my writing valuable. If so, I’d love it if you bought me a coffee to support future work.
The ‘toolkit’ for trading aggressively
Clement here.
Progressive exposure isn’t just a way to manage risk. It’s also a way to gain valuable feedback on your trades. More than that, I see it as the ‘toolkit’ that provides the means to trade aggressively.
This may be best explained with an example: my silver trade from May 2024 (I’ve also tweeted about it).
Putting the trade into context
$QQQ came out of a month-long correction and had been trading above the 50 SMA for three days (the below chart goes up to 8 May 2024).
At this point, I’d largely avoided the April correction and was up a decent amount for the year. As $QQQ started trading above the 10 and 20 EMA, my mindset was to look for setups and pursue ‘superior’ returns.
Silver at the time
Silver broke out of a large inverse-head-and-shoulders-ish chart pattern and stalled on 12 April, before correcting lower over the next two weeks. Notice this was when $QQQ started correcting lower too.
Silver then traded close to the 50 SMA and held tightly before pushing higher, above the 10 and 20 EMA.
As it consolidated tightly above the 10 and 20 EMA, silver had the look of another inverse-head-and-shoulders pattern just above the big weekly pattern it broke out of. That gave me confidence there was more to this than meets the eye.
Plus, individual silver miners (considered levered plays to the metal itself) looked to be setting up for a move, as they traded rather constructively above the 10 and 20 EMA. Also notice the volume dry-up, especially in $PAAS and $CDE.
The weight of evidence tilting in my favour gave me confidence of more potential upside.
Taking the trade
My main weapon of choice was $AGQ, the 2x leveraged ETF for silver.
I first bought on 8 May to ‘test the waters’. I considered this a low cheat, as I expected silver to continue building its pattern higher within this base, envisioning a cup and handle.
On 9 May, I made a follow-on buy as it confirmed higher, before hitting a near-term peak on 10 May. Here, I decided to take a partial while observing how the pattern continued to resolve itself.
At this point, the trade was gaining traction, with very little give-back in price. In the subsequent days — 10 and 13 May — it continued to trade rather tightly.
Going for the ‘jugular’
The opportunity to get aggressive came on the back of the Producer Price Index (PPI) announcement on 14 May.
While I was watching the reaction to the economic event via the dollar index ($DXY), I quickly noticed that a hot PPI figure failed to drive the dollar higher:
To me, this was a ‘news failure’ event (a term coined by Jason Shapiro), which prompted me to double my silver position. The dollar and precious metals should be inversely correlated — i.e. a lower dollar should mean higher silver prices.
That worked out well, as silver completed the cup and handle I was looking for, and subsequently ramped higher over the next few days.
Different types of aggression within trading
Kyna again.
One thing Clement and I both realised through our conversations is that although most traders talk about ‘aggression’ to refer to position sizing and overall market exposure, that isn’t a complete picture.
Aggressive entry tactics
If you learnt from Qullamaggie, chances are you use the opening range high (ORH) on the 5- or even 1-minute chart to enter positions.
I’ve previously discussed this entry tactic in more detail for both Qullamaggie-style breakouts and episodic pivots (EPs).
However, few traders stop to think about the fact this is inherently an aggressive way to trade.
For clarity: this is not a bad thing. But be conscious of this fact, and consider whether this is the right approach for your personality. As with anything, it has both pros and cons.
The most obvious benefit is that you have a terrific risk–reward. Your stops will be tight, meaning that you can easily trade with size while risking a small percentage of your account. And when you’re right, you can make many, many R-multiples.
The downside is that you’ll get stopped out a lot. You’ll go through many, and lengthy, losing streaks. And you’ll see plenty of stocks shake you out, then take off without you.
Bottom line: choose what works best for you. Take the principles Qullamaggie (or other great traders) teach, then make that strategy your own.
JUNO, for instance, tends not to trade in the first 30–60 minutes after the market opens. (Something that cropped up in my first interview with him — we’ll follow up with a second interview soon!)
Aggressive trade management
You can also aggressively sell into strength, and aggressively move up your stop losses.
Again, this has both pros and cons. You will leave money on the table, but are also moving your money around faster, turning over your edge more frequently. Remember: if you aren’t selling early, you’re selling late.
As Minervini says: it doesn’t matter what happens to the stock after you sell it. All that matters is that you have an edge. That you’re consistently and repeatedly getting odds on your money.
Conclusion
This stack covered a lot of ground:
The importance of aggressive trading when the time calls for it.
The two key factors to determine aggressiveness:
Your own recent performance.
Situational awareness.
How to trade aggressively and use progressive exposure, with Clement’s silver trade as an example.
Different types of aggression within trading.
Clement describes the two key factors — recent performance and situational awareness — as “separate but vital parts of the equation to superperformance”:
Feedback from your performance is the ‘toolkit’ that provides the means for aggressive trading.
Market environment is the ‘blueprint’ for identifying the signs that you should be aggressive.
However, you can’t trade aggressively — without getting into trouble — if you lack sufficient experience, acquired through deep dives and deliberate practice.
As Stockbee would say, it requires high self-efficacy.
Also recognise that aggression goes hand in hand with extreme defence. As the Minervini, Ritchie and Hedgepath panel discussion pointed out, all roads lead back to risk management.
But there are many ways of managing risk, depending on how you trade. For that matter, ‘aggressive trading’ can mean different things to different people, too.
I’ve wanted to do this stack for quite a while, now, and am very grateful to Clement for helping me make it happen — thank you!
To you, the reader, I hope this article gave you food for thought. Clement and I would also both love it if you shared in the comments how you trade aggressively — perhaps we can incorporate them into a part 2!
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