+969% Return in 1 Year: The Winning Pullback Strategy of a Trading Champion

Key Concepts

• Adaptability is Paramount: Successful trading requires constant adjustment to market conditions and personal performance.
• Risk Management is Crucial: Tight stop-loss orders, consistent position sizing, and a focus on downside protection are essential for long-term success.
• Experiential Learning is Key: The most valuable lessons come from personally facing and overcoming trading challenges.
• Market Context Matters: Understanding broader market trends and sector rotations informs better trading decisions.
• IWM as a Market Indicator: The relationship between IWM and QQQ performance can provide insights into potential market drawdowns (though past performance is not indicative of future results).

Trading Journey & Performance (2020-2025)

Martin Luke began trading in October 2020 with $10,000, tripling his account within four months due to a strong bull market. He experienced a near 50% drawdown in 2021 from chasing small caps and random trades. Learning from Christian Kulamei and Mark Minervini, he focused on risk management and VCP analysis, resulting in a flat 2022 and a recovery in 2023. He achieved a 280%+ return in the 2024 US Investing Championship (USIC). 2025 saw 209 winning trades and 731 losing trades (a 22% win rate), with a shorter average holding period and tighter stops leading to smaller average losses. December 2025 saw a 26% drawdown, with 46% of trades considered avoidable.

Evolving Trading Style & Methodology

Initially a swing trader focused on breakouts, EPS plays, and parabolic moves, Martin shifted towards pullback trading in 2025. He initially learned this on the short side, shorting at resistance during bounces into declining EMAs, then applied the same principle to long entries. He primarily uses 9, 21, 50, and 150 EMAs, dollar volume, and Anchor Free Web (AFW) to identify setups. Risk per trade is around 0.5%, with adjustments based on confidence and profit cushions, and portfolio sizing typically 25-30%. Stops are generally set tightly, less than 2.5-3% from entry. He favors intraday breakouts of the previous bar’s high on a one-minute chart and pullbacks to the 9 or 21 EMA on the hourly chart.

Entry Tactics & Technical Analysis

Martin observes intraday patterns of stocks gapping up or breaking out, then reversing and finding support, looking for entries at the low of the day or failed opening range breakouts. He identifies pullbacks into daily 9 or 21 EMAs, prior highs/lows, and uses AFW to find support levels. He utilizes Anchored VWAP (AVWAP) – learned from Brian Shannon – to identify support and resistance, anchoring it to swing highs or lows. He emphasizes multiple confirmations (AVWAP, EMAs, swing points) for higher probability trades.

2025 Trade Analysis & Lessons Learned

Throughout 2025, Martin focused on breakout and pullback entries, experimenting with stop-loss distances. He analyzed numerous trades, including Planet Labs, INQ, AMD, and Tesla, identifying both successes and failures. He learned that tighter stops would have reduced losses on some trades, and that chasing missed entries after a losing streak (like his December drawdown) led to aggressive, failed trades. He emphasizes the importance of considering broader market context, particularly the relationship between the IWM and QQQ.

Market Correlation & Future Outlook

Martin’s analysis of 15% drawdowns revealed a significant shift in the correlation between the IWM and QQQ. Before 2008, approximately 80% of QQQ 15% drawdowns were preceded by IWM weakness. After 2008, this correlation reversed completely – 100% of the time, a QQQ drawdown did not occur if IWM was leading. He suggests strong IWM performance indicates a lower probability of significant market pullbacks, advising reduced focus on short positions.

Philosophical Approach to Trading

Martin stresses treating trading as a business and adopting the mindset of a successful trader by asking, “What would they do?” He emphasizes that experiential learning – facing and overcoming challenges – is more impactful than secondhand knowledge. He acknowledges that missing opportunities is normal and encourages continuous self-reflection and improvement. He believes setbacks are inevitable and should be viewed as lessons learned.

Conclusion

Martin Luke’s trading journey demonstrates the importance of adaptability, disciplined risk management, and continuous learning. His evolution from random stock picking to a data-driven, pullback-focused strategy highlights the need to refine methods based on market conditions and personal experience. His emphasis on experiential learning and the psychological aspects of trading provides valuable insights for traders of all levels. Ultimately, his approach underscores that success in trading is not about avoiding losses, but about learning from them and consistently improving one’s decision-making process.