Kardec Trader breaks down a simple trading strategy focused on reading momentum and avoiding hype-driven trades. Healthy price action alternates between rises and consolidation, but extreme rocket ship moves reverse sharply, like GameStop during the Robinhood incident. The goal is spotting extended moves before momentum shifts and you get chopped up.
A healthy chart needs like to go up, consolidate down. Go up, consolidate down, Go up, consolidate down. When you're starting to see a rocket ship, the same way that gravity comes back down and consolidates, because this is such a rocket ship, when it does finally come back down, it doesn't come back down a little bit, it comes back down a lot. One of the most historic examples is that day of GameStop where Robinhood turned off the buy button. Everyone that was buying GameStop was just buying it based on the hype. And then what ends up happening is the moment that Robinhood turns off the buy button. All of this is not natural price action. And whenever there's any type of movement based on hype, gravity eventually comes back down. So my job as a trader is to not only identify when these extended moves are happening, but to make sure that I don't get chopped up on this day. I don't get chopped up on that day. I don't get chopped up on this day because at the end of the day, what I've recognized is the moment that it turns red, that is a momentum shift.
