Growing a $2k Account to $65,662.04 in 30 Days (My Day Trading Strategy)

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Transcript

Welcome to today's fulllength course where I'm 
going to teach you how to start day trading.  
Specifically, the momentum day trading strategy 
that I implement every single day in my own  
trading. My name is Ross Cameron. I'm a full-time 
trader and I funded my first account back in 2001.  
I'm probably best known for turning an account 
with less than $600 into more than $20 million  
of fully verified and independently audited 
trading profits. Now, I share that with you  
not because I want you to assume my results are 
typical, because they're not. But I want you to  
know that the person that you're about to learn 
how to day trade from actually knows what the heck  
they're talking about. I am putting real money 
behind the strategy that I'm going to teach you  
here today every single day. Now, about 30 days 
ago, I decided to reset my account back down to  
$2,000 to demonstrate what it would be like 
to grow a small account in today's market.  
So, today is day 30 of my brand new small account 
challenge. And guess what? Over the last 30 days,  
I've been able to grow my account from a starting 
balance of $2,000 to over $65,000. That's right,  
in 30 days. And just today, my account is up 
over 44%. Well, we've got a stock and the ticker  
is right here, um, YXT. This stock today went 
up over 500%. So, for my account to be up 44%,  
it's not unreasonable. In fact, I I could have 
produced a bigger percentage gain if I had taken  
more trades or been a little bit more aggressive. 
But, nonetheless, I'm not complaining. 44% is  
still phenomenal. And growing the account from 
$2,000 to $65,000 in 30 days is really solid. So,  
what I want to do here, especially for those 
of you guys who are just getting started,  
is I want to lay out the five simple steps that 
I've been following every single day to grow my  
account. By the end of this class, you're going to 
walk away with an overview of a strategy that you  
can start implementing in your own trading 
starting today. But I want you to make one  
promise. I do not want you to put real money on 
the line until you've first proven you can make  
money trading this strategy in a simulator. If you 
can't make money in a simulator, I hate to say it,  
but you've got no business putting real money on 
the line. So, take it slow. Trading is a marathon.  
It's not a sprint. It's not about overnight 
success. You got to stick with it for a while.  
In fact, I funded my first account in 2001, and I 
didn't cross my first million dollars of trading  
profits until 2019. So, it took me a long time. 
Now, I took some breaks from trading. I wasn't  
sticking with it every single day for that period 
of time. But nonetheless, it gives you the idea  
that it takes time. Anything worth it, though, 
you've got to put in the effort. So, let's talk  
about what we're going to be going over in today's 
class. These are the five steps that I'm going  
to be teaching you. Number one, how to find the 
strongest stocks to trade on any given day. Today,  
I found YXT when it was up about 75 80%. It went 
on to go up over 500% on the day. So there was  
a lot of opportunity to continue to trade that 
after I had identified it as a good candidate.  
Number two, I'm going to walk you through the 
process that I use every single day to find the  
best entries on candlestick charts. The language 
of the financial markets is read through charts,  
and I'm going to teach you how I read them in 
today's class. Number three, I'm going to walk  
you through how I use level two market data to 
interpret sentiment and make my final decision to  
execute a trade. Number four, I'm going to share 
with you the exit indicators I use to tell me when  
to pull the rip cord and get out and also when 
to walk away on any given day. And number five,  
I'm going to walk you through the process that 
I use every single day to record and analyze my  
metrics so I can continue to improve my trading 
performance and my ability to extract profit from  
the market. Now, in case you didn't know, all of 
the profit from these small account challenges  
gets donated to charity. That's right. And we've 
now raised over $427,000 with the goal of donating  
to a children's hospital in every single state 
in the United States. We have now donated to 40  
children's hospitals. This is awesome. And every 
time you guys hit the thumbs up on the episodes  
in this series, I add an extra dollar to how much 
we're donating. So you actually can help increase  
the amount we donate by hitting the thumbs 
up on this episode right now. All right. So,  
that's super exciting. Now, as part of 
this course that I'm about to teach you,  
I have some PDF handouts that I'd like you guys to 
download. I have a link. It's pinned at the top of  
the comments and in the description where you can 
download the following PDF worksheets. My small  
account strategy, my trading plan worksheet, 
my stock selection guide, and the trade log  
that I want you guys to start using to record 
your performance. So with that, let's go ahead  
and dive right in with step one, finding a strong 
stock to trade. So the process of finding strong  
stocks to trade for me, I am relying on stock 
scanners. Now there are some traders out there  
that trade different strategies. For me, maybe a 
trader who focuses on trading Bitcoin every single  
day or who trades Tesla and Nvidia, you know, one 
of these large cap stocks every single day. they  
might not need a scanner because they're trading 
the same instrument every single day. However,  
in my experience, when I tried doing that, 
I found that my accuracy declined because I  
felt like what I was essentially doing was 
playing chess against the computer. Now,  
the computer always wins, but when you trade 
against the high frequency trading algorithms,  
trading large caps, you really don't have a good 
edge. And so the system that I use with level two  
and with candlestick chart patterns does not work 
very well on those types of instruments. So while  
there may be other strategies to trade them, the 
way I trade is by focusing on trading volatility,  
I like to find things that are moving. So in other 
words, I don't make money, as you would imagine,  
by buying something at five and selling it at 
five. Right? That's going to be a break even  
trade. I'd like to buy something at five and 
sell it at 550 550 for a plus 10% return. Now,  
I'm not going to put my entire account into that 
trade. But if I put, let's just say, a quarter of  
my account into that trade, my account would be 
up 2.5% on that specific trade in one day. Now,  
if I get four trades like that, my account could 
be up 10% in a single day, or as we saw today,  
as much as 44% in a single day. So, in order for 
me to make money, I need the underlying asset to  
be moving. And so, rather than just trading from 
a basket of the same stocks every single day,  
I use stock scanners to help me find stocks that 
are moving right now. And so, this scanner that  
I'm running, this is part of the Day Trade Dash 
software that I actually began building in 2017.  
So, these are our own custom scanners that are 
available for members at Warrior Trading. You can  
use scanners that are off the shelf that are free, 
but the problem is they're going to be on delayed  
data. And if you're on delayed data, you'll be 15 
or 20 minutes behind. Well, me, a trader that's  
using real time data. And 15 20 minutes can make a 
pretty big difference when a company either comes  
out with breaking news or suddenly shorts are 
getting squeezed and it starts to move higher.  
So, this is the scanner right here that X that YXT 
first popped up on. Now, when it first alerted,  
it had only 45,000 shares of volume. There was 
not much volume. It was up 76% and I wasn't  
really clear on what the catalyst was or why it 
was moving higher, but I was aware of at least a  
couple of things including the price that it was 
up 76% and moving higher, that the total volume  
uh was low, but that the relative volume was 
high. We're going to get into a little bit  
more detail about that as I walk you through 
my five pillars of stock selection. So, these  
are the five criteria that I programmed into my 
scanners. Four of these criteria reference demand  
and one of them references supply. In order for a 
stock to go up 400 500% in one day, there has to  
be an imbalance between supply and demand. It's as 
simple as that. And so the supply is the number of  
shares that are available to trade. And the demand 
is typically created by a breaking news event.  
But there are some other factors as you can see 
here that increase demand. So let me start with  
relative volume. So uh in this case here um what 
I have found consistently over my entire career  
and you can see this is like this is a very 
clear uh metric is that I make the most money  
on stocks that have 500 times the relative volume 
today as what is typical. So what does that mean?  
Every stock has average volume. Average is what it 
typically trades on an average day over the last  
50 days. So, every stock has a 50-day average in 
the amount of volume that they trade on. So, if a  
stock is trading on five times higher volume than 
the 50-day average, that's the day that I want to  
be trading with it on it. Now, why would a stock 
have five times above average volume? And it's  
typically because there's some type of underlying 
catalyst. It's usually breaking news. Now, that's  
not always the case, and today's trade was an 
exception to that, but that's typically the case.  
So, trading stocks with five times above average 
volume, therefore, has to be one of my first  
criteria or pillars of stock selection, five times 
relative volume. So, right now, if you scanned the  
entire market just for stocks with five times 
relative volume, there wouldn't be very many  
stocks on your scan. What I'm going to do here is 
I'm actually going to pull up my scanners for you,  
and I'm going to demonstrate this. So, let's see. 
So, we've got um X YXT right here, as you can see,  
sort of balancing out. So, I'm going to go to my 
toolkit here, and I'm just going to go to uh top  
relative volume. So in the entire market right 
now, how many stocks have relative volume of more  
than five? Let's see. So we've got a 100 um stocks 
on this scanner. So we've got about a hundred, but  
as you can see, a lot of them are kind of right 
on the cusp of being just a hair over five times  
relative volume. And in fact, if we looked at how 
many had relative volume of more than 20, it looks  
like it's about 20 stocks in the whole market. So 
XYT or YXT sorry um has relative volume of 14,000  
times above average. So today it has 44 million 
shares of volume whereas yesterday it had 500  
shares. That's crazy. That's that's unbelievable. 
So that's a huge swing in demand, right? This  
stock is experiencing huge swing in demand. 
So, if you ran a scanner just searching for  
relative volume of greater than five, you would 
get an alert. You would get probably about a 100  
stocks on a scan. If you did relative volume of 
greater than 20, you'd probably have closer to 20  
stocks on your scanner on any given day. And just 
like that, with this one filter right here, you  
have reduced the possible candidates of stocks to 
trade in the market from over 10,000 stocks, ETFs,  
etc. down to about 20. Wow. I think that by itself 
is an awesome filter because what I want to do is  
I want to filter out the noise and get focused 
on this signal. I want to be trading stocks  
that actually have the potential to do something 
interesting. So number one criteria, five times  
above average volume. Number two, I typically 
do better when stocks also have just high total  
volume. Having high relative volume is great, but 
there will be some examples where you've got a  
stock like this one here, JAB, that has really 
high relative volume, but the total volume is  
only 1.4 million shares. So, or this one here 
where the total volume is only 800,000 shares,  
whereas this one's got 44 million shares. So, 
total volume does make a difference at a certain  
point. It's not it's not absolutely required that 
you've got 25 million shares of volume before you  
take the trade, but as you can see, I tend to make 
more money as stocks have higher volume. I also do  
better focusing on trading stocks that are gapping 
higher, which means they're opening up at least 2%  
from the prior day's close. Why would a stock 
be opening 2% higher than the prior day close?  
It's typically again because there's some type of 
underlying catalyst. So gapping up high val high  
high total volume high relative volume normally 
it's because a stock has breaking news. Now I have  
also found that I tend to do the best on stocks 
between two and 20. So today we had the stock  
that went up over 500% and it started around $23 a 
share. So realistically, if that stock had started  
at $20 a share, gosh, I mean, it would have had to 
go up to 80, $100, $200 a share to get that same  
four 400% 500% return. It's just not realistic 
that that would happen. It can, but it's very  
uncommon. However, on lower price stocks, we see 
stocks go from $2 to $4 routinely. That's nothing  
unusual, and that's a 100% return. So, I typically 
do find that I make more money on stocks between  
two and 20, especially when they have high total 
volume and high relative volume because that's  
when I can buy bigger positions if I'd like to. 
And then those are the so those first four pillars  
of stock selection are all based on demand. Stocks 
with five times above average volume have higher  
demand. Stocks up at least 10% have higher is 
inherent an indicator of high demand. Stocks  
that have um breaking news of course have higher 
demand. That's what creates the demand. And stocks  
that are priced between 2 and 20 have more demand. 
Now number five is supply and this is the float or  
the number of shares available to trade. So the 
number of shares available to trade is determined  
by the company when they do their initial public 
offering. It's the when they sell shares onto the  
open market and from that day forward those shares 
are part of the public float. the total number of  
shares available to trade. So in the case of YXT, 
the total number of shares available to trade  
is about 2.87 million shares. And this is very 
interesting. That means the total number of shares  
out there in total is less than 3 million shares. 
And yet, as you could see here, it's got over 40  
million shares of volume. How is that possible? 
This is because traders are rapidly buying and  
selling from each other. One trader thinks it's 
going to continue higher, one trader disagrees,  
they take a short position, then another trader 
covers, another trader buys, another trader sells.  
So, it's this frenzied volume of buying and 
selling, buying and selling. In a sense, it's  
kind of like hot potato. Traders want a piece of 
it, but they're also fickle, and they don't want  
to be caught holding when it's really extended 
and it rolls over. So the result is that we see  
very high volumes in trading activity. Now in 2019 
all brokers well all big US retail brokers went to  
commissionfree trading and commission free trading 
really changed the game because it allowed people  
to jump in and out without paying a fee. Prior 
to that we saw less volume in the market. But now  
because commission free you can get in, get out, 
get in, get out. And there's some traders who will  
take hundreds of trades in a single day because 
why not? It's commission free. So they're just  
getting in, getting out, getting in, getting out. 
So all of that creates a lot of volume. And that  
volume is a good thing because here's something 
interesting. Because the float is about 3 million  
shares. We just round up. There are 3 million 
shares out there that are currently up 500%.  
Now, if you had the good fortune to be holding 
a stock that went up 500% in one day, what do  
you think you would do? You would probably sell. 
You would take some profit off the table. And so,  
an interesting example here today is that we 
also had a big move in Shopify. So, Shopify is  
a big S&P, you know, company. It's it's a huge 
company. They've got a 1.3 billion share float.  
They put out earnings this morning and the 
stock promptly went from about $120 a share  
up to $165. It went up 36%. But it did it on less 
than 1 million shares of volume. In other words,  
1 million shares is less than 1 1,000th of all 
of the shares available to trade on shop. And  
so I said, what if some of these remaining 
1,000 just in terms of ratio shares decide  
they want to sell? Are there going to be enough 
buyers here to hold up the price plus 36%? And  
I said that the answer would be no. And so, not 
surprisingly, Shopify has been coming back down  
as some of the shareholders that were holding 
yesterday have decided to take profit. In fact,  
it's holding up a little bit better than I would 
have expected, up 16%. But nonetheless, it's down  
quite a bit from its peak of up 36%. But that was 
not an issue in the case of X of YXT. YXT had such  
a low float that all of those shareholders could 
have easily sold. In fact, they could have sold  
many times over and the stock was continuing to 
move higher. To a certain degree, these types of  
stocks become a bit of a self-fulfilling prophecy 
in the market where traders look at the float and  
immediately realize when the stock's up over 100% 
and is traded at least the amount of volume of the  
float that most likely anyone who wanted to sell 
could have. And yet the stock is still holding  
and that means upside resistance is relatively 
limited. So these are the five pillars of stock  
selection that I'm using every single day. And if 
a stock doesn't meet all five of these pillars,  
I'm going to be cautious. So number one, we've got 
to we've got to and this is the criteria for a big  
big move for the stock to be up 30%. I would love 
that breaking news between five and 10 is a real  
sweet spot. Five times relative volume. And then 
further if the stock is in a hot sector crypto,  
biotech, AI or in the case of this company, it's 
a Chinese company. So Chinese text tech stocks,  
tech, you know, companies have been popular. And 
then the time between 7 a.m. and 10:00 a.m. All  
of this becomes kind of the sweet spot for a big 
move, especially when you've got a float of less  
than 20 million shares. And lower generally is 
going to be better. So today uh well this is an  
example actually um of a different stock but this 
is a stock that went up 432% on 300 million shares  
of volume and it's just an example of basically 
the same pattern that we had today from $3 here  
up to $16 a share. These are incredible moves. 
So the first the really the the first thing that  
I'm looking at number one is I need to see the 
stock meets my five pillars of stock selection.  
The only exception that I'll make is that the 
stock doesn't need to have news if it's clearly  
moving really well and is one of the most obvious 
stocks today. So, YXT here up 500%. It was the  
number one leading gainer in the entire market. 
That by itself made it a really good candidate  
to pay attention to. All right. So, we look 
at this from all five pillars. The price is  
fine between two and 20. Now, it got a little more 
expensive, but it did start down at three or four,  
so that was fine. The total volume is great. 
The relative volume is great. The percentage  
change is great. The float is great. The only 
thing this didn't have was a clear catalyst,  
but this is a tech company obviously making a 
big move and so traders were willing to jump  
on it. So, that was, you know, that was the one 
area where it carried a little bit more risk,  
but was still worth um, at least in my opinion, it 
was still worth consideration. So, as a beginner,  
if you stick to focusing on quality over 
quantity, the most important thing is that  
you're trading the right stocks on any given day. 
And I had someone this morning who said, Ross,  
take a look at Shopify. I say, you know what? I 
don't think Shopify is going to work. It's got a  
really big float. I just think that's the type of 
stock that we could get into some real trouble on.  
It's not reasonable to expect that it's going to 
be able to hold these levels. And so, naturally,  
I disregard it. That was definitely the right 
move. But for a beginner, sometimes they'll say,  
"Oh, well, maybe the float doesn't matter because, 
you know, it is moving quite a bit." It's very  
rare the float doesn't matter. Rare that the price 
doesn't matter. When you have a stock that's $150  
or $160 a share, it's just too expensive for 
most traders. Now, if you've got the gain,  
you've got the relative volume, the price is good, 
and the float's good, and there's no news, what  
typically happens is traders think and believe 
that someone out there knows something. That's a  
funny thing. You sort of are like, well, it's it's 
like if all of a sudden everyone starts running  
out of a building, you're like, well, they must 
know something, right? And so traders are kind of  
like that. They're like, well, if the crowd says 
it's bad, it's bad. I don't know. If the crowd  
says it's good, it's good. And so while eventually 
it matters whether or not the company actually has  
news in the context of the next 10, 15, 20 minutes 
of taking a day trade, if we've got relative  
volume, total volume, percentage gain, it's an 
obvious stock with the right float and we have a  
candlestick chart pattern that we understand it 
is to me a trade worth taking. Step one, stock  
selection. It is the most important step that 
you can make as a trader. You trade the strongest  
stocks on any given day. Step two is stocks. Step 
two is the specific entry pattern. So waiting  
for a pullback. Now this was interesting on YXT 
because we got this initial pop. It dropped down.  
It popped up. It dropped down. And then right 
here it squeezes up and then it pulls back. Then  
it pushes higher and it pulls back. Each one of 
these pullbacks right here represented a fantastic  
opportunity to take a trade. Now, I did not take a 
trade on this first one. I was watching it. I had  
my order ready to go, but I was hesitating just a 
little bit because I had noticed it had hit this  
$6 level a couple times. Once, twice, three times, 
and four times, and it kept not breaking. Why?  
Because there was a big seller right at six. So, 
I was not sure it was going to work. And then it  
broke through that level and it went straight up 
to $8 a share. Wow, that's an incredible move. I  
missed it. On the next pullback right here, that's 
where I took my first trade. Boom. Right there.  
And we'll break that down in more detail when we 
get into the recap. So, it's very important once  
you first find the right stock to trade that 
you're able to patiently wait for a pattern  
to form. Look, there are times where we've got a 
stock that is a a quality stock. It meets all five  
pillars of stock selection, but it doesn't give me 
any good patterns. And while that's disappointing,  
it's better not to take a trade than to jump in 
something that's not forming a safe pattern where  
I can understand my risk and my reward. So, this 
pullback pattern right here, what I like about it  
is that I don't have to chase it. I can let the 
stock squeeze higher. So, it starts moving up,  
moving higher, moving higher. And as the stock is 
moving higher, it'll be hitting my scanners. So,  
that's when boom, I'm seeing the scanners right 
here. These are stocks that are moving higher.  
I have my audio alerts turned on. So, ding, ding, 
ding. I'm getting the alert. Stocks moving higher.  
And now, I'm just watching it, right? So, I let 
it squeeze, let it go up, and then I'm waiting for  
this pullback. Now, even Shopify did give a little 
pullback here and a rally back higher. Although  
the goal and target of this pattern is a retest of 
the high a day and then continuation higher which  
as you could see is what we got on um on the 
stock from today. So on the stock today we got  
the pullback right here and then it pushed a lot 
higher from a 8 750 $8 a share range all the way  
up to about 1150 which was awesome. So we get that 
first squeeze up and then we let it pull back. So,  
as it's pulling back, there's a couple of things 
I pay really close attention to. Number one,  
when it's pulling back, I do not want to see 
should not do not Well, sorry. Sometimes when I'm  
talking and and writing, it's a little hard. Um, 
does not doesn't There we go. That's even faster.  
doesn't retrace more than 50% of the move. So, in 
other words, if the stock squeezes up like this,  
but then comes all the way back down like that, 
then this area here, no, no, no, no. That I can't  
trust that. This is what we want for it to pull 
back right here, but not more than about 50% of  
the initial move. And then we look for that move 
higher. So, it should not retrace more than 50%  
of the move. That's number one. Number two, the 
volume should be higher on green candles than on  
red candles. And this is very important because 
this volume profile communicates to us what  
other traders are thinking. So as we see the stock 
popping up, if it's squeezing up on high volume on  
the green candle, that's bullish. Light volume on 
the red candles, that's fine. And then we want to  
see higher volume coming back in as the candle's 
moving higher. Now, this actually looks like  
it retraced more than 50% of the move. So, let's 
just imagine that this candle had started a couple  
candles back and it had moved quite a bit higher 
before giving us this little pullback right there.  
So, it should not retrace more than 50% of the 
move. It should not have high volume on the red  
candles. It should not break below VWAP. So, break 
below VWAP, the volume weighted average price,  
which is a technical indicator. And number four, 
it should not break below the 9 EMA. So, a perfect  
uh pullback pattern. So, we got a pullback pattern 
here. And a perfect pullback pattern will have a  
nice big green candle, maybe two or three, but 
then as it pulls back, it doesn't retrace more  
than 50%. High volume on the green candles, 
light on the red, doesn't break VWAP, doesn't  
break the 90 EMA. And another thing that we want 
to pay attention to on these pullback patterns  
as it's squeezing higher, we want to watch for 
topping tails. Those are upper candle wicks. So,  
when you have basically when you have a stock 
that has um I'll just do it on this side. Uh let's  
see. We'll do green so we're matching the right 
color. So, we have a squeeze here, moves higher,  
and then this one ends up being like this with 
a large topping tail. A topping tail like that  
inherently is bearish. The next candle opens 
right here around the close, goes lower, goes a  
little bit lower, comes down. Bottoming tails are 
bullish. So, if this starts to rally back up here,  
it's a little bit tricky to feel safe buying 
in this area here where there was previously  
all of this selling. Yes, it squeezed up, but 
then the sellers pushed it right back down. So,  
we prefer that we not see topping tails and 
instead, you know, it just sort of stops at  
the top and then dips back down. That would be our 
preference. It's we don't always get the picture  
perfect pattern, but, you know, if we were going 
to be picky, that's what we would want to see.  
So, we're going to be watching the volume profile 
now in real time. This is what it looks like. The  
candle starts squeezing higher. It pushes a little 
higher. You've got a little topping tail there. It  
dips down. It bottoms. And then my entry here 
is the crossing candle. The first candle to  
make a new high. The candle that crosses over 
the high of the previous candle. So, the high  
of this previous candle is the top of that wick. 
And the moment this candle breaks that new high,  
the trend is shifting. We were moving higher here 
and then we had a couple red candles and we were  
moving lower and now we've based out and we're 
moving higher again. And so that's the shift in  
momentum. And now I'm I'm holding this until I get 
a valid exit indicator, which we'll talk about in  
a moment. So that entry right there is the spot 
where I'm a buyer. The first candle to make a new  
high. That's specifically what I'm looking at. But 
what's my max loss on this pattern? My max loss  
is the low of the pullback. And this is why it's 
so important to wait for a pullback. Because if  
you jumped in right here, what's your max loss? 
It's way back down before the move started. If  
you got in up here or up here, your max loss is 
even further back here. But once it pulls back,  
the stock is doing two things. It's proving it 
can hold this level. It's giving people that  
have already been holding a chance to sell, 
but it's proving that it can hold this level.  
And it's giving the opportunity now for fresh 
traders to come and look at this and see, wow,  
this stock right now is up 75%, whatever the case 
is, it's holding up. Anyone who wanted to sell  
could have certainly sold. It hasn't gone lower. 
Sometimes they will. Sometimes they'll come all  
the way back down, but in this case, it's holding. 
And so this then becomes the low of that pullback.  
And that is your stop. So that's your max loss. So 
if your stop is here and let's just say your entry  
is here, you know the difference there. Let's 
just say that's 10 cents per share. All right,  
so whatever it's 10 cents per share, then can you 
make at least 20 cents per share of profit? And in  
this case, I would say you could. I like to aim to 
have at least a 2:1 profit to loss ratio. We know  
that day trading is risky. So our job has to be 
that we're managers of risk. I'm a manager of risk  
and a hunter of volatility. I don't make money 
buying in some and selling something at five. So,  
I could certainly manage my risk by buying 
something not moving, but that's not going  
to work because I won't get profit. So, I need to 
take some risk. And I do that by trading stocks  
that are more volatile, but I also need to keep my 
risk in check. So, this profit to loss table right  
here shows you that if you risk a dollar to make a 
dollar, you've got to be right 50% of the time in  
order to break even. All right, that's reasonable. 
If you risk $1 to make $2, you only need to be  
right 33% of the time in order to break even. On 
the other hand, if you risk $2 to make only $1,  
your break even point is 67%. And that's not a 
realistic break. That's not a realistic level  
of accuracy for your beginner trader to achieve. 
If a beginner trader can be at 50%, that's good.  
So then, shouldn't we set the bar low and have 
you trade at a a 2:1 profit to loss ratio where  
you risk a dollar to make a dollar, knowing 
that you actually only need to be right 33%  
of the time in order to break even. So, if you 
can be at 50%, which is sort of a coin toss, then  
you're doing well. This is the problem. A lot of 
beginner traders don't understand these metrics.  
The the issue is that beginner traders end up 
holding their losers too long and the result is  
that their average losers do become bigger. 
Even though they might only have, you know,  
a few losses from time to time, when they happen, 
they are bigger. So, I like to think that day  
trading profitably requires three core components. 
Your accuracy, which is the percentage of the time  
that you're right. the profit to loss ratio, which 
is the relationship of your average winners versus  
your average losers. And then those two produce 
your consistency, which is the amount of weeks  
in a row that you're profitable, or the amount out 
of the last six weeks that you've been green. And  
if you're green four or five out of the last six 
weeks, if your accuracy is 60 70%, if your profit  
loss ratio is 2:1, you will be a successful 
trader. But a lot of traders say, "Well, geez,  
I'm not successful. Where do I begin?" The 
place to begin is very interesting. It's not  
at profitability. It's not at, oh, I just need to 
make more money. My winners need to be bigger. In  
fact, it starts with accuracy. This is the spiral 
that a lot of beginner traders find themselves  
in. They have a poor track record, a history of 
losing, poor decisions, and emotionally influence  
trading. You get frustrated, you get stubborn, so 
you just slam the the buy button. You hold losers  
too long and that leads to poor self-confidence. 
Pressure increases. You've put time and money into  
learning how to trade. You're not seeing results. 
So now you've got more pressure. You start to get  
desperate. That leads to reckless trading. That 
therefore increases your losses. You're taking  
more trades with bigger size, taking on more risk, 
but without a track record to support it. The  
emotions get even bigger, which makes your track 
record worse. And this is a negative feedback loop  
where you spiral. you don't want this to happen to 
you. I want you on a positive feedback loop. So,  
we do that by focusing on quality, both quality of 
the stock, trading stocks that meet four, at least  
four of the five pillars of stock selection, and 
by trading the best candlestick chart patterns.  
And my personal favorite is that first pullback 
pattern that I just showed you. If you focus  
on trading the right stocks first and foremost, 
you're narrowing down the possible candles in the  
market from, you know, 10,000 down to just 15 to 
20 each day because we said it was 20 stocks when  
you were applying just the relative volume filter. 
Just the relative volume filter put it down to 20.  
So now you add a couple more filters and you say, 
well, I also only want to trade something that,  
let's just go back on this side, um, only has 
a float of less than 20 million shares. So that  
knocks a few of these off the scan. And then you 
say the I also have to make sure the stock is at  
least um up you know 10 20% on the day. Some of 
these are down so that doesn't work. And you need  
the relative volume. Oh well this we are the you 
need the total volume and then looking for you  
know a catalyst or a certain percentage change. 
And all of a sudden you've narrowed down your  
list of stocks that you could trade on any given 
day from 10,000 to three or four. So now you're  
trading the right stock. You trade the right 
stock and you wait for the right pattern. Your  
accuracy will improve. Accuracy will improve your 
profit to loss ratio because invariably you'll  
be eliminating some of those big outlier losses 
that were dragging down your metrics. The profit  
loss ratio being better will also improve your 
consistency. More green days, more green weeks.  
That improves what? Self-confidence. Now you've 
got a strong track record. Your confidence is  
going up and that further increases profitability. 
This becomes a positive feedback loop. And every  
trader goes on a spectrum of having stretches 
and periods where you're feeling very confident  
and you're taking increasingly more risk. You're 
being more aggressive and you're making more and  
more and more money until you have a loss and 
it falls apart and then you have a setback and  
you've got to reset and go back to basics and 
focus on high quality setups only. Just slow  
it down a little bit more. But some traders at 
that fork in the road after a big loss end up  
flailing. they they revert just to pure emotion, 
desperation, and suddenly they end up being a  
trader with a P&L that looks like this. And tell 
me if this is familiar to any of you. You have  
some nice progress and then one day you give it 
all back. Some nice progress, one day you give  
it all back. Nice progress, one day you give 
it all back. This is a break even trader. Now,  
don't take for granted that you're keeping your 
head above water. Now, some traders might have  
sort of a P&L that looks like this. little profit, 
little profit, little profit, and you're actually  
losing money. So, we don't want to be there, and 
I'm sure some of you are. We want to get you first  
to break even, and then what's the difference 
between break being break even and profitable?  
It's knowing on these days to walk away sooner. 
So, instead of going all the way down that far,  
you go down that far. Then it's faster to recover, 
right? And spacing out the time between these  
losses. Now, if you look at my own, if we look 
at my own metrics, and of course, I share these  
with you guys all the time. But if you look at my 
metrics here uh from the small account challenge,  
you will see that I had a relatively big red day 
uh 4 days ago, right? I was down $7,000 as you can  
see here. This happens. If we looked at just my 
regular trading account over the last, you know,  
90 days or whatever, losses happen. I take red 
days, I have a loss, then I rally back up. Couple  
really big green days, and then a loss. I mean, 
this is part of trading to a certain extent,  
but the difference that separates a beginner 
trader from those that are um, you know,  
more experienced is how frequently the losses are 
happening and how deep you're going when you have  
the draw down. So, I really want you to focus on 
doing everything possible to trade in a way that  
supports the growth of your self-confidence. 
Profits are a byproduct of the process. If you  
focus just on building your consistency, just on 
the process and your confidence, the profits will  
follow. So, it's really important to think of it 
that way. Now, in the case this morning of YXT,  
we had the initial squeeze up on our scanners. 
So, the stock started hitting the scanner. Ding,  
ding, ding, ding, ding. It popped up. I looked 
at it. I saw it squeezing higher and I said,  
"All right, where's the dip?" The first dip, 
I missed it, right? But on the second dip,  
I jumped in. I got that trade and we got that 
really nice squeeze higher. So, let's actually  
look how I was managing the risk. And we're going 
to talk about this getting into now step three of  
executing the trade using this window right here, 
which you can see is level two market data. So,  
level two market data shows us the orders behind 
the scenes that essentially create the boundaries  
for how much a stock can go up or can go down 
and that allow stocks to make these big moves.  
So in the case of YXT, as we had squeezed higher 
right here and right here, I had not yet taken any  
trades on it. But as it was pulling back right 
in this area, it dipped down and I noticed that  
there was support at about $7.50. $7.50 is a half 
dollar. There's a great degree of psychological  
support around half dollars and whole dollars 
in the market. If a stock's holding above 750,  
the next level of resistance is 8. But then 
if it can hold over eight, the next level is  
850. If it's over 850, the next level is 9. Then 
950 and 10 and so on so forth. It's very common  
that stocks trade with this respect to the half 
dollar and the whole dollar. So as I noticed it  
was holding around 750, I started to see that we 
were also at the same time getting this pattern  
right here. So check the time. It was 818 and 
59 seconds, which meant that this red candle was  
about to close. These candles close at the top of 
every minute. And this is a one minute chart. So,  
I had given it a chance to squeeze up. It pulled 
back for one candle for a second candle. And then  
right here, as that candle closed, I recognized 
that the crossing candle would be at about $7.65.  
And so what I decided to do was I got in just 
a little bit before that crossing candle using  
750 as my stop and about 760 as my entry. So 
my entry was $7.60 and my hard stop was $7.45  
which is a 15 stop. I bought 5,000 shares which 
meant I took $750 of risk. My profit target was  
$8 but I was hoping we would get a squeeze to 
$850. So, optimistic profit target was about 90  
cents per share, but between $2,000 and $4,500 of 
profit. So, would you risk $750 to make $2,000 to  
$4,500? And I and you actually the answer would be 
I don't know. How often am I right? So, if you're  
right 75% of the time, then the answer should be 
yes. I would take that trade as long as I knew I  
could take 10 more trades right after it because 
over the course of those 10 trades, I would make  
money. And that's what happened. So, this was 
my entry right here. This is Thinker Swim,  
uh, Charles Schwab, showing the 5,000 share 
order at $7.60. And we got this squeeze all  
the way up here to a high. My best exit was at 
$1010, which was phenomenal. That was when I  
saw my first exit indicator. And then I sold more 
at $979 and more at $9 as it came back down. So,  
we should probably spend some time talking 
about those exit indicators. But before we do,  
I want to do a little pop quiz to see what you're 
learning. So, is this a spot right here where you  
should be a buyer as you look at the stock? The 
chart pattern should be telling you no. You don't  
know all the details about the stock. I mean, 
clearly we see it's up quite a bit on the day.  
It's got a lot of volume. You see it's a 1.43 
million share float. So, it's a low float. So,  
it probably meets at least four of our five 
pillars of stock selection. But right here,  
there is not a candlestick chart pattern to work 
with. In fact, there's a recent rejection right  
there. And if you had taken that trade, it would 
have sold off. What about this setup right here?  
Should you take this trade? This is another stock 
with a 1.3 million share float. Had squeezed up,  
pulled back, pushed higher, pulled back, stalled 
out, sort of dipped down. Then it rallied up,  
pulled back, popped up. Right here, it has 
retraced more than 50% of this initial candle.  
It's pulled back too much. The price is below 
the 9 EMA. This is not a good setup. I would not  
take that trade. What about this one? Now, here 
we've got a push higher, a pullback. It worked.  
A pullback right here. We're above the 90 EMA. Low 
volume on the selling candles, high volume on the  
green candles. That's an entry that we should be 
taking. And that gave you a nice trade back up to  
the high. Some work out better than others, but 
that was a decent trade from here to here. What  
about this next one? Now, this is the same one, 
actually. So, you already know what's going to  
happen. You've got the pullback here. You have 
a little higher volume on that initial candle,  
but it's not terrible. But first candle to make 
a new high as we break through this 180 level and  
you get a squeeze back up towards $23 a share, 
which is nice. So number four, respecting my  
exit indicators. This is very important. I do 
not want to cap my winners, which means I will  
not sell just because I'm up 20 cents. Even though 
my profit target on this was 50 cents to a dollar  
or 25 to 50 cents a share, whatever it was, 50 
cents to a dollar a share, it was $8 to 850. Just  
because it hit eight or 850, doesn't mean I sell. 
If I am so fortunate that I picked a setup that is  
going up two or $3 a share, I want to benefit from 
as much of that move as possible. So, I will hold  
until I see an exit indicator. What are the exit 
indicators that I respect? a big seller appearing  
on the level two can be one of them. Now, we know 
that anyone could put a big sell order out and  
it's possible that someone could put an order out 
just to fake out other traders. That is illegal.  
You're not supposed to do it, but some people will 
do it. So, an order just flashing isn't enough,  
but if it's st if it's sitting there, if it's a if 
it feels like a real sell order, that will be an  
exit indicator for me. Imagine you're in a stock 
and suddenly someone puts out a sell order for 1  
million shares. That's a huge sell order. You're 
probably best just to get out of the way. So,  
a big sell order, I'm going to be out of the way. 
50,000 shares, 100,000 shares, those are big sell  
orders as well. I'm just going to get out and 
take my profit. Number two, it has the obvious  
appearance of a hidden seller. A hidden seller 
is when there's lots of buying, but the price  
is not moving higher because there's a iceberg, 
a big seller unloading shares. When we have a  
hidden seller, I usually get out. Now, these are 
exit indicators. Whether I'm up 5 cents a share,  
50 cents a share, or $5 a share. If I don't see 
an exit indicator until I'm up a ton, then hey,  
that's awesome. If I see one and I'm only up two, 
three cents a share, it's disappointing, but it is  
what it is. I got to get out. I got to just jump 
right out because the exit indicator has to be  
respected. Number three, if I see a large burst 
of red on the tape, that indicates a surge of  
selling and a possible false breakout. On the next 
slide, I'll show you an example what that looks  
like. Number four, if initially we pop and then we 
have a dramatic reversal, that will form a topping  
tail candle and a false breakout. Number five, if 
buying is slowing down, and we can visualize that  
on the time and sales as well. And number six, 
the formation of a topping tail candle or a red  
candle. So if we look at YXT right here on this 
chart, you can see that this candle right here  
has a big topping tail. That green candle has that 
large top where it went all the way up to 1169 and  
then flushed back down. Topping tails by itself 
are a concern. And so the exit indicators that I  
identified on this first was a lot of red on the 
tape at about 11:30. A lot of red on the tape.  
Didn't like that. Then a big seller as it started 
to flush back down. It was now down a dollar a  
share. And that was the formation of the topping 
tail candle. Read on the tape. Topping tail. Big  
sellers. That's my cue to get out. It doesn't 
mean I'm done with it. This was at $11.69. And as  
we know, the stock ended up going up to a high of 
what was it? Over $20 a share. So yxt right here.  
Um it yes it went higher later but at that moment 
it was time to get out and so I respected my exit  
indicators. Now is there another trader out there 
who got in around the same spot as me didn't sell  
up here came all the way back down to almost being 
break even and then it goes all the way to 21 and  
then they get out there. Are they a hero? I don't 
really think so. I think it's better to get in and  
get out and get in and get out. And if you want 
to get in and keep getting out, you could do that  
as long as you want until you know that you've 
reached a point in the day when statistically  
you're not as likely to continue to make money. 
So let's look at my metrics right here. Now,  
well, let's let's not get ahead of ourselves. 
We're going to do that on step five. So let's  
just back this up for here for one second and go 
back to the slide. So, if this is when I get out  
of a specific trade, if it's if I see one of these 
five exit indicators or my six ex exit indicators,  
when do I know when to stop trading on any given 
day, right? Am I leaving money on the table or am  
I giving back profit? I suppose every day you're 
doing one or the other. You're either giving back  
or you're leaving money on the table. So, here's 
my lesson of when to walk away. And a lot of this  
has been guided by this book right here, which I 
recommend to you guys. quit. The power of knowing  
when to walk away. This seems like this would be 
written literally for a day trader. Um it's not,  
but uh there's a lot of overlap that makes great 
sense. So check this book out. This was written by  
um a professional poker player, Annie Duke, made 
millions of dollars playing poker, and knowing  
when to walk away is certainly relevant in that 
um line of work as well. So, I walk away if I  
lose half of my day, half of the profit I've made 
on the day at any time. If I lose half, I walk  
away. Why? Because I find that losing half, I can 
no longer look at the glass as half full when it  
is literally less than half full. Uh, so I really 
need to walk away if I've given back half because  
I'm more apt to become emotionally compromised, 
which means I'm more likely to be stubborn,  
frustrated, and then incur additional losses. 
And if it is not fun to lose half of the day,  
it's even worse to lose the whole day. Number two, 
I have to walk away if I hit my max loss. My max  
loss is equal to my average daily gain. So, my 
average daily gain, as you could see right here,  
on over $23 million of trading profit is a little 
under $10,000. So, generally, that's around where  
I keep my max daily loss. However, what's really 
important is to look at your last 30 days. So,  
my last 30 days, I've been averaging quite a bit 
more than that, $19,000 per day, which means my  
max daily loss could be a little bit bigger. 
Now, that's not the case with my small account,  
but I also been trading in my main account during 
this challenge. So, $20,000 daily max loss for me  
is sort of my comfort zone. But the whole idea is 
you don't want to lose more than you can make in  
one good day. Number three, if the window when I 
trade the best has closed, it's time to walk away.  
All right, so let's look at the metrics here that 
I was about to show you just a moment ago. So,  
well, this here um is actually a good one. So, 
if you look at days and times here, you will see  
that I'm doing really well until suddenly, boop, 
between 10 and 11:00 a.m. I'm losing money. And  
so if you saw these metrics in another trader, 
what would you recommend that they do? Perhaps  
just simply don't trade past 10:00 a.m. That 
would be the first most simple uh thing to do.  
Um maybe you could look a little deeper is what's 
going on here exactly? Is there something that  
you can correct? But the simplest is just to stop 
doing what's not working. And usually the simple  
answer is the right answer with trading. If it's 
not working, stop doing it. So for me right now,  
10 a.m. is pretty much my hard stop. After 10 am, 
I'm pretty much done trading because statistically  
I'm more likely to lose money. So even if the 
stock still looks good, I just know that after  
10 a.m. for whatever reason, I don't do as well. 
So the window when I trade the best is closed and  
it's time for me to walk away. Number four, if 
there are no longer any aquality stocks. So this  
is really important. There are some days where 
there will not be a stock that even meets four  
of the five pillars of stock selection. during the 
small account challenge that I've just done. Um,  
let's see. We'll pull up to look at the calendar 
and we'll see how many of these days I didn't end  
up taking any trades at all. And we'll do this 
based on um, we'll just do yearto date. So,  
small account challenge is only day 30, but I'm 
just going to give it more time. All right. So,  
we're going to go to overview and we're going to 
look at the calendar right here. And this is when  
I started the challenge uh, back in June. And 
so you could see already uh no trade, no trade,  
no trade, no trade. Um then we had no trades. That 
was the fourth of July. That was a holiday. Uh no  
trades, no trades, no trades, no trades. So I've 
had some no trade days. It I've been averaging one  
no trade day per week. I had a no trade day um on 
Let's see. Actually, no, I didn't. What was this  
day? Um, well, now that makes me think, did I did 
I not trade? Oh, you know what? I didn't I didn't  
take any trades there. Uh, that was a no trade 
day. What am I talking about? So, in any case, um,  
I had traded on Monday and then today's Wednesday. 
So, nonetheless, I've had about one no trade day  
per week. So, yes, there will be days where there 
are not a quality setups and if that's the case,  
you're better off just walking away. And then 
number five, if the theme of the day is bearish,  
if we are seeing stocks pop up, but they're 
having a really nasty reversal and rejection,  
then it's just best to call it and walk away. 
Maybe it's just not a day where there's good  
momentum in the market. And there's any number of 
reasons why that could be the case, but it doesn't  
really matter. If the momentum is not there, don't 
fight it. Now, a hard rule for me is don't come  
back after I've left. Stop watching. Because if I 
leave and then I come back, I'm apt to give into  
FOMO because I feel like I've missed something. 
You know, I missed a big move. Now I'm coming back  
and I'm compensating for what I missed. And that 
usually gets me into trouble. In fact, the right  
time to walk away usually feels too soon. That was 
something that um Annie Duke shared in her book.  
Now, number five. So that's number one through 
four. We've now gone through um where to find the  
strong how to find the strongest stocks using our 
scanners. Number two, finding the the what I think  
are the highest probability candlestick chart 
patterns, which for me is the first pullback. Now,  
in the book with Annie Duke, she talks about how 
her brother taught her to play poker and he didn't  
teach her every single hand you could possibly 
play. He taught her the top most what he felt  
high probability hands and he said only play these 
while you're learning. That became her foundation.  
So as I'm teaching you this pattern of trading the 
first pullback that is your foundation. If you got  
good at just trading that one pattern you could 
do well as a trader. You don't need more than  
that. Now you can add more than that. You could do 
the first pullback on the one minute time frame.  
You could also do it on the five minute. You could 
also do it on the 10-second. Then you could add in  
an ABCD pattern. Then you could add in a cup and 
handle formation, an inverted head and shoulders.  
There's a lot of different patterns that I trade 
at this point in my career, but as a beginner, get  
good at one pattern that becomes your bread and 
butter. Then number three, we talked about those  
precise entries using level two. Number four, we 
talked about your exit indicators. And now number  
five, we're going to talk about how to record your 
trades. It's very important that you're analyzing  
your metrics. I would not be here today with over 
$20 million of trading profits if I had not been  
tracking my trades from the very beginning. 
Here's the reason I started doing it. When I  
first learned about the stock market, it was part 
of a class at school and we had to track every  
single trade that we were taking in a ledger. It 
was like a, you know, a spreadsheet but on paper.  
And that got me into the habit of recording every 
trade. So when I started trading with real money  
in 2001, my first account, I continued doing that. 
When I came back number of years later and said,  
I'm going to try to become a day trader. I tracked 
every single trade. When things got tough, when I  
got frustrated, I could then sort those metrics 
to look at my biggest loser and ask myself,  
what did I do wrong? So right here, we've got 
my trades from this small account challenge.  
We're going to go to trades right over here and 
we can sort by profitability. We can look at my  
biggest winners and my biggest losers. My biggest 
loser right here is INLF from this challenge. What  
did I do wrong on this trade? Well, where do I 
begin? Look at this setup. Look at where I got  
in and look at where I got out. Now, it's fair to 
say that I did get in here to anticipate a first  
candle to make a new high. That is true. Look at 
where I got out. I waited way too long to sell.  
I should have sold right there. I didn't. So, the 
loss was bigger than it should have been. Now,  
the fact is that was my first trade on the stock. 
I hadn't traded it back here when it pulled away  
on the first pullback. I didn't get this one. I 
didn't get this one. I finally broke the ice. It  
was extended. I was feeling FOMO. It was 10:30 
in the morning. I had already left for the day  
and done some other stuff. I came back and then 
took this trade. That was a rookie mistake. So,  
there's a lesson in that loss. Now, this one 
on YXT today, that was tolerable. I gave back  
a little bit of profit on one of the trades 
and I don't really regret that because I look  
at that trade and I say, "Yep, no, I know what 
I was thinking there. I got in. I was looking  
for that push higher. It didn't work." That's 
fine. So, that's okay. You will have some losses  
that are like, "Yep, no, I I think that's fine. 
What about this one here? This one here, well,  
I chased it. That entry is too high. I should 
have been in down here. So, it was a bad entry."  
Now, if you're not tracking your trades, you don't 
have the opportunity to learn from your mistakes,  
right? So, if we look at my metrics right here 
and we looked at time of day, we would see, uhoh,  
well, just alone, if I stop at 10:00 a.m., that 
would have improved my performance for the last,  
you know, 30 days. So, what about price and 
volume? Any trends there? Ah, doing well pretty  
much across the board. So, there's nothing there. 
That's fine. Profitability by stock, I mean, no,  
nothing too much here. This is all pretty much 
fine. So, you know, the big finding here really  
would be more specific to the exact entry points 
number one and making sure I'm respecting my  
exits. Getting a little stubborn in the small 
account has cost me. So, I really want you to  
track every single trade that you're taking. And 
there's a lot of different software platforms you  
can use. Whether you use the same one I'm using or 
use something else doesn't really matter. But it's  
so important that you data mine every trade 
that you've taken. You have to do that. This  
is how you'll become a better trader. You look 
at what you're doing that works and you double  
down on that and you look at what you're doing 
that doesn't work and you stop doing it. Now,  
I think a big problem and the reason that a lot 
of traders struggle is they overcomplicate things.  
And that's why it's so important for me to try to 
keep it simple. One, two, three, four, five steps.  
Number one, it has always made the most sense to 
me to focus on the number one leading gainer stock  
in the market, the stock that is up the most. Look 
for good entries on that stock. Ride the momentum.  
Don't over complicate it. If you're getting into 
the weeds trading stocks that aren't obvious,  
you're going to struggle. So, make sure 
you're trading the right stocks first and  
foremost. And if you haven't already downloaded 
the stock selection guide, um the PDF resources  
I put together are for you guys to support you in 
your journey of learning how to trade. and they  
go even deeper than we had time to get into in 
today's class. Uh, and for those of you guys that  
actually want to use the software I'm using every 
single day for charting, scanning, breaking news,  
who want to listen to me while I'm trading, I run 
a broadcast so you can actually watch me while I'm  
trading. Watch over my shoulder and you can see 
my entries, you can see my exit. And you know,  
look, you'll see me win, you'll see me lose, 
you see everything. So, I don't win every day,  
but I don't lose every day either. and uh this 
these past 30 days in the small account challenge.  
I've had two red days. Uh but boy, it's been um 
it's been really awesome growing this account  
and donating the profit to charity. So you guys, 
I hope if you enjoyed this class today, you hit  
the thumbs up. It'll add an extra dollar to how 
much we donate. And if you want to learn about the  
process of reading candlestick charts, this has 
been a topic that we can go really deep on. I've  
got a class I'll put a link to right here that you 
guys should definitely check out, a deep dive into  
technical analysis. So, thank you as always for 
tuning in. I'll remind you, trading is risky. My  
results aren't typical, and there's no guarantee 
you'll find success whether you trade with me or  
you learn on your own. So, please manage your 
risk by practicing in a simulator before you  
ever put real money on the line. And with that, I 
will see you guys for the next upload real soon.