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Usman Ashraf sits down in Miami for his first-ever appearance on the Words of Wisdom trading podcast—a candid, high-energy chat about how he left med school in China, drove Uber in New York, and clawed his way into consistent options trading. He talks about the Amazon swing that ballooned into nearly half a million, the Wall Street passenger who tipped him off to implied volatility, and why discipline and showing up matter more than hot tips. It’s real trader talk from someone who’s lived the grind and built back after painful drawdowns.
In this piece, you’ll learn the core of Usman’s strategy: how he sizes down early in the year, builds a “profit cushion,” adapts when market regimes flip, and uses implied volatility to pick strikes and expirations. We’ll unpack his zero-DTE tactics, why backtesting plus paper trading beats strategy-hopping, and the routines that keep his psychology steady—like stepping away at midday to reset. If you’re a newer trader seeking a simple, repeatable approach (without chasing Lambos or endless indicators), this breakdown gives you actionable steps you can use on your next session.
Usman Ashraf Playbook & Strategy: How He Actually Trades
Market Bias First, Trades Second
Before pressing any buttons, Usman frames the market: trend, key levels, and which instruments actually have range today. This keeps him from forcing trades where there’s no juice. The bullets below tell you exactly how to turn that quick read into a concrete plan.
- At the open, define bias in 60 seconds: “uptrend if price is above yesterday’s high and holding the first pullback; downtrend if below yesterday’s low and rejecting VWAP.”
- Mark 3 levels only: prior day high/low and the overnight high/low cluster; ignore the rest.
- Trade only names with ADR ≥ 1.5× their 20-day average or index futures with premarket range ≥ 0.7× 20-day average.
- If bias is unclear by 9:45 ET, stand down until the first 5-minute candle closes above/below VWAP and the second candle confirms.
A-Setups, Not All Setups
He runs a short checklist to label something an “A-setup.” If it doesn’t cut, he waits. Use the same filter so your best ideas get your capital and headspace.
- A setup requires: (1) a clear trend on 5-minute, (2) price pulling back to a marked level, (3) momentum confirmation via higher low/lower high + VWAP alignment.
- Minimum RR = 2:1 on the initial stop; if it’s not there on the chart, skip it.
- One catalyst is enough: opening drive, range break, or liquidity sweep—not all three.
- Put a star next to A-setups with confluence from the first 90 minutes; avoid “lunchtime chop” unless range expansion resumes.
Premarket Plan on One Page
Usman keeps preparation simple and repeatable, so execution is automatic. Do this in writing before the bell so you’re reacting to the market, not emotions.
- Write 3 lines: bias, top 2 tickers/contracts, key entry zones (price, not feelings).
- Define “no-trade” conditions (e.g., index inside yesterday’s range + overlapping VWAP/200-EMA).
- Pre-assign maximum loss per day (e.g., 0.5R of weekly risk) and stop trading if hit.
- Pre-select order types: limit for pullbacks, stop-market for breakouts; never freestyle.
Entry Triggers You Can’t Debate
Entries are binary: the market either gives you your trigger or it doesn’t. These rules force clarity and reduce the “just one more click” impulse.
- Pullback entry: limit order at prior 5-minute swing +/- 10% of ATR(5, 5-min) with stop 1× ATR below/above swing.
- Breakout entry: stop-market 1 tick beyond the session high/low only if volume on the trigger bar ≥ 120% of 20-bar average.
- If slippage > 0.3× ATR(1, 1-min) on two consecutive trades, switch to pullbacks only for the rest of the session.
- Never add to a loser; add once to a winner at the first higher low/lower high only if unrealized PnL ≥ +1R.
Risk and Sizing (Numbers, Not Vibes)
He sizes from the stop outwards—risk per trade is fixed first, then the position is calculated. This protects the account during cold streaks and lets winners compound.
- Risk per trade = 0.25R–0.5R of your weekly risk budget; weekly risk ≤ 1%–2% of equity.
- Contracts/shares = (risk per trade) ÷ (stop distance + expected slippage).
- Daily max drawdown = 1R; hit it and you’re done for the day—no exceptions.
- Reduce size by 50% after two consecutive losses; restore after one clean +1R win.
Managing the Trade After You’re In
Execution doesn’t stop at entry. Usman codifies how to protect the downside and let the upside breathe.
- Move stop to breakeven at +1R only after a structure shift (higher low/lower high on 1-min); not just because PnL is green.
- Take partial at +1.5R (30%–50% size), trail the rest behind the 5-minute swing or a fixed 1× ATR(5, 1-minute) stop.
- If range expands (new session high/low with rising volume), widen trail to previous 5-minute swing; if range contracts, tighten to VWAP.
- Hard exit on opposite signal: close below VWAP in an uptrend (or above in a downtrend) with confirming volume spike.
Options Overlay (If You Trade Weeklies/0DTE)
When volatility is the edge, execution needs extra guardrails. These are the knobs Usman dials before clicking buy/sell on short-dated options.
- Only trade options when IV rank ≥ 30 or when the underlying’s 1-min ATR is expanding for 3+ bars.
- Choose strikes 0.20–0.35 delta for trend moves; 0.15–0.20 for breakouts that may retest.
- Time to expiry: same-day for opening drive momentum; next-day if entry is after 11:00 ET.
- Max spread width = 5% of underlying price for defined-risk structures; otherwise, use single-leg with hard stop on the underlying.
Session Timing Rules
Certain hours are statistically noisier. He tilts size and expectations around the clock to harvest real volatility and skip chop.
- Focus windows: 9:35–10:30 ET and 13:45–15:45 ET.
- No new trades 11:00–13:30 ET unless ADR already exceeded and a fresh range break occurs.
- First 3 minutes are observational only; entries start on/after the first 5-minute close.
- Last 10 minutes: manage open runners only—no fresh risk into the close.
Playbook for Range vs. Trend Days
Label the day type early and run the corresponding script. This stops you from using trend tools in a range and vice versa.
- Trend day: price holds one side of VWAP + higher highs/higher lows (or inverse). Use pullbacks to VWAP/5-min EMA; ride partials to close.
- Range day: two failed attempts beyond the prior day’s high/low. Fade extremes with tight stops and target the midpoint; size half of trend-day size.
- Switch rule: two failed continuation attempts = assume range; two successful range expansions = assume trend.
- Stand down if the day type flips more than once in 60 minutes.
Mistake Controls (So Small Errors Don’t Become Big Ones)
Errors happen; the goal is to contain them. These tripwires shut down the behaviors that usually spiral.
- Two rule breaks (late add, moved stop, revenge entry) = immediate halt and written debrief.
- If you catch yourself checking P&L mid-trade more than twice per minute, hide the P&L column and trade the chart only.
- After a −2R morning, do a 15-minute reset (no screens) before any afternoon trade.
- Cap the number of tickets per day to 6; extra trades require a screenshot and a written reason before sending.
Journal to Iterate, Not Just Record
Usman treats journaling as a feedback loop, not homework. Keep it tight, visual, and directly tied to rule tweaks.
- For each trade, paste a before/after chart with entries, stops, targets, and the exact A-setup checklist ticked or crossed.
- Tag outcomes by day type (trend/range), entry style (pullback/breakout), and session window.
- Weekly: compute win rate, average R, and expectancy per tag; drop the bottom 10% tag for the next week.
- Rewrite one rule per week based on data (e.g., tighten breakout volume filter from 120% to 140% if false breaks persist).
Lifestyle & Mindset That Protects Execution
Consistency comes from routine. These simple habits keep decision quality high when markets speed up.
- Sleep 7+ hours; no discretionary trading if <6 hours—run sim only.
- Pre-market: 10 deep breaths + 60-second visualization of executing the plan (not outcomes).
- Nutrition rule: no caffeine after 11:00 ET; hydrate before and after each trade.
- End-of-day: grade discipline (A/B/C) before looking at P&L; only reward process, not random green days.
Set Bias First, Trade Second: Mechanics Over Market Predictions
Usman Ashraf starts every session by deciding market bias in under a minute, then builds a simple plan around it. He looks at yesterday’s high/low, VWAP, and the first five-minute structure to label trend or range—no guessing games, no macro crystal ball. Once the bias is set, he trims the chart to three levels and ignores everything else that doesn’t move the needle. That fast framing stops him from chasing noise and keeps capital pointed only at A-setups.
From there, Usman Ashraf executes mechanics that don’t care about opinions: fixed risk per trade, prewritten entry triggers, and a minimum 2:1 reward-to-risk. If bias is unclear by 9:45 ET, he waits for confirmation rather than forcing a read. He’ll only act when price action aligns with the plan—pullback to a marked level or a breakout with volume—and he refuses to add to losers. The goal is to let structure make decisions, so discipline can compound while predictions fade into the background.
Risk First Sizing: Fixed R, No Add-To-Losers Rule
Usman Ashraf builds every trade from the stop outward, locking in a fixed R before thinking about potential profit. He calculates size by dividing the predefined risk by the distance to the invalidation level, so execution can’t drift with emotion. Daily and weekly loss limits protect the account from strings of small cuts turning into a crater. If the math doesn’t give at least a 2:1 reward-to-risk on the chart, he skips the trade.
Just as important, Usman Ashraf refuses to add to losers—no “averaging down,” no narratives. He’ll add once to a winner only after structure confirms with a higher low or lower high, and unrealized P&L is already positive. After two consecutive losses, size ratchets down automatically to cut the volatility of outcomes; one clean win restores normal size. The result is a risk engine that compounds discipline long after the market’s noise has passed.
Volatility Drives Allocation: Use IV and ATR to Choose Size
Usman Ashraf lets volatility dictate how much he puts to work, not gut feel. When implied volatility and short-term ATR expand, he sizes up within his fixed-R framework; when they contract, he cuts risk and switches to pullbacks over breakouts. The goal is simple: match trade aggressiveness to the market’s actual speed so entries have room to breathe without ballooning risk.
Usman Ashraf checks the IV rank to gauge option pricing and uses a 1–5 minute ATR to estimate expected wiggle. If trigger-bar volume and ATR are ramping, he’ll prefer momentum entries; if they’re cooling, he waits for mean-reversion tags of VWAP or prior swings. Strike selection follows the same logic—higher IV, closer-to-the-money with tighter stops; lower IV, more conservative deltas and longer expiry. By letting volatility set allocation and structure, he removes emotion and turns market tempo into a repeatable edge.
Diversify by Underlying, Strategy, and Duration—Not Just Ticker Count
Usman Ashraf doesn’t call it diversification unless risk is spread across different engines of return. That means mixing indices with a couple of liquid single names, pairing pullback entries with defined-risk breakouts, and staggering timeframes so not everything resolves at once. He wants positions that can win for different reasons—trend extension, mean reversion, catalyst drive—not five copies of the same trade wearing different tickers. If correlation spikes (index and top components moving as one), he trims exposure and rotates to the instrument with the cleanest structure.
To make it practical, Usman Ashraf slots trades into buckets: underlying (index vs. stock), strategy (trend vs. fade), and duration (intraday vs. swing). He caps any single bucket at a fixed percentage of daily risk, so one theme can’t sink the day. When volatility compresses, he leans on defined-risk structures or smaller size with longer expiry; when volatility expands, he concentrates on the 1–2 instruments showing the strongest follow-through. The result is a portfolio of non-overlapping bets where one dud doesn’t poison the whole session.
Defined vs Undefined Risk: When To Choose Spreads Over Singles
Usman Ashraf treats “defined vs. undefined risk” as a switch he flips based on volatility, catalysts, and gap risk. When IV is elevated or a catalyst looms (earnings, FOMC, CPI), he prefers defined-risk structures—debit spreads for directional plays or credit spreads when levels are likely to hold—because max loss is known and priced upfront. On clean, trending days with orderly tape and tight bid–ask spreads, he’ll use single-leg options or futures for simplicity and faster fills, but only with a hard stop anchored to structure, not P&L. If slippage expands or liquidity thins, he moves back to defined risk to cap tail exposure.
For mechanics, Usman Ashraf sizes spreads so that max loss equals his fixed R and places them where the break-even sits just outside key levels (prior high/low, VWAP). He avoids selling naked options into binary events and won’t hold undefined risk overnight unless the position is already partially realized and hedged. If IV crush is likely, he chooses debit spreads over naked calls/puts to offset premium decay; if IV expansion is likely, he uses single legs or wide credit spreads only when distance-to-stop is favorable. The rule is simple: when uncertainty is high or moves are gappy, protect first with defined risk; when structure is clean and flow is stable, go simple and let singles capture the range.
In the end, Usman Ashraf’s edge isn’t a magical indicator—it’s a chain of small, enforceable rules that remove guesswork. He sets bias first and only then hunts A-setups; he fixes risk before he dreams about reward; he lets volatility decide aggression instead of ego; and he diversifies by engines of return so one theme can’t nuke the day. When the tape gets messy, his playbook gets tighter: two back-to-back red trades and he steps away, elevated IV and gap risk push him toward defined-risk structures, and sloppy execution sends him back to paper to re-warm the mechanics. That discipline turns drawdowns into controlled dents, not disasters.
What makes it repeatable is how practical he keeps it. Usman Ashraf sizes from the stop outward, respects hard exits, and only adds to strength after structure confirms. He scans IV and short-term range to pick strikes, expiries, and entry style; he staggers positions by underlying, strategy, and duration; and he journals outcomes against day type to prune what doesn’t pay. The lesson for any trader is simple: build a ruleset you can execute at speed, let volatility and structure do the talking, and measure everything. If you treat trading like a system—process first, prediction last—the consistency you’re chasing starts to look a lot less like luck and a lot more like work done right.
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