Marius Stamatudis: Swing Trading Strategies for 291% Returns

The Journey of Marius Stamatudis: From Novice to Champion Trader

Marius Stamatudis, a name that has recently become synonymous with exceptional trading performance, grabbed the fourth spot in the 2023 US Investing Championship with an impressive 291% return in less than a year. His journey from a curious student to a successful swing trader is both inspiring and instructive for aspiring traders.

Early Days and Initial Struggles

Marius's trading journey began during his time as a student at the Agricultural University in Athens, where he was studying food science and human nutrition. Unable to picture himself analyzing food, he started searching for ways to make money online. A simple Google search led him to stock trading and investing, which piqued his interest.

Like many novice traders, Marius's initial foray into the world of trading was far from successful. With limited knowledge and excessive leverage, he blew his first account in just three days. This devastating experience, while discouraging, served as a wake-up call. Determined to improve, he took up courses and alert services, but his second attempt lasted only seven days.

The Turning Point: Self-Study and Discipline

Realizing that quick fixes and shortcuts wouldn't cut it, Marius embarked on a journey of self-study and discovery. He began to dig deeper into trading concepts, slowly building his knowledge and understanding. This period of dedicated learning proved crucial, as it allowed him to:

• Identify gaps in his trading strategy
• Develop discipline in his approach
• Build a solid foundation of trading knowledge

The results of his efforts began to show:

• 2017: Posted his first break-even year
• 2018: Recovered all past losses and expenses
• 2019: Achieved high triple-digit returns

Transition to Swing Trading

A significant shift in Marius's trading career came in 2020. At this point, he was still day trading, closing out positions on the same day. However, he noticed a pattern: many stocks continued to rise after he had exited his positions. This realization led him to explore swing trading.

To make this transition, Marius:

1. Immersed himself in books by renowned swing traders like William O'Neal and Mark Minervini
2. Discovered and learned from Christian Kulamagi's Twitch stream
3. Incorporated elements from his day trading framework into his new swing trading approach

After completing his mandatory military service, Marius fully embraced swing trading in 2022. His dedication and newly refined strategy paid off when he joined the US Investing Championship in late January 2023, securing the fourth position despite his late start.

Marius Stamatudis's Swing Trading Strategy

Marius's swing trading approach revolves around three key setups:

1. Classic breakouts
2. Episodic pivots
3. Parabolic shorts

Let's delve into each of these setups and understand how Marius implements them in his trading.

Daily Routine and Screening Process

Before we explore the specific setups, it's important to understand Marius's daily routine and screening process. This forms the foundation of his trading strategy:

1. Scanner Review: Marius starts his day by reviewing well-laid-out scanners for his preferred setups. These include:

   • Best performer screens for 1-month, 3-month, and 6-month timeframes
   • Dense volume scanner
   • IPO screen for potential short opportunities

2. Individual Stock Analysis: He then screens through individual names on these lists, looking for his desired setups.

3. Watchlist Creation: Promising stocks are added to his watchlist for further monitoring.

4. Breakout Zone Identification: For potential breakout candidates, Marius draws trendlines on the breakout zones and sets alerts.

5. Weekly Theme Analysis: Marius conducts a detailed weekly scan to identify prevailing market themes and determine the basic market structure. This broader view helps him prepare for daily trading and act quickly on emerging opportunities.

Key Metrics in Stock Selection

Marius pays close attention to two important metrics when selecting stocks:

1. Average Daily Range (ADR): This measures the average movement in stock price without considering gap ups and gap downs.

2. Average True Range (ATR): Similar to ADR, but it includes gap ups and gap downs in the calculation.

Marius typically looks for stocks with a high ADR, preferably 5% or more. This helps him filter stocks that move faster during the day, potentially offering better trading opportunities.

Setup 1: Classic Breakouts

The classic breakout setup is a cornerstone of Marius's trading strategy. Here's how he approaches it:

1. Initial Move: Look for a significant price increase in the past 1 to 6 months.

2. Consolidation: After the initial move, the stock should enter a period of orderly consolidation, lasting from 2 weeks to 2 months. During this phase, the price should make higher lows, often using the 10, 20, or 50-day moving average as support.

3. Breakout: The consolidation is followed by a range expansion or breakout.

4. Entry: Marius enters the trade when the price crosses the trendline drawn on the consolidation pattern.

5. Stop Loss: The stop loss is placed at the low of the breakout day candle.

Example Trade: GREE

Marius traded GREE when it formed a down channel after a 140% move from the low in a short time. The stock broke out from the down channel at $2.80, and Marius entered the trade. The stop loss was placed at $2.40, the low of the breakout day candle, representing a risk of 11%.

This trade had a potential reward-to-risk ratio of up to 20:1, as the stock went up 200% in just two weeks. However, Marius didn't hold the entire move due to his standard exit rules.

Exit Strategy for Classic Breakouts

Marius employs a systematic approach to taking profits and managing risk:

1. Partial Profits: He takes partial profits as the stock reaches 2.5 to 3 times the ADR.

2. Trailing Stop: For the remaining position, he trails the stop loss using:

   • 10-day moving average for fast-moving trades
   • 20-day moving average for slower-moving stocks

3. Break-Even Stop: To minimize risk after the trade has delivered a certain multiple of the initial risk, Marius moves his stop loss to break-even, locking in the downside protection.

Setup 2: Episodic Pivots

The episodic pivot setup focuses on stocks that suddenly come to life after a period of inactivity. Here's how Marius approaches this setup:

1. Catalyst: Look for a sleepy stock that gaps up due to a catalyst such as an earnings surprise, drug approval, or regulatory change.

2. Gap Size: Marius quantifies significant gaps as 5% or above, noting that larger gaps often provide better opportunities.

3. Stock History: The setup typically involves a beaten-down name that hasn't shown much price action for an extended period.

4. Entry: While Marius's entry point varies case by case, he often uses the opening range high as an entry trigger. This could be the high of the first 1, 5, or 60-minute candle.

5. Stop Loss: The stop is placed at the low of the day.

Example Trade: Giga Cloud Technology (GCT)

Marius traded GCT in December 2023 when it gapped up 13% from the previous day's close on an earnings surprise. The stock delivered a 70-80% return in just one month, with a favorable risk-reward ratio of 1:8.

Setup 3: Parabolic Shorts

The parabolic short setup is based on the principle of mean reversion. Here's how Marius implements this strategy:

1. Identify Strong Moves: Look for stocks with big moves in a short time, typically ranging from 100% to 400%.

2. Wait for Weakness: Watch for the first signs of stress or momentum loss, often visible on intraday charts.

3. Entry: Enter the short position when the stock breaks the opening range low. This could be the low of the first 1, 5, or 60-minute candle.

4. Confirmation: For added confirmation, wait for the stock to have an initial crack, bounce back to the Volume Weighted Average Price (VWAP), and then fail at VWAP before entering.

5. Stop Loss: Place the stop loss at the high of the day or the high of the entry candle if the daily high is too far.

Risk Management and Performance Statistics

Marius's success isn't just about identifying profitable setups; it's also about managing risk effectively. Here are some key statistics from his performance in the US Investing Championship:

• Win Rate: 32% overall, ranging from 25% in bad markets to 40% in good markets
• Trade Frequency: Approximately two trades per day, totaling over 400 trades in the year
• Average Gain to Loss Ratio: 5:1
• Risk per Trade: 0.25% to 0.4% of the trading account

Despite the relatively low win rate, Marius's system has a massive positive expectancy due to the high gain-to-loss ratio. This means that his winning trades significantly outweigh his losing ones.

Risk Management Approach

Marius's risk management strategy is designed to withstand losing streaks:

• By risking only 0.25% to 0.4% per trade, even a string of 10 consecutive losses would result in a maximum drawdown of 4%.
• This conservative approach to risk allows Marius to stay in the game and recover from drawdowns more easily.

Lessons from Marius Stamatudis's Trading Journey

Marius Stamatudis's journey from a novice trader to a top performer in the US Investing Championship offers valuable lessons for aspiring traders:

1. Continuous Learning: Marius's success came after years of study and practice. He didn't rely on quick fixes but invested time in understanding the markets and refining his strategy.

2. Adaptability: The transition from day trading to swing trading shows the importance of being flexible and adapting your strategy based on market conditions and personal strengths.

3. Systematic Approach: Marius's use of well-defined setups and daily routines demonstrates the value of a systematic approach to trading.

4. Risk Management: His conservative risk management strategy, risking only a small percentage per trade, allows for longevity in trading and the ability to withstand losing streaks.

5. Patience: The willingness to wait for high-probability setups rather than overtrading is a key factor in Marius's success.

6. Leveraging Technology: The use of scanners and alerts helps Marius efficiently identify potential trades in a vast market.

7. Understanding Market Themes: Regular analysis of broader market themes allows for better preparation and quicker action on emerging opportunities.

Conclusion: Building Your Own Trading Success

Marius Stamatudis's remarkable performance in the 2023 US Investing Championship serves as an inspiration and a blueprint for traders aiming to achieve consistent profitability. His journey underscores the importance of dedication, continuous learning, and disciplined risk management in trading success.

While Marius's specific strategies may not be suitable for every trader, the principles underlying his approach are universally applicable:

1. Develop a well-defined trading system
2. Implement strict risk management rules
3. Continuously educate yourself about the markets
4. Be adaptable and willing to refine your approach
5. Stay disciplined in your trading execution

By focusing on these core principles and finding a trading style that suits your personality and risk tolerance, you can work towards building your own path to trading success. Remember, successful trading is not about mimicking others, but about developing a approach that works for you and sticking to it with unwavering discipline.

As you embark on or continue your trading journey, keep Marius Stamatudis's story in mind. It serves as a reminder that with the right mindset, dedication, and approach, significant trading success is within reach. Stay committed to your learning and growth, manage your risks wisely, and remain patient in your pursuit of trading excellence.

Article created from: https://www.youtube.com/watch?v=8Ji5w9uRqJo