These Are the Buckets That Matter
If your trading doesn’t fall into one of these buckets, you’re probably going to struggle.
Month after month, the money is made within these buckets.
If you spend most of your time outside of them, you’re probably not making much progress unless you’re getting lucky, or you have some sort of structural edge. Maybe a massive following that moves stocks, a broker who gives you midpoint fills on every order, or one of those dumb CFD brokers that lets you hit the bid on SSR names with unlimited size and no market impact.
For everyone else, this is where the real money is being made.
This is where your focus ought to be.
If you think you’re going to reinvent the wheel, you’re wasting your time.
The best trades and the best traders make the most money within these buckets.
There are good opportunities, and there are great opportunities, and they almost always come from these setups. The more you focus on them, the better your odds of real success.
1. Overnight Momentum Trading
Stocks closing in the top 20% of their intraday range on elevated relative volume (rVol) are often the best long setups.
For shorts, it’s the opposite: names closing in the bottom 20% of their range.
Market conditions matter. Context matters. And the stocks you choose matter.
Names like TSLA, NVDA, PLTR that are highly retail-centric tend to follow through incredibly well.
Small caps closing strong on huge volume, like ZAPP (7/8/24), often create asymmetric risk/reward trades overnight.
2. Imbalance Trading
This includes opening and closing imbalances, deals closing, S&P index rebalances, Russell, Nasdaq, MSCI, end-of-month rotations, and OpEx days.
These events create outlier opportunities if you know what to look for.
You’ll need to pay for imbalance data. Nobody’s going to spoon-feed this one to you.
It’s a lonely game, but the edge is real.
3. Breaking News
Lots of options here. Pick your poison.
Not my game, but if it’s yours, it can absolutely pay.
4. Higher Time Frame (HTF) Overextension Trades
These are the multi-day or multi-week parabolic moves with multiple legs up or down and range expansion.
Think of those massive red candle days on SMCI, MSTR, NVDA, GME, TSLA in 2024.
That’s where the juice is if you time it right.
5. Lower Time Frame (LTF) Overextension Trades
Same idea, smaller scope.
Example: BA (7/8/24) after it accelerated to the downside.
Also where some small cap short setups fit, though that’s not for the faint of heart.
Good luck with that bucket.
6. Special Situations
These are “one-off” trades that just logically make sense.
For instance, when MARA was added to the S&P 600, its spread versus RIOT blew out.
MARA traded nearly 20% higher. Once index buying wrapped up, fading that move by shorting MARA was a fantastic mean reversion trade the next morning.
Special situations require research, logic, and understanding how markets actually work.
They can also include merger arbitrage (like the Twitter deal) or corporate events (like AVGO).
7. Auction Trading
Trading the auction mechanics means reading IPOs out of the gate, limit up or limit down halts, and reopens.
It’s a different kind of game, but for those who can read order flow, it’s one of the most predictable setups out there.
Final Thoughts
These are the buckets that matter.
This is where the majority of the money is made in a short period of time for active traders.
If you can figure out the nuances, patterns, and permutations within these buckets, you have a fighting chance.
And if you try to fight it, carve your own path, or reinvent the wheel, good luck.
HTF = Higher Time Frame
LTF = Lower Time Frame