Hi all,

I'm a husband and dad of five and I've recently transitioned to full time trading.

I wanted to post some concepts that I've found helpful in my trading journey, and in doing so maybe help someone who's thinking of, or working on transitioning to full time trading.

Writing out these concepts has been really helpful for teaching myself different nuances in trading and since I was doing it anyway I thought I'd post it here to potentially help others.

Would also love feedback on my concepts and ideas and to hear about how you guys find the right "conditions" for your trading setups.

Here's my post:
(These are basically notes to myself)

What is a trading “Setup”?

To me, a setup is a set of clear conditions needed to enter and exit a trade.

And to help understand these concepts, I like look at them through the lens of surfing.

Here’s what I mean; Surfers need certain conditions to be met in order to enter the water, paddle out, and consistently catch waves.

Conditions like location of the body of water, time of year, and daily weather patterns all play a part. They also need to consider if the surf spot is crowded, what type of waves they’re trying to catch based on the season, where they will start their wave, and where they’ll exit. They also need to ensure there are safety measures in place.

When combined, these conditions determine the surfers chance of success.

After thousands of attempts that surfer will have a very good understanding of the conditions needed to consistently catch waves. And he will be very specific about those conditions being met in the future, to ensure consistency.

Trading is no different.

Make it your own.

It’s become clear to me that to be successful over time, every trader must build out their own specific trading conditions that need to be met (trade setups) in order to find trading’s holy grail: consistency.

It’s easy to think setups are best copied from your favorite trader—and yes, this is often a good foundation—but consider a quote from one of my favorite trading authors:

"What if we simply focused on what we understand, what we do well, what makes sense to us?" – Mike Bellafiore

This makes a lot of sense to me because you are a unique person, with certain traits, talents and abilities. You have individual likes, dislikes, goals, desires, and curiosities.

Just as every surfer is unique, so is every trader. You must eventually carve you’re own path.

I started to get super curious about large and mid-caps on the Nasdaq after I came across traders like Steve Spencer and SMB Capital.

Steve shares examples of how to take advantage of intraday moves in these liquid leaders and I wanted to find more examples—to see how and why people are doing this—so I turned to twitter(X). I questioned and observed how people are thinking about setups in this sector.

The volume and variety of ways people trade is mind-blowing. A clear pattern emerged: each trader developed their own set of conditions through countless trade attempts (reps), staying persistent and learning from their mistakes - making small tweaks along the way with each lesson learned.

“There are no silver bullets, only golden bibi’s” - Unknown

Over time I came to realize this sector of the market was a good place for me to start for several reasons:

1. The (mostly) absent fat-tail risk found in small-cap stocks.
2. The liquidity available to get in and out easily.
3. The variety of ways to leverage trades through things like leveraged ETFs and options.
4. The consistency of moves and catalysts that come from these particular stocks, making them easier to catalogue.
5. Scalability over time.

To help you explore this yourself, I’ll explain five common principles to help you find your conditions. I do this to remind myself and to hopefully support you in building your own setups (conditions) to find consistency.

As you read this post, I encourage you to think about a sector or financial product that has peaked your interest for one reason or another, and what conditions might be needed to suit your needs.

5 Principles to creating your own setups

1. Narrow your focus - be specific. (What body of water will you surf?)

One common theme I see in all successful traders is being in the right stocks at the right time, and being very specific about it.

A common saying amongst traders - “You’re only as good as the stocks you trade”

Let me explain using the surfing analogy again:
(I’ll be doing that a lot in this post)

”You’re only as good as the waves you surf”

From careful observation over time, surfers know that the best waves typically happen in Hawaii. Specifically on the north shore of Hawaii.

And just like the surfer, not every trade is worth “paddling out” for. Your job is to find the conditions (a location) where the stocks are moving well and most suited to your abilities. Being in the right place at the right time is everything. Think about it, if you don’t have waves to surf you end up swimming in circles. Trading is no different.

In trading this could be narrowing your focus to large caps with at least a $10 billion market cap and trading at least 1 million shares premarket, and trading them at the open of the trading day when there is the most volume. Or you could look at small cap stocks that have gapped at least 20%. Personally, I like large and mid cap stocks that are trading at least 2-3 times their normal volume in the premarket.

Wherever you focus, the principle is this:

Just like the surfer, you must find a very specific location or sector of the market that is known to consistently produce great trades (waves).

2. Stocks are like elastic bands (Are we in the right season for surfing?)

Now that we have our first condition - location - we need to find our specific time frame when the “waves” are at their best.

For surfers, November to February is the prime surfing season in Hawaii.
It’s when the ocean is most “out of balance” and producing the best waves.

Stocks need to rebalance and find equilibrium, just like the ocean.
We can often see this imbalance when looking at the price chart (I personally like to start with the daily chart in my search).

The more stretched or compressed a stock is, combined with the amount of time it remains in that state, the greater the probability of an outsized move is coming (wave to surf).

Just as surfers recognize certain patterns in the seasons, traders start to recognize patterns in the price charts that show them when a stock is out of balance and whether it’s in the right “season” for trading.

Check out the example below. Here’s a stock that looks out of balance to me and that I think was ready for a wave:

https://preview.redd.it/b8mbfub3hzfe1.png?width=2551&format=png&auto=webp&s=0789fe3dedc2961a9e3a379e0cc12f38f4d81c52

Nvidia had been building pressure (compressed) for two months. Instead of heading back down, it paused mid-channel, making a “higher low” and started pushing up to the upper level of the trend. The pressure that was building released, and it broke out to the previous high from the candle on the far left. This change in price action (for me it was the higher low) signals it was time to get interested and dig a bit deeper.

Surf’s up!

3. Catalysts are key to finding consistency (What’s the weather like today?)

Think about the conditions we have so far:

1. Sector/stock (location)
2. Daily pattern (time of season)

For our third condition, we’re talking about catalysts (think weather on the day)...

In the case of a surfer, they’re observing if the day’s weather conditions match with the location and time of season. If they’re in Hawaii > on the north shore > in January > they know from hard-won experience that the perfect weather includes the following:

• Big Swells: January is part of Hawaii's peak surf season, with large swells generated by winter storms in the North Pacific. Wave heights typically range from 6-20 feet, depending on the spot (e.g., Pipeline, Sunset Beach, or Waimea Bay).
• Clean Surf: Ideal conditions have minimal wind or light offshore winds (blowing from the land to the sea), which keep the waves clean and well-shaped.
• Swell Direction :A west-northwest to northwest swell direction is optimal for the North Shore, as it aligns well with most surf breaks.
• Mild Air Temperatures: Daytime highs: 75–80°F (24–27°C).Nighttime lows: Around 65–70°F (18–21°C).
• Sunny or Partly Cloudy Skies: Clear weather enhances visibility and comfort.
• Gentle Winds: Trade winds (northeast) are common but should be light to avoid choppy surf. Ideal wind speeds: 5–10 mph (8–16 km/h).
• Water Temperature: Around 75°F (24°C), so a light wetsuit top or rash guard is usually sufficient, but many surfers go without.
• Tide: Tide timing depends on the specific break, but mid to high tide is often preferred for safer and more consistent waves.

Think about how specific that is!
Now let’s take that principle over to trading.

In the example of Nvidia, the main catalyst was technical (based mostly on the chart pattern). The stock’s daily price action had been compressed for a meaningful amount of time, it then started to deviate and move up on volume, to what I deemed as a very key level. Showing me it was potentially ready to change. This (along with a few other variables that are unique to my needs) confirmed it met my conditions for a potential trade on the day.

The “weather” looked good!

Catalysts can of course be non-technical. They can include fresh news, downgrades, upgrades, or surprise earnings reports. These can all be great reasons to enter a trade.

For example, if the market expects $1 per share in earnings, but the company delivers $1.20—especially from a new revenue stream—it can spark a powerful move.

For the surfer, the weather conditions need to match up with the location and season in order to create good waves.

For the trader, the best catalysts will nearly always match up with the first two conditions; location (stock) and time of season (daily pattern).

With thousands of reps, just as it becomes second nature to a seasoned surfer, the same is true for the experienced trader.

Tip: In the early stages of your trading career, just like a young surfer, be specific and write out every nuance you notice when you see big trades (waves). It could be things like what the volume is doing, what’s the sector doing, how it’s acting in the premarket or around certain key levels, what’s the open interest in the option chains, are there big buyers or sellers on the tape? etc. This gives you more data to cross reference over time and allows you to gain experience faster. Don’t forget to record your screen so you can replay the trades! Upload your recordings to YouTube and set them to private for easy reference.

4. Volume (Now we’re in the water, waiting for the wave)

We now have a very solid base of conditions to build on. So far our principles include:

1. Sector/stock (location)
2. Daily pattern (time of season)
3. Catalyst (weather conditions of the day).

Now let’s talk about the fourth principle: Volume (how many shares are being bought and sold in a certain time frame).

Volume flows give you a sense of the probabilities of the expected move actually taking place.

Again, think of it like a surfer waiting for the next wave; they might have perfect conditions on the day, they just need some confirmation…

They may see a rising bump or swell line on the horizon. This indicates an incoming wave. Surfers look for sets (groups of waves) and gauge the wave's size and speed from its appearance far out at sea.

Traders can do the same with volume!

For example: Is the volume increasing or slowing? Is it more than normal for this stock, sector, or time of day? By how much? Is it spiking or constant?

If the volume looks like it’s aligning with your conditions, it’s time to focus.

The wave is coming…

Now one last piece of the puzzle remains.

5. Price action (Wait for your signal to enter)

We’re in the water, waiting…Conditions are perfect.

We have our conditions set:

1. Stock (location) ✓
2. Daily pattern (time of season) ✓
3. Catalyst (weather on the day) ✓
4. Volume (water rises on the horizon) ✓

The final piece to the puzzle is price action…

You have a plan in place, you know what you want to see, you just need to wait to see it.

In trading, price action can include things like candlestick patterns, tape reading (one of my favorites), price behavior around certain key levels or indicators, bid and offer sizing on the level II, and many other nuances that simply take time and reps to recognize.

Price action is everything in trading.

It’s the final piece that tells you if it’s go time (or not).

I personally love it because feedback is almost instantaneous.
Some traders call it the “only truth” in trading.

In surfing I liken it to when you see the white water at the tip of a wave starting to crest, the waves are starting to move faster and break to shore according your angle. This is exactly what you want to see - all signaling your entry.

Time to start paddling.

And depending on the conditions, how hard to paddle. (think position sizing - but more on that later. Right now we just need to practice standing up.)

You’re paddling, you’re feeling the wave starting. You stand up on your board, set your sights on managing your ride, and simply follow your plan to the exit.

All your focus is now on the price action during your trade.

Just as a surfer is watching the wave he’s riding - looking at its curve and shape, its speed, size and watching out for dangers along the way - so is the trader.

You have a plan in place in case you see different variables pop up. But otherwise you’re simply riding the trade, taking the rep and riding as long as you can, or until you get to your target.

Just like surfing, price action in trading is best learned through experience.
The more you do it, the more nuances you pick up and the more confident you become.

Bonus principle: Film your surf session, take notes!

In both surfing and trading, reviewing your performance is essential for improvement. Just as a surfer might film their sessions to analyze technique, you can track and review your trades to identify patterns, strengths, and areas for growth.

Journaling your setups, entry and exit points, and emotional state during trades can provide invaluable insights over time. The goal is to iterate—refining your strategy with each trade (wave) to consistently improve your edge and execution.

I hope these principles can help guide as you build out your own unique conditions to become a more consistent and profitable trader.