This trader has achieved an appreciation of 2 700% in the last 2 years. Now he reveals the 3 indicators that helped him…

Eduardo Briceno survived the arduous journey from Venezuela to the US, where he became a successful day trader. He started with $28,000 and made over $788,000 in 2 years, a return of 2,716%. His success is based on a carefully thought out strategy focused on small companies, which he designed based on deep market knowledge and technical analysis. Let's take a look.

Eduardo Briceno

Eduardo Briceno, 35, became a full-time day trader shortly after arriving in the US in 2017. It was a decision he made after he fled Venezuela and had no clear means of earning an income. Although he had some experience and understanding of the stock market, it wasn't enough to become a successful trader. He also took trading and investing courses from an educational institution and an online program. But no amount of education could prepare him for the stress of a stock trader who could not afford to lose his bets.

At first, it was the worst decision he ever made. Briceno estimates he lost about $8,000 of much-needed savings. But he persevered, even at the cost of living off loans from friends and family, until he gradually began to hone his trading skills.

One of the biggest changes that Briceno says was key to his success was a change in mindset. He stopped trying to make money in the stock market and started focusing on trading technique. This allowed him to separate himself from his emotions and stick to executing trades based on his setups.

Based on the statement, he started in October 2020 with $28,000 in a Cobra brokerage account. The balance in that account increased to $40,392.42 until he closed it in December 2020. He then opened a new Cobra account under the LLC in January 2021 and transferred $40,000. The records show that he withdrew $437,195.72 during 2021 and 2022. At one point in October 2022, he added $45,000 to the account. In April 2021, he also opened a Guardian account under the same LLC and deposited $35,000. This account shows that he has withdrawn a total of $457,319 from 2021 to the present. In November and December 2021, he added $11,000 and $10,000 to the account.

Briceno said any additional money transferred into the accounts after the initial $28,000 deposit was from his business profits. Based on his initial amount and factoring in total withdrawals of $788,551, he earned 2,716.3% from October 2020 to February 2023.

Briceno has a YouTube channel that is primarily in Spanish where he shares trading content. It also sells courses online. His results have been described as unusual and outstanding by Norman Zadeh, a former math professor who hosts the United States Investing Championship each year. But Zadeh cautioned against this type of approach, noting that more traders end up losing everything by trying to do what Briceno did.

Briceno implements a wide range of strategies that he has compiled from his training and personal experience. Together they create a setup that consists of fundamentals, technical aspects, understanding trading patterns and risk management. He specifically sticks to trading small-cap and momentum stocks because he is most familiar with them and knows their movement patterns. Based on this, he uses three main indicators to assist him in his trades.

Indicators

He tries to keep the indicators as simple as possible so that they are reference points rather than overshadowing the theories and other variables he trades. This is because the chart delays information and does not provide context as to why the price is moving in a certain direction. However, if Briceno holds a position, the indicator could signal that the price action is moving against his theory or tell him who is in control, the seller or the buyer.

The most relevant indicator he tracks on high-volume days is the volume-weighted average price (VWAP), which shows the average trading price of a stock adjusted for trading volume. For Briceno, when the spot price is above the VWAP line, it's a sign that buyers are in control. In contrast, when the price falls below VWAP, it's a sign that the average trader who bought the stock is now underwater and sellers are in control, he said.

If the stock price is heading close to and above VWAP, he uses it as a good entry point for a long position. But if the price is more than 10% above VWAP, it's a sign that it might be overextended and tends to sell. His goal is to stay close to the average to avoid chasing the stock.
Different types of traders will use the VWAP for different reasons. For example, a contrarian or mean reversion trader will look for a spot price further away from the VWAP as an indication of a potential reversal or correction.
One of his recent trades in which the VWAP was helpful was a sympathy play. C3.ai $AI recovered during the last week of March and broke its resistance around $30.92. Briceno wanted to trade Guardforce AI (GFAI), a micro float AI stock that he would normally avoid due to its small float size and lack of liquidity. So he compensated by betting on a very small position to keep his risk management intact.

On April 3, he entered a long position in GFAI after it became volatile and broke its pre-market high of $10.30 shortly after the market opened. Throughout the day, the price held above the VWAP, allowing him to exit and re-enter his position with some conviction. He locked in profits of over $3,800 on the trade, according to a screenshot of his brokerage account.

In other words, he trades with multiple variables that will be different for each trader. In the above scenario, he traded the "hot" sector, which was AI. He took into account the stock's float and its volume to adjust his risk exposure.

So-called "tape reading" is another important part of his process. It's a term that got its name from the early 1860s, when day traders followed telegraph lines that transmitted real-time stock data to tape.

This information eventually became digitized when computers were used for trading. It is not an indicator that is placed in a chart. But it keeps it on the screen and uses it for other updated data.

Specifically, it tracks time and a sell channel that shows stock transactions including date, price, volume, type of trade and the speed at which orders are executed. Unlike the chart, it is a less laggy indicator as it shows live transactions.

"It's the most important tool for all traders and it's probably one of the tools I use the most," Briceno said.

When transactions turn green quickly, it's a sign that price is rising with momentum. If he's long at this point, he'll lock in some profits rather than continue to ride the rally in a full position because it could correct over time. He does the same when he is in a short position when the position turns red, indicating selling pressure.

Another indicator he uses to determine where key lines of support and resistance (or price floor and ceiling) may be located is the Level 2 chart. It shows limit orders that have been entered at certain price points. Buy orders are listed in the "bid" column and sell orders are in the "ask" column. Price points at which there are large order sizes on the "demand" side could act as an early indicator of potential resistance points, he noted. Price points with large orders in the "bids" could indicate that there is potential support in this area. With this chart being reviewed by other traders, it could become a self-fulfilling prophecy that many traders are acting on these price points. However, there may be hidden bid orders that are not shown on this table, he noted

Overall, risk management remains a key part of its strategy. No matter how many indicators he watches, if there is a catalyst, a stock can move so quickly that he won't have enough time and sometimes liquidity to exit a position, he noted.

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Please note that this is not financial advice.