The Mont Pelerin Trading System
A rules-based momentum swing trading system focused on stocks in confirmed uptrends with institutional sponsorship. The goal is to participate in high-quality moves while keeping risk controlled through mechanical rules.
This is the exact system I use. Shared for educational purposes.
Core Philosophy
I only trade stocks that are in a confirmed uptrend and showing signs of institutional interest. I don’t try to predict tops and bottoms or trade chop. Instead, I wait for clear evidence that a stock is in a healthy trend and then follow strict, mechanical rules for entry, sizing, and exit.
The system is designed to remove as much emotion and discretion as possible. Good trends are allowed to run. Broken trends are exited quickly.
The Main Tools
Stage 2 Uptrends
I focus on stocks that have broken out of long bases and are trending higher. This is the phase where the strongest and cleanest moves tend to happen. I avoid downtrends and choppy, directionless markets.
Heikin Ashi TRIGGER
This is my daily entry trigger. A TRIGGER occurs when the first bullish Heikin Ashi candle closes above the high of the previous bearish series. It signals that momentum has shifted back in favor of buyers after a pause in the uptrend.
Supertrend (7,2) – The Stop Loss
Supertrend is my primary trend filter and stop loss. I use specific settings (period 7, multiplier 2). When it is green, the trend is considered healthy. When it flips red, the trend has broken and I exit. This is the main mechanical stop loss in the system.
Multi-Screen Confluence
Before I consider a trade, the stock must pass multiple independent screens at the same time (relative strength, accumulation patterns, leadership characteristics, etc.). The more factors that align, the higher the conviction.
What Must Align Before I Buy
A stock only becomes a candidate when all of these are true:
- It is in a confirmed Stage 2 uptrend.
- It shows a fresh daily Heikin Ashi TRIGGER.
- Daily Supertrend (7,2) is green.
- No earnings are scheduled in the next 14 days.
- It meets the minimum conviction threshold from the screens.
Entry Rules
I only enter when every condition above is met. This filters out lower-quality setups and forces patience.
Position Sizing & Risk Limits
Position size is conviction-weighted. Stronger setups (more screens passing, higher overall conviction) get larger size. Weaker but valid setups get smaller size.
There are hard limits in place:
- Maximum number of open positions at any time
- Maximum new capital deployed per week
- Never add to a winning position — every trade stays at its original size
Exit Rules
Primary Stop Loss – Supertrend Flip
When the daily Supertrend (7,2) flips from green to red, I exit the remaining position at the next open. This is the core stop loss rule. It gets me out when the trend I entered has broken.
Partial Profit Taking
When a position reaches approximately +15% unrealized gain, I sell 25% of the position and move the stop on the remaining shares to my original entry price (breakeven). This locks in profit while giving the rest room to run.
Why This Exit Approach?
The Supertrend flip acts as the main defense against large losses. The partial trim at +15% banks gains on trades that have already worked, while the breakeven stop means that once a trade reaches that level, I can no longer lose money on the remaining shares.
Why the System is Built This Way
The rules exist to solve common trading problems: emotional decisions, overtrading weak setups, holding losers too long, and giving back profits. By requiring multiple factors to align before entry and using mechanical exits, the system aims to keep me in good trends longer while cutting losses quickly when the evidence turns against the position.