- Leoš Mikulka, a software architect, is up 317% in the US Investing Championship as a swing trader.
- He credits his success to an online program by Mark Minervini about risk management.
- He filters stocks using indicators that signal long-term trends and relative-strength ratings.
Leoš Mikulka works as a software solutions architect at an IT company in Prague. But after work, he also trades US stocks. The six-hour time difference means that when the US stock market opens at 9:30 a.m. ET, he begins trading at 3:30 p.m. his time.
He was 13 when he first heard about trading stocks. He had come across Benjamin Graham's book, "The Intelligent Investor." His parents purchased it for him, but it ended up sitting on his shelf for years.
It wasn't until he was in university in 2016 that his interest in stocks was sparked again. He was looking at company financials for one of his courses when he became interested in company structures and figured he could use that knowledge to learn to invest in stocks and make money.
He purchased a book called "How to Make Money in Stocks" by William O'Neil, who founded Investor's Business Daily, a news source for investors. After reading the book, he thought he was well-versed and ready to begin trading in 2016. It was a slow but successful attempt: he told Business Insider he closed the year off with a gain.
In 2017, he had an even better year, he said. He did the math in his head and thought that if he could repeat this success, it would compound incredibly. But the stock market plunged in 2018. The S&P 500 fell by about 15% in the final quarter. After losing everything he had gained over the previous two years, it was a reality check. It took him until 2020 to recover his prior losses, he said. But in 2021, he got caught in a short squeeze after trying to short Gamestop and lost money again.
By 2023, he had become comfortable with his trading strategy, allowing him to gradually keep his gains. He credits an online training program he took in 2020 called Minervini Private Access by Mark Minervini, a stock trader who won the US Investing Championship. He also did the Master Trader Program workshop by the same teacher. From it, he learned about the mental aspect of trading, which helped him manage risk and avoid revenge trading. He especially learned position sizing, keeping it small, and scaling into a position rather than slamming a large position at once.
Today, he's mainly a swing trader, which means he tends to hold stocks for a period of days to weeks. He entered the US Investing Championship and had gained 317% as of April 30, according to Norman Zadeh, founder of the US Investing Championship and records viewed by Business Insider.
How he filters stocks
Since he's not a day trader, his goal is to find stocks that have been in a strong consistent uptrend that he can hold over a few days to weeks. For this reason, he filters using indicators that signal long-term trends.
His go-to chart deck is IBD's MarketSurge platform. He begins by filtering stocks using Mark Minervini's Trend Template for one-to-four-month and five-month filters, which shows the stocks whose 200-day moving average has been in an uptrend in those timeframes. This filter works well in an environment where the broad market is in an uptrend, providing a wide net of stocks.
He then filters for stocks with share prices above $12 to remove cheaper, more volatile stocks.
He filters out stocks that have dropped by more than 20% from their 52-week highs. This removes stocks that have had steeper corrections. He assumes the stocks that pulled back slightly, or by less than 20%, are forming a base and more likely facing a temporary correction, enabling him to buy the dip.
He then filters stocks by relative strength ratings (RS Rating) above 89, this is a proprietary rating system from IBD, with "1" being the worst and "99" being the best stocks outperforming the broader market over the trailing 52 weeks. This signals that there has been high investor interest in these stocks relative to others over a longer period. He splits the stocks by size, specifically, the number of shares outstanding: "RS 100 million and above," which means stocks with more than 100 million shares outstanding, "RS 100 million and below," "RS 50 million," and "RS 25 million.
The larger the shares outstanding, the smaller percentage moves he requires to consider trading them. He also takes profits sooner, setting his stop loss at 2% below his buy price.
"So those would be, if, say for example Apple, I usually won't be looking for some huge gains. I would be more inclined to take profits earlier," Mikulka said.
But stocks under the RS 25 million require larger price moves to attract his attention, he added. They are riskier, so he aims for higher gains to even out the risk-reward ratio. He requires larger percentage gains of about 12% to 15% over a period of 30 to 60 days before considering a trade. He will set his stop loss at about 5% below his buy price to account for increased volatility. He avoids stocks that may have seen 100% gains within a 50% pullback because the volatility is too extreme. He avoids stocks tied to cyclical trends such as oil and other commodities.
Finally, he filters for volume with the "50-day average volume"— the average number of shares traded daily over 50 days — above 25,000 shares. He also includes the volume of the 50-day average dollar — the average number of shares traded daily over 50 days multiplied by the most recent closing price — above zero to avoid stocks that have falling prices with dropping shares traded.
While Nvidia may have been an obvious trade for many who were paying attention to headline news, it caught Mikulka's attention after it appeared on his screener. He had been watching Nvidia's chart since December, and it had a consistent 200-day moving average trend upward. Even during slight pullbacks, the stock held above its 50-day moving average. As it broke above its resistance area, there was also a significant volume increase. He purchased shares on January 8 at $506. He sold some of his position at $548 on January 11 and sold off more shares on January 22 for $602, according to records of his brokerage. He held the remainder until March 4 at $870 after the stock became over-extended, moving too far above the 10-day moving average and buying volume was slowing.
Another winning trade was made on January 22, he purchased shares of Mitsubishi UFJ Financial Group (MUFG) for $8.93 after it had been on an uptrend on its 200-day moving average with relatively small pullbacks. As of January 3rd, it held above its 50-day moving average, bouncing off resistance points around $8.83 and $8.94 with minor pullbacks. On January 22, it finally broke above the resistance area, where he purchased shares one tick below. He held his position until February 2, when he sold half his position, taking profits at $9.46 after his unrealized gains were above 6% — double his risk threshold of 3%. This is based on his risk-reward ratio, which he sets at two times his risk. He then moved his stop loss up to breakeven, which is his buy price, to remove the risk on the remainder of his shares. He sold more shares on February 26 for $10.09, and the third time he sold was on March 8 for $11.05 after the share price was over-extended above the 10-day moving average.
But a strong uptrend doesn't always translate to a win. On January 9, he lost on a trade he made on Celsius Holdings (CELH). The stock had a strong 150- and 200-day average uptrend. It also created a support line around $48 and it broke above its resistance above $59. He purchased shares at $60. He didn't wait for strong enough confirmation before buying. Volume began to drop off, and the price uptrend lost steam. He exited his position in increments between $57 and $55.