Start with unusual movement
Leadership, a gap or extreme extension narrows the universe to stocks already demonstrating exceptional behavior.
The playbook / Overview
Three ways momentum reveals itself.
Continuation, revaluation and exhaustion. Kullamägi's three setup families approach fast-moving stocks from different points in their life cycle, but they share the same demand: price must confirm the idea.
MOMENTUM CONTINUATION
Breakout
A strong stock pauses after a major move, forms a tightening consolidation near rising moving averages and then expands from the range.
OPEN GUIDE →CATALYST + REVALUATIONEpisodic Pivot
A genuine surprise, often earnings or guidance, creates a large gap and exceptional volume that can begin a longer institutional repricing.
OPEN GUIDE →EXTENSION + REVERSALParabolic
An accelerating stock becomes extremely extended. The reversal trade waits for momentum to break rather than guessing where the top will be.
OPEN GUIDE →
Shared architecture
Different pattern. Same operating system.
Each setup has distinct criteria, but the study and execution loop remains consistent.
Demand a recognizable structure
A large move alone is not a setup. The consolidation, catalyst response or reversal behavior creates the tradable context.
Wait for price confirmation
Opening-range breaks and failures turn a watchlist idea into an actionable event. Anticipation increases ambiguity.
Place invalidation nearby
The low or high of day, the opening range or a VWAP reclaim can define when the premise has failed.
Size from the stop
The distance between entry and invalidation determines shares. A wider stop requires a smaller position for the same planned risk.
Let evidence govern exits
Moving averages, price closes and failed follow-through are management references, not guaranteed protection.
The warning label
A checklist is not mastery.
Setup criteria help organize observation. They do not capture market regime, liquidity, earnings risk, gap risk, slippage, short availability or the countless variations visible after studying hundreds of examples.
Kullamägi's own EP article tells readers to verify any claimed edge for themselves. The database work is not optional because it is how a trader learns what weak versions look like.
Risk noteExamples on these pages summarize
historical personal practices described by Kullamägi. They are
not recommendations. Short selling can involve theoretically
unlimited loss, and stop orders cannot guarantee the final execution
price.