How I Turned $2,000 into $105,951.28 in 46 Days (My Small Account Day Trading Strategy)

In today's episode, I'm going to teach you the 
day trading strategy that I use to turn a $2,000  
account into over $100,000 in 46 days. In this 
episode, I'm going to share with you the three  
simple steps that I follow each day. These are 
steps that you can implement in your own trading,  
but I want you to make me a promise. I do not want 
you to put real money on the line until you first  
proven you can follow these steps consistently. 
and profitably in a trading simulator. I don't  
want you to assume that my results are typical and 
that you'll just jump in and make 100 grand in 46  
days cuz that's not how it works. I've paid 
my dues. I funded my first account in 2001,  
more than 25 years ago. I've been doing this 
for a long time. But I like to do small account  
challenges to demonstrate that the strategies 
even after all these years are the same. So,  
let's go ahead and jump on the screen share and 
start breaking it down. Today is day 46, finally  
crossing over $100,000. And I will share with you 
that during this challenge, I made a few mistakes.  
I'm human and I had a few days where I didn't 
follow all of the rules that I laid out for myself  
in terms of stock selection, entries, and exits, 
and especially knowing when to walk away each day.  
We'll get into those sort of weak points or weak 
moments in the challenge during today's class,  
but we'll also talk about the fact that, you know, 
as a whole, this challenge was very successful.  
I I performed a little bit slower than I did 
the last time I did one of these challenges. My  
previous one was a $600 account, just under $600 
to $100,000. And I did that one in 44 days. So,  
that one was a little bit faster, but during that 
challenge, I was using leverage in my account,  
which means I was trading on borrowed money. 
During this challenge, using Charles Schwab as  
my broker, they didn't extend leverage for pretty 
much any of these lowerpric stocks. So, although  
I was day trading, I was only really trading with 
the cash that I had available in my account on any  
particular day. So the growth comparatively 
is actually better because I wasn't using  
any borrowed money for this challenge. So let's 
begin by talking about big picture. I produced  
over $100,000 of profit. I did it on a total of 
113 trades and I maintained 70% accuracy. As you  
can see right here, I had 80 winners, 33 losers, 
and my average winners were about $2,000 a piece,  
and my average losers were about $2,000 a piece as 
well, which means I had a profit to loss ratio of  
1 one. And I want to begin here because I want to 
start risk first. Trading is risky. That shouldn't  
be a surprise to hear me say that. And so whenever 
I'm thinking about trading both in general and on  
any specific stock, I'm always thinking about how 
much I'm risking versus how much I stand to gain.  
And I don't want to risk more than what I stand 
to gain. So if we just jump on the whiteboard here  
and think about this very simply, if I risk $2,000 
and I stand to gain $2,000, how often do I have to  
be right in order to break even? 50/50, right? 
I got to be right 50% of the time to break even.  
On the other hand, if I can achieve accuracy 
of better than just 50% upwards of 70% which  
is what I was able to maintain, then with this 
profit to loss ratio of 1 one, I will produce  
profit over the course of dozens, hundreds, and 
eventually thousands of trades. Over my career,  
I've taken over 35,000 trades, and I've maintained 
a profit to loss ratio of approximately 1 one.  
Sometimes it's a little better, sometimes it's a 
little lower and my accuracy is maintained pretty  
consistently at about 70%. Now, one of the 
things I will be sharing with you during this  
uh class today are the metrics not only from 
this small account challenge, but also from  
my previous small account challenge of growing 
600 to $100,000 and also from the past 10 years,  
which all of uh them have been imported into this 
software right here. these past 10 years, actually  
11 years, where you can look at all of my metrics 
stacked up. So, this is a really good picture of  
how I performed consistently over long periods 
of time. This was the previous small account  
challenge where I averaged about 74% accuracy uh 
and got up to about $120,000 in a similar amount  
of time. And so, we'll have a couple different 
points of comparison that we can uh dive into. So,  
because day trading is risky, I always want you 
to practice in a simulator before you put real  
money on the line. And it's very important that 
you're thinking about how much you stand to gain  
versus how much you're risking. So if you stand 
to gain a dollar and you're risking a dollar,  
50% is your break even. If you can be better than 
that with accuracy, you're profitable. If you risk  
$2 to make only a dollar, you'd have to be right 
67% of the time to break even. Which means if I  
had this inverted or negative profit to loss 
ratio over the past 46 days, I really wouldn't  
have produced much profit. On the other hand, if I 
could have been risking a dollar to make $2, well,  
I would have been able to make twice as much 
money over the same period of time. And so I  
always look at a trade and I ask myself if I have 
the potential to at least make what I'm risking,  
if not more. Because what I've generally found 
over long periods of time is that when I look  
at a setup and I think to myself, all right, I 
think I have the potential on this trade to make,  
let's say, 50 cents a share. I rarely capture 
the full potential of what I think it could  
do. In fact, typically I capture less than 
half of that potential. So, in other words,  
if I saw a setup and I only have the potential to 
make 10 cents a share on it, then in reality, I  
probably would only make four or 5 cents a share. 
And that's really not a trade worth taking because  
typically I wouldn't be able to set my max loss 
tight enough to sustain a 1:1 ratio. in which case  
I would end up losing more on that type of trade 
on average than I make, which means my accuracy  
would have to be very high in order to support 
continuing to trade those types of setups. So,  
in the last uh 46 days, we've experienced a big 
sort of swing in the market from a very very hot  
market to a very very cold market and then back to 
a very very hot market. In fact, just today, well,  
yesterday we had a stock that went up over 2,000%. 
And that stock continued higher uh this morning.  
Yesterday was at a low of I'll pull a chart up 
just so you can see it for context. Uh this stock  
yesterday had a low of 50 cents a share right down 
here. So, this was way back yesterday, actually 35  
cents a share. Today, unbelievably, this thing has 
so far hit a high of over $17 a share. That's an  
incredible move. And that's certainly not the only 
one. We've had a number of these big moves today.  
So, I will of course give you a recap of my trades 
from today, but I'm also going to walk you through  
the these three steps I've been following over the 
past 46 days. So, day trading is risky and risk  
management is key. One of the things that I found 
is certainly true with me and is probably true for  
a lot of beginner and even experienced traders 
is that while I have the rules of the strategy,  
you know, which I lay out as, you know, the one, 
two, three steps and then each of these have sort  
of individual steps that you follow. Even though I 
have this and if I followed it consistently every  
single day, I would produce an expected result. 
What gets in the way is, you know, right up here,  
my head, I start thinking that I know better. And 
so this is like it's so classic because I have the  
rule right in front of me and yet in the moment I 
think I don't know. I think I'm going to go ahead  
and take this trade that even though I have a set 
of rules that say I shouldn't trade it because the  
price is too high or whatever, whatever. We'll get 
into the more detail as we go through this class.  
I decide to just override that rule and go with my 
gut. Unfortunately, our gut is not very well tuned  
to making money in the market. And so what ends up 
typically happening is that when you follow your  
gut, you end up giving in to your emotions, which 
means you end up buying stocks that are really  
high. Sort of almost like capitulating. Like you 
just give in to the fear of missing out and you  
punch the buy button at an obscenely high level. 
And then when it starts to drop, you don't want  
to take the loss and you hold and hold and hold 
until you emotionally sell at the very bottom of  
the pullback. And now you're a trader who bought 
the top, you sold the bottom, and you're losing.  
And when you do this consistently, you have 
poor self-confidence, you have increased losses,  
and you have a poor track record. And this 
becomes a downward spiral where, ironically,  
you take increasingly larger positions to try to 
recoup the money you've lost. But recouping the  
money the lo you've lost doing the same thing 
you've been doing which has been resulting in  
losing money is only going to fuel that downward 
spiral. And yet so many traders do it including  
myself from time to time. And so I found that one 
of the biggest obstacles between between success  
between a beginner trader and finding success 
and profitability is your mental game. So I'm  
of course going to share with you the three steps 
that you need to follow, but I also want you to be  
really thinking about your mindset. So what I want 
you to focus on through this episode certainly  
but in trading with trading in general is high 
accuracy. If you can focus on having high accuracy  
that is the beginning of creating a positive 
feedback loop. So why is that? Well, when you  
focus on high accuracy, you inevitably eliminate 
some of the outlier losses that have been drawing  
down your profit loss ratio and have been hurting 
your self-confidence. So improved accuracy means  
you've eliminated unnecessary losses. You've got a 
better profit loss ratio, which means you're more  
consistent. More green days, more green weeks. 
If you've got more green days, more green weeks,  
you're going to have a stronger track record. That 
builds self-confidence. Now, with self-confidence,  
you have good a good basis to start taking larger 
position sizes. Larger position sizes, increasing  
the frequency of trades means more profitability. 
And this becomes that positive feedback loop. And  
you've seen that in my own trading whenever I 
do these small account challenges. So this is  
the small account challenge that I had done um 
previously. This was the last one from uh $600  
up to a little over a hundred grand. Let's see. I 
crossed 100,000. Uh looks like it was somewhere.  
Oh no, it was right here that I crossed 100,000. 
So anyways, I think that was in 44 days. It took  
me 44 days to grow a $600 account to 100 grand. 
You can see how the first week was relatively  
slow growth and then the growth started to really 
pick up quite quite quickly. Uh it slowed down a  
little bit here and then as uh as time went on I 
could just adjust the calendar here to December  
uh 31. Um let's see over the course of we'll 
do detail down here and I'll show you this.  
um you know I had a sort of slow period and then 
it increased again and then again we stretched  
this out you know one more year and you can 
see you know that continued so that's now 2  
years of a small account challenge then we go 
into another two years this is getting into  
holy smokes what just happened here now we're 
getting into a period that was unbelievably  
strong we had a GameStop short squeeze so on 
and so forth and so over the last uh 46 days  
I've been doing this charity challenge. All the 
profits going to charity. Um, let's see. We'll  
go year to date here. My focus has been sitting 
down each day following the rules and the best  
I can with a couple of exceptions and trying 
to build that positive feedback loop. And so,  
if you look at this over the 90-day window 
here, you can see that the profitability was  
steady and then it started to really increase 
quickly here. And I suspect if I continue this  
challenge for another 46 days, we'll see the 
profitability go up even faster because I've  
got the confidence. It's not enough just to have 
money in your account. Some people think, "Oh,  
if I just fund my account with $100,000, I'll have 
the money to be able to take big trades." Money is  
not the first order of business. The first order 
of business is building that strong track record,  
building your self-confidence because that's your 
foundation. And this is why it's so important to  
practice in a simulator before putting real money 
on the line because it's in the simulator that you  
build that foundation. That's where your track 
record comes from. So, you shouldn't put real  
money into the market until you've first proven 
that you can maintain this consistency. Now, as  
many of you know, this small account challenge has 
been a charity challenge with all of the profits  
that I've made being donated to charity. So, we 
have now raised over $516,000 over the course of  
the last four small account challenges that I have 
done. And every time you guys hit the thumbs up on  
the episodes in this series, I add an extra dollar 
to how much we donate. So, that half million is a  
combination of my trading profits and you guys 
hitting the thumbs up. And we have successfully  
donated to 50 children's hospitals across the 
country. one in each state plus Puerto Rico,  
Washington DC, Guam, and the US Virgin Islands. 
So, that was the goal for this challenge,  
and we have just crossed it right here. And all of 
the profit that comes from this episode right here  
and you guys hitting the thumbs up will go to our 
continued goal of donating to Children's Hospital.  
So, thank you so much for being part of this 
exciting challenge. Step one, stock selection. So  
every morning when I sit down, my job is to find a 
stock worthy of trading. I'm using stock scanners  
to find it. Now the stock scanners that I use are 
a premium service. It's a software that I actually  
built. I began building it in 2017. And today we 
have thousands of traders across the world who  
are using these scanners to find stocks moving in 
real time. We subscribe to real-time market data.  
We aggregate that data and we search for stocks 
that meet my five pillars of stock selection that  
you're about to learn about. So, the first order 
of business is to find a stock that's moving. Now,  
what I want to do is I want to give you a PDF that 
you guys can print out and use in your own trading  
that outlines not only my stock selection guide, 
including the five pillars of stock selection,  
but also outlines my small account strategy, 
my trading plan, and a trade log that you can  
begin using in your own trading to track your 
performance. There will be a link pinned at  
the top of the comment where you can download 
those PDFs for free. We will ask for your email  
address. We'll give you the email. We'll give you 
the link where you can download them. We will not  
share your email address with anyone. We will 
send you periodic emails to keep you informed  
at what's going on here at Warrior Trading, new 
challenges I'm doing, and things like that. But I  
want you to know that we don't share your email 
with anyone. So, please check out these PDFs.  
You can use them in your own trading. This is a 
resource that we've put together for you guys and  
it accompanies this class here today. So these are 
my five pillars of stock selection. Number one,  
the stock has to be up at least 10% or more on the 
day. This is an indicator of demand. Number two,  
the relative volume needs to be at least 
five times above average. That means today  
the stock is trading on five times higher 
volume than its average volume each day  
over the last 50 days average. Number three, 
the stock should have a news catalyst today,  
which is the reason it's up 10% and the reason it 
has five times above average volume. Number four,  
the stock should be priced between 2 and 20. 
This price range is not only better for small  
account challenges, but it's also more popular 
among retail traders. There's millions of retail  
traders out there and retail traders generally 
find trading higher price stocks to obviously  
require more capital but to also have lighter 
volume and carry more risk. Number four sorry  
number five is the supply. These are the indicator 
the five pillars of stock selection. The first  
four are indicators of demand. And in order for 
a stock to go up 100 200 300% or more there needs  
to be an imbalance between supply and demand. So 
supply in this equation is created by the float,  
the number of shares available to trade. So when a 
company does its IPO, they sell shares on the open  
market and those shares are a fixed number and 
that becomes the pool of shares that we're buying  
and selling from. So if you have a stock that has 
a relatively small pool of shares and they put out  
a news catalyst and there's suddenly a surge in 
demand, then the price will move up very quickly  
as traders are scrambling to buy shares from the 
limited number of sellers that own shares. Now,  
these five pillars of stock selection are not just 
my opinion of what I think probably works. They're  
actually based on my own trading data. This 
is my 10-year average. Over the last 10 years,  
trading stocks with five times relative volume, 
five times above average, has produced that much  
profit. And the rest of my profitability has 
come from stocks that had slightly less volume.  
So clear, very clear, five times relative volume 
is a must when it comes to the pillars of stock  
selection. During my small account challenge, this 
is the performance from the from the last 46 days,  
including today. Most of the profit by by and 
by and large was from stocks that had five times  
relative volume. But you can see I had a few more 
trades in this lower section which I feel was a  
bit of a mistake, a little bit of a divergence 
where I was anticipating that a stock was going  
to work but in many cases I was wrong and it did 
not work. So this is an important thing to take  
note of in terms of mistakes that were made 
during the challenge. So um again I'm going  
to I'm going to admit that there were some 
mistakes that were made. So, number one, um,  
trading lower relative volume stocks. That was the 
first mistake that I made during this challenge at  
various times. Number two, stocks that have higher 
volume today. On my 10-year average, I've done  
better when stocks have had more than 25 million 
shares of volume today. And consistently, I do  
better as we have more volume. That's typically 
because when a stock has a really good catalyst,  
there's more people trading it, and so the volume 
goes up. That was also true with the small account  
challenge, but I had a few losses down here on 
stocks with lower volume. So, mistake number  
two was dipping my toe in on um oops, low volume, 
sorry, low volume stocks. Low volume stocks uh in  
many cases are a mistake. This again is me trying 
to anticipate that the stock is going to work and  
is going to have a lot of volume that it's going 
to be popular today. Perhaps because I just saw  
the news catalyst come out, but it's often better 
to wait for the confirmation rather than try to  
anticipate. Over the last 10 years, trading stocks 
that have been gapping up more than 2% on the day  
is where pretty much all of my profit has come 
from. That means the stock is moving up in either  
after hours trading or pre-market trading based on 
news that has come out after the previous close.  
This is the the strategy that I trade for the 
most part is breaking news catalyst and most  
of those catalysts come out in the after hours 
session. During my uh 46-day challenge here, most  
of the profit also came from this sector. Uh but 
there were a few days where I was trading stocks  
that had actually gapped down and were reversing 
and there were a couple that were smaller. These  
are outliers and again when you're doing a small 
account challenge and you you know your back is  
kind of up against the wall, it's better to just 
focus on the basics and not deviate. So, let me  
pose the question. Why would a stock go up on uh 
five times relative volume, above average volume,  
up at least 10%. It's because there's a catalyst. 
So, trading news is important. However, in the  
last 46 days, we've seen a number of examples of 
stocks that have actually made enormous moves and  
there have not been clear catalysts. That has been 
a challenge. And so, one of the things that I have  
well, so let me I'm going to talk about that in 
just a moment. Before I do that, let's talk about  
price. I've done the best historically between $2 
and $20 and between five and 10 has been a sweet  
spot. This is over my 10 the last 10 years and 
this is during the small account challenge. So,  
this is pretty consistent. Had a couple of 
exceptions here, but nothing that was really  
uh too far outside the norm. So, did a good job 
with price. And then number five was float. And  
so stocks with a float of less than 20 million 
shares are the ones that tend to make bigger  
percentage moves. And so this column right here 
on our scanners is showing the float. And so you  
can see here these are our uh top five six leading 
gainers in the entire market right now today. And  
um actually this was a screenshot from the other 
day. But in any case, you could see clearly that  
these leading gainers all have lower floats, less 
than 20 million shares. This one's an exception  
at 26. And these ones are exceptions as well, 
but this is generally what we see on any given  
day. So if I pull up the scanners from just today 
as an example, um this is this morning and number  
one leading gainer right here has a 1.6 million 
share float. The second, this is up 400%. The  
second leading gainer actually has a 34 million 
share float. The third leading gainer has an 11  
million share float. The fourth and fifth are both 
7 million shares. And then you get one down here  
that's a little bit higher. So generally speaking, 
floats of under 20 million are the sweet spot, but  
there are some ex exceptions. Now when it comes to 
news, this is tricky because today is an example  
where this stock RET, which made an unbelievable 
move, has actually gone up with absolutely no news  
whatsoever. It's a Chinese stock and there is 
no clear catalyst. And this definitely poses a  
risk for traders. It's hard to understand why a 
stock would be going up with no news. Generally  
speaking, traders draw a conclusion that somebody 
must know something because surely a stock doesn't  
go up in one day from 50 cents a share, 35 cents 
a share, whatever it was, all the way up to a high  
of $8 without some type of catalyst. But I would 
argue that what we do know is that with some of  
these stocks as they start moving higher, there 
are short sellers that start selling, selling,  
selling, selling, expect the stock with no news 
will end up rolling over. And if a certain point  
that stock pushes past their max loss, they have 
no choice but to cover. And to cover that position  
means buying and adding to the long side, which 
creates this buying volume and this big squeeze.  
And so it's very possible that you could actually 
have a stock with no underlying catalyst. Truly,  
no fundamental reason for it to go up that high, 
but because shorts got stubborn, you have what's  
called a short squeeze. And that's what happened 
on GameStop in 2021. Did the fundamentals match  
GameStop being priced at a high of $500 a share? 
And the answer is no. We we understand that  
clearly. And yet it became disconnected from 
its true value because of the dynamics of fear  
and greed and buying and shortselling. And so 
these can represent opportunities. This stock,  
for example, would meet four out of the five 
pillars of stock selection. Because it doesn't  
meet all five, I have to take it with a little 
bit less risk, recognizing that there's a higher  
chance that it could fail. However, if it is the 
leading gainer as it is at this moment right now,  
it would be a mistake to disregard it simply 
because there is not a fresh news catalyst. So,  
that's an important thing to be aware of. Okay. 
So, we'll hide that. So my five pillars of stock  
selection have become uh listed like this. Stocks 
got to be up 10% needs five times relative volume.  
There should be a news event should be priced 
between 2 and 20 and the float should be less than  
20 million shares. Okay, so that's very clear. 
However, within those five pillars, I also have  
acknowledged that I do better at a certain time of 
day. So I do better earlier in the trading session  
with declining profitability as the day goes on. 
And that's because most of my trading is on stocks  
that have breaking news and that news is typically 
coming out early in the trading session. Now,  
you can have news catalysts that come out uh later 
in the trading session in the afternoon. However,  
I don't typically uh trade later in the day 
because I feel like there's only a limited  
amount of time before the market closes. I would 
rather trade early because if I make a mistake,  
I still have time to recover. But if I trade 
at the end, I don't have much time to recover  
that mistake. So this was during um this is 
actually total profits from all time. Let me just  
um update that slide. And this is so this is 
um let's see let me just reverse this. So this  
was the 10-year average right here. And then 
that's the 10-year average. And this was the  
small account challenge right here. So during 
the small account challenge, I did have a few  
losses trading a little bit past the open. And in 
hindsight, I had regretted that. I felt that I had  
deviated from the time of day where I typically 
trade the best. So time between 7:00 a.m. and uh  
really 9:30 for the cleanest action because after 
the 9:30 opening bell, we have a couple changes in  
the market. One is the presence of market orders. 
The other is the presence of stop orders and the  
third is the present of presence of halt levels. 
These all give the market makers the upper hand  
against us the little guy as the retail traders. 
So after 9:30 in this current market I find that  
trading typically becomes more difficult. So 
the highest quality stocks are even more tightly  
filtered than the five pillars I just shared with 
you. I have a minimum that the stock has to be up  
at least 30% on the day. It should per I would 
prefer a breaking news headline, but again that  
can be an exception. The price between 5 and 10 
is my real sweet spot. Five times relative volume,  
it's a must. The time between 7 a.m. and 10:00 
a.m. and the float of under 10 million shares  
to further reduce the supply, which then means 
the imbalance between supply and demand will be  
even bigger. So today's top gainers earlier this 
morning on day 46 we had ZTG which was up over  
300%. This is an incredible move and this was 
at 7:15 in the morning. So this is very early.  
MEEDS was our second leading gainer up 137% as you 
could see uh when I just pulled up the slides or  
the uh scans just a moment ago. MEEDS is as of 
right now up 485%. It's highly volatile. It's  
making a really big move. ZTG has pulled back 
a little bit. It's now up 197%. So, these are  
this is what I was looking at this morning at 7 
a.m. as I'm trying to make the decision of which  
stock should I choose. I always want to make sure 
I'm choosing a stock that I feel is obvious that I  
feel other traders are also likely looking at. So, 
this was day 46. Now, yesterday, to add context,  
we had this 2,117% short squeeze, which as we now 
know, continued later this morning. But at the  
time at 6:45 7 a.m., I didn't know that this was 
going to continue. All I knew was that yesterday  
we had a huge move. And that meant I wanted to pay 
really close attention to stocks that were similar  
to this one because after you have a big move, 
traders are not wanting to miss the next one.  
So when you have another stock that pops up that 
looks similar, traders are going to be quick  
to jump in it. And so what did this have going 
for it? It was a foreign listed security priced  
relatively low that started moving very quickly 
and in an instant was up over 100%. This morning  
ZTG hits our scanners. It's also a foreign listed 
security. Within an instant, it's already up over  
100% and it's moving quickly. So, this to me met 
the profile of being the similar type of stock as  
our big move in the previous session. So, how does 
it meet my five pillars of stock selection? It's  
already up 150% before I'm considering taking my 
first trade. It's got 13,000 times higher volume  
today than its 50-day average. There is no news 
catalyst, but neither did the one yesterday that  
made the big move. So, maybe that's even better 
because it makes it more similar to yesterday's  
big move. The price is between two and 20. It's 
a little on the lower side, but but it's right at  
the cusp, so I'm okay with it. The float is under 
20 million shares. So, this meets four out of the  
five pillars. The time is right, and it closely 
aligns with our big move yesterday. It has the  
China connection. The big move from yesterday 
was a Chinese listed stock. This is a stock in  
um Macau. It's a um a special administrative zone 
of China. I think you could kind of think of it  
as like the Washington DC of the United States 
or maybe the Puerto Rico of the United States.  
It's a it's a it's a part of China. And so and 
they they operate um in China. All right. So  
it's got the China connection and all of a sudden 
we get this huge move. The stock ends up going up  
400% on 50 million shares of volume. So when the 
stock first hit my scanner right here, I had to  
make a prediction. Did I believe this stock had 
the potential to go higher? And I used these five  
pillars of stock selection to come up with the 
answer. And I believe the answer was yes. So I  
believed the stock had the potential to go higher. 
That's step one. And I believe the stock was  
obvious. I I felt at that time it was in fact the 
most obvious stock in the entire market because it  
was the leading gainer. And so now the question 
is where do I take my entry? Right, we've got a  
stock candidate. Now I've got to decide where to 
buy. So now we're going to go into step two, which  
is actually where to press that buy button. Okay, 
so for step two, I want to wait for the pullback.  
I don't want to just slam my order while the 
stock is in the middle of a squeeze because if  
I do that, I don't have any basis for nearby 
support. So, let me give you an example. So,  
we have a stock that squeezes up right here. 
Squeezes up right here. And let's say so this  
is the low of the of the initial pullback or the 
initial move right down there. So, let's say I  
just punch my order right here. If I just jump in 
right there at the beginning of the move, where's  
my max loss on that trade? Well, my max loss 
should be at the most recent level of support,  
which is right down here. So, that's really far 
away. Now, if it keeps going higher on the next  
candle, I might think, oh, no problem. You know, I 
got out right here. This is a good trade. But it's  
not really a good trade because I was risking more 
in risk than I was standing to gain in reward.  
Risk and reward. So even if I was profitable on 
this particular trade, I would need to be right  
probably 70% of the time in order to consistently 
take this setup and be profitable. And so that's  
not very sustainable, especially for a beginner 
trader. So rather than getting in right there,  
what I would rather do is be patient and let the 
stock pull back. So let it experience its first  
dip right here where we have a little pullback. 
And this is now the moment of truth because the  
stock could come all the way back down and we've 
certainly seen that happen. We've seen examples  
of that happening today. So, let's just pull up 
the scanners and I'll show you an example from  
this morning. So, let's see. We had um what was 
one that we had from today? We could scroll back  
on our scanners a little ways here. Um let's see. 
We had DLXY. So, this is a good one from earlier.  
Although it ended up rebounding, I don't think 
that's uh really the point at the moment. Um this  
rallied up. Well, it's not a perfect example. 
Let me let me switch to the one minute chart.  
Might be a little clear. So, this one rallied up 
here and um and then basically it went from 45 to  
110 and then back to 60. So, if you just bought 
it in the middle of this candle here or here,  
your max loss is way down here. And this came 
all the way back down. Now, eventually it came  
back up and then you got a little pullback here 
and it pushed a little higher and now after the  
opening bell, we've gotten a little bit of action 
here. That's a nice pullback right there. But  
buying in the middle here, in the middle here, 
or in the middle of here or here, that doesn't  
really make a lot of sense because your stops are 
way back at the low of the previous pullback. So,  
right here is a particularly extended position to 
be considering a trade because it's support is so  
far away. So, in order for you to get a 2:1 
profit to loss ratio on this from this spot,  
it needs to go like up to here. Your stop is 
down here. And is it realistic for it to go  
up 100%. Well, in a day like today where we're 
seeing a lot of volatility, it's certainly not  
impossible considering the other stocks that 
have moved. But it's not a great strategy to  
require the stock go up 100% in order for you 
to justify taking the trade. So, in any case,  
this is the moment of truth. If it pulls back 
and then does not go lower, it bases out here,  
maybe there's a little bottoming tail, whatever, 
then we would start to look at this as a new area  
of support because this is where the buyers start 
to step in and say, I actually think that this  
stock is going to go higher. So, as that first 
candle crosses right here, I call that a crossing  
candle. It's the candle over candle formation. And 
this candle signifies a change in trend. So green,  
green, green going up and then as we have a red 
going down, we're having a change in trend to the  
downside. So the trend changes right here and then 
it changes again right here with this reversal. So  
this is actually the place right there where I 
want to be a buyer right here in the middle of  
that candle. The moment that candle breaks over 
the red candle, I'm in. And now I'm looking for  
a continuation up to the high. Now by taking 
an entry right here, what's my max loss? It's  
the low of this pullback. So now this is my risk 
risk and my profit target is first a retest to the  
high a day which is at least the same size as the 
risk but often higher and then if that works we're  
getting a continuation higher. So often when we 
hit high a day if I'm being conservative I'll sell  
half my position and I'll sell more as it goes 
higher. If I'm being aggressive I'll hold the  
whole thing. If I'm being really aggressive I'll 
actually add here moving my cost basis up to about  
here and then sell into the extension. But I would 
only do that if we're in a really hot market. So  
those are a couple different scenarios. That is 
the pullback that I look for and that's exactly  
what I traded on ZTG this morning. So ZTG pops up 
right here and it hits the scanners, right? So I'm  
seeing it hitting the scanners. Ding, ding, ding, 
ding, ding. We're seeing the volume increasing.  
It pulls back and right there I punched it. 
So I was waiting for the pullback. I added  
right there. Now, in this case, I was a little bit 
more aggressive, which I'll show you in a moment.  
Waiting for the pullback is so important. One of 
the other mistakes I made during this challenge  
was being at times impatient. So, I was impatient 
and I did not wait for the pullback, not waiting.  
So, I would jump in something that was too 
extended. This is sort of giving into FOMO. And  
I think part of this was because, you know, I felt 
like I really want to grow this account quickly.  
I want to be trading every day. I have this goal 
of donating to 50 children's hospitals across the  
country. I'm and and I, you know, I didn't want 
to miss opportunities and so I was being a little  
too aggressive at times and so I wasn't as always 
always as good at waiting for this setup to form  
and sometimes I would jump in a little prematurely 
up here or even somewhere in the beginning of the  
move because I didn't want to miss out. However, 
waiting for the setup to come to you will yield  
better results than being impatient. So, this 
is the formation, the rally up, the pullback,  
the first candle to make a new high, that's 
our crossing candle, then the retest through  
the high a day, and the extension higher. And so, 
this morning, that's exactly what we got on ZTG.  
And so my first entry on it was right down here at 
$155 and $161 right in this area looking for that  
break through the high. That was my entry. Okay. 
So now I've taken my position. Now you'll say Ross  
there's there h what what if let's say just for 
the sake of argument uh what about right here? You  
know this ends up going higher but that doesn't 
really look exactly the same. That's a little  
more complicated. You're right. That's a slightly 
more complicated strategy. Later in this episode,  
I'm going to share with you some recommended 
reading. Two of the books that I'm going to  
recommend. Um, one of them, Thinking in Bets by 
Annie Duke. The other Quit: The Power of Knowing  
When to Walk Away, also by Annie Duke. These are 
great books. You can listen to them on audio tape.  
They're not very visual, so just listen to 
them while you're driving or something. But,  
um, one of the things that Annie Duke talks about, 
she was a professional poker player, made millions  
of dollars playing poker, and her brother taught 
her how to play. And the way he taught her was  
he taught her first just a few sets of hands to 
play. And he said, "Only play these. When you get  
these cards, play that hand. Everything else just 
fold. Don't play it." And as a beginner trader,  
I would encourage you to do the same thing. Just 
focus on a couple of really good setups. And this  
is my favorite. Get good at this. And then 
later, once you've got your bread and butter,  
then you can start venturing out to some of these 
more risky setups. This is not as clean right  
here. While it did work, it was not as clean, 
which meant it carried more risk. So for the  
small account, this first pullback right here was 
the spot to be a buyer. So now there's a question  
of when to sell. All right, you know when to 
buy. Now we got to figure out when to sell.  
It's very important to respect exit indicators. A 
big seller appearing on the level two is an exit  
indicator. Level two is our market data. So that's 
where we see all the buyers and all the sellers.  
So if we're watching a stock that's moving 
higher and suddenly we have let's just say  
for the sake of argument we'll create a little 
level two window here. So let's see we'll make  
um make the level two window. So on the left we 
have our bid and on the right we have our ask.  
And let's say we have an order here at 550 for 
1,000 shares and then we have an order at 555 for  
100,000 shares. That is a large sell order. So if 
I'm in a position and let's say this was 555 right  
here and I see that big sell order, I'm going to 
recognize that that sell order is going to create  
at the very least shortterm resistance on this 
stock because in order for the price to go higher,  
there'll have to be 100,000 shares of buying that 
buy up that seller. And having 100,000 shares of  
buying with something that's already extended 
is not as likely. In fact, if you were a short  
seller, you probably wouldn't cover your short 
seeing that you've got this resistance right  
overhead. And so, the only people that would be 
buying would be someone who's long. Well, who's  
buying to the long side way up here at the middle 
of the candle? That's not really a good spot to  
buy long either. So, typically a big seller on 
an extended stock will result in a pullback. Now,  
that pullback might be just a moderate pullback 
down to here, something like that, and then we  
make way for another leg higher. That's certainly 
possible. We could have another crossing candle,  
but for right now, the seller is in the way. And 
so when I see a big seller, I jump out of the way,  
especially if I've just gotten into the trade 
and I don't have a very big cushion. Number two,  
the obvious appearance of a hidden seller. A 
hidden seller is when there's buy orders going  
through. So in this case, there's lots of people 
buying at 555, buying, buying, buying, buying,  
buying, but the price isn't budging. That tells us 
that someone is unloading at 555 and they're using  
a hidden order. This is something that market 
makers can do, but so can more experienced traders  
using specialty boutique brokers. So, if you see 
a lot of buying and the price isn't moving higher,  
that's a warning sign. Number three, a large 
burst of red on the tape can indicate a surge  
of selling. It does indicate that and a and 
a possible false breakout or a reversal.  
Number four, if we initially have a pop, so 
a big squeeze, but then a dramatic reversal,  
it'll form a topping tail. Topping tails are 
bearish. So, if we do a mini lesson here on  
um candlesticks, we've got a candlestick right 
here, and this is the open. I'm going to switch  
here. This is the open of the candlestick. This 
is the close. And then this is the top of the  
candle wick. This is the bottom of the candle 
wick. So, the most bullish candlestick would be  
a candle that opens at the bottom, it never 
goes lower, and it closes all the way up at  
the top. That's the most bullish. What would be a 
little bit less bullish? Well, maybe if it opened,  
it sold off and then it came up because that 
would tell us that while it closed strong,  
it was weak at the beginning of the candle. What 
would be a little less bullish? What if it opened,  
it went lower, then it went up, it hit this 
high, and then it sold off a little bit. So,  
it closed down here. This now tells us it closed a 
little lower than the high. So, inside the candle,  
what essentially happened was the price opened. It 
tick tick tick tick tick down, then tick tick tick  
tick tick tick tock up, and then closed. If this 
is a one minute long candle, then within those  
60 seconds, that was what happened to the price. 
And so that's a little bit more bearish than this  
move here where it opens and just goes straight 
up as you can imagine. Now certainly there's  
um even more extreme examples of this where you 
have a stock that opens it goes way down like  
this which means in the moments where we were dip 
dip dip dip dipping down this was actually a red  
candle right and then the price reverses. So all 
of a sudden we squeeze up to way up here. And so  
in that moment this becomes a green candle with 
just the bottom candle wick because the open price  
stays the the same through the whole period. This 
was the open. It closes here. Now it looks like  
oh we're in good shape. But wait, no, just before 
the close all of a sudden there's a big surge of  
sellers that come in and it comes down like that. 
So then what do we have? We have a candle that  
looks like this. And this is called a dogee. When 
you have a really tiny body like that, this is a  
candle of indecision. It communicates a struggle 
between buyers and sellers. You don't want to see  
buyers and sellers struggling on a stock that 
is in this position right here because this  
is a stock that previously was very bullish, but 
now suddenly we're having at the very top of this  
move. We'll just erase this just so I can kind of 
show this to you. We have at the top of this move,  
we have a big dogee candle like that. That is a 
reversal indicator. What often happens is the next  
candle opens at the same price, begins to go lower 
here, and then we have a drop down like this. Now,  
on the other hand, down here, if you've got that 
bottoming tail, that bottoming tail is bullish  
for the next rally back up because it shows 
that while it was weak, buyers bought it up,  
we rally back up, we rally back up again, and then 
let's say we get another dogee at the top, candle  
of indecision, preparing for a dip back down. So 
in the case this morning and these are the areas  
that I pay a lot of attention to as a trader the 
changes in trend. So I look at the candle shape  
around these changes and I look at those topping 
tails to signify weakness or the bottoming tails  
to signify strength and I also check the volume 
profile. So that's a number of shares traded  
on each of these candles. So what we like to 
see is a volume profile of increasing volume.  
So volume is going higher and higher and higher. 
What we wouldn't want is for volume to be doing  
the opposite. If volume starts high and is getting 
progressively lower as the price goes higher,  
we call that a divergence. A divergence often 
indicates that while the price is going higher,  
there's less strength behind the move and 
we're likely to roll over. Now, for those  
of you guys that are brand new traders, you might 
be thinking, "Wow, this is a lot of information  
to process in in real time." And I agree it is. I 
find this at this point in my career to be fairly  
straightforward. This is pattern recognition. This 
is a visual language of the financial markets. And  
just as if you looked at um a picture of a dog 
and a cat, you can immediately recognize these  
are domestic animals. They're pets. Uh, let's 
say the dog is a golden retriever. So now you're  
associating all these positive connotations you 
have with golden retrievers. They're big, dumb,  
happy dogs. They're friendly. They're probably not 
going to bite you, right? And you see the cat and  
let's say it's a Siamese cat. You're like, "Oh, I 
better not go near that cat. It might scratch me,  
right?" So you have these connotations that 
you associate just by looking at the pattern,  
the visual shape, right, in the picture, and you 
draw all these conclusions. The same thing happens  
with candlestick charts. You look at this shape 
and all of a sudden you draw all these conclusions  
about what's going on behind the scenes. What's 
helpful as a beginner trader is to have a  
translator. So what I do every day in at Warrior 
Trading is I provide my market commentary and I'm  
in the role of being a translator. I'm sharing 
with you what I'm seeing and I'm putting it into  
layman's terms. I'm articulating the volume 
profile. I'm commenting on the topping tales.  
I'm pulling together all of these different 
data points and giving them back to you in a  
way that's easier for you to understand. And the 
hope is that the more you listen and the more you  
go through the classes and rewatch archives of my 
trading, the better you'll get at assimilating all  
that data so you actually process it yourself. And 
that's just like learning any other language that  
you listen to other people speaking the language, 
you study it, and the more you immerse yourself in  
that uh language, the the the the quicker you will 
pick it up. And so I do have links, of course,  
um at the bottom of this um episode or and in the 
comments where you can download the small account  
uh challenge PDFs. So the PDFs accompany this 
class, but you can also do a two-eek trial. And  
when you guys do a two-eek trial, you can actually 
listen and watch over my shoulder as I'm trading.  
That two week trial is 20 bucks. So for $20, you 
get to spend two weeks with me listening to me  
provide my market commentary, giving you, you 
know, 25 plus years of educated intuition. And  
you also get to use this software right here for 
scanning, charting, and for searching the breaking  
news feed. So this is what you get as part of that 
twoe trial. So make sure you guys check that out  
if you haven't already. Okay. So, respecting my 
exit indicators is probably one of the biggest  
challenges that traders face in my opinion. And I 
take this with a grain of salt because I've been  
trading for a long time, but my opinion is that 
it's not very difficult to choose which stocks  
are obvious. I look at the scanners each day and 
I'm typically trading the the top two or three  
leading gainers. It's it's fairly straightforward. 
These stocks usually meet my five pillars of stock  
selection. By understanding those five pillars, 
you better understand why these stocks have the  
potential to move. But usually, I'm trading and 
focusing on the leading gainers each day. So,  
that's fairly straightforward. Waiting for the 
first pullback, that can be challenging. So,  
you know, you've got to wait for the first 
pullback and it can be a challenge to have  
the patience and discipline to wait for it. But 
if you can, you know, then that's where you can  
be in a good spot. But where a lot of traders get 
tripped up is on the exit indicators. Ultimately  
holding losers too long which brings down your 
average loss or it increases your average loss,  
right? It brings it also hurts your accuracy if 
you let a winner turn into a loser. So holding  
losers too long and also selling winners too soon. 
A lot of beginner traders do this. You get in,  
you probably take a little too much size at the 
beginning of the trade and so you're immediately  
testing your kind of emotional comfort zone. 
you're like, "Oh my gosh, if this doesn't work,  
I'm I'm going to get be smoked on this thing." So, 
as soon as it goes up a little bit, you're like,  
"I'm out." And now what you've done is you've 
capped your winner. You might have had the right  
idea down here, but you know, you took instead of 
maybe you should just take a 100 shares. You took  
10,000 shares and you're all of a sudden down, 
you know, 8 cents a share, you're down 800 bucks.  
You're like, "Oh my gosh, that's so much money." 
And then it pops up and you're up 800 bucks.  
You're like, "I'm selling the whole thing." and 
you get out right here and then the stock ends up  
going up 75 cents a share. That would have been 
75 cents a share times, you know, 10,000 shares  
is $7,500. But you're a beginner trader. You 
shouldn't be trading with this kind of size. So by  
trading with size that's too big, you're becoming 
emotionally respon you're you're emotionally  
activated essentially. And that's another reason 
that I'm a big fan of practicing in a simulator.  
So you're in that safe environment. And this 
is it would have saved me so much heartache if  
I had just practiced in a simulator instead of 
putting real money on the line. So in any case,  
what a lot of beginner traders do is when they're 
in even a winning position, they sell too soon.  
So now they're reducing the size of their 
average winners, but when they're in a loser,  
they don't want to cut the loss. And I'm I'm 
saying they, but it's me, too, because I've been  
there myself. So don't feel bad. This is how most 
traders and most humans are in the market. We're  
not at birth trained with the mental aptitude to 
be a good trader. We have to train ourselves to  
be good traders. And that means having a system 
like the three steps I'm sharing with you and  
also training yourself to have the discipline to 
follow the rules of this system or this strategy.  
So, one of my challenges this um in these past 46 
days, certainly being impatient and not waiting  
for the right entry and then also getting stubborn 
and holding losers too long. And it was 100% the  
result of being emotionally compromised. In that 
moment, I was not following the rules of when to  
exit. I held, I hoped, and I got stubborn. And so 
no one is completely immune to this. Even after  
years of experience in the market, you could 
still find yourself getting stubborn. So that's  
very important. Respect your exit indicators. And 
it's far easier to do it when you're trading with  
smaller share size. These are the three clear exit 
indicators I had on my trade today. Number one,  
red on the tape. So all this red, that was the 
burst of selling. Number two, we had a big seller  
that came in. I was already selling by that point. 
and we had the formation of a topping tail candle.  
And so I took my exit partial off the table up 
around 260, which was great. And then 230, 223,  
and 212 as it was coming back down. And that was 
the toppingtail candle that formed right there. It  
was the right decision to take some profit off the 
table. Now, it went from about 280, back down to  
$2, then it goes up to 320, then back down to 240, 
then up to 360. And so for me, the way I trade is  
I want to get in and get out. Now, my entry here 
was actually on the 10-second chart, and it was in  
that little micro pullback. Now, of course, during 
this challenge, I was using Charles Schwab, and I  
would say that Charles Schwab is a decent broker, 
but they are not as fast as a direct access  
broker. There's two different types of brokers in 
the United States. There's commissionfree brokers  
and there's direct access brokers. Commissionfree 
brokers use a wholesaler to route your orders. The  
wholesaler makes a profit on your order flow 
which allows and they pay some of that profit  
to the broker which is what allows you to have 
commission free trading. But in that relationship,  
the wholesaler filling your order on their own 
internal pool of shares unfortunately creates a  
little bit of latency. And this was something that 
created a little bit of an emotional challenge  
with my small account challenge that I felt at 
times that I needed to be in a little ahead of  
the move because I was worried if I waited for 
confirmation I'd be behind. And when I had to  
get out, I was worried that if I wasn't selling 
early, I'd be selling into a big red candle.  
And so the limitations of the platform created 
some changes in the way I trade. And I don't think  
that's really a good thing. I think it's better if 
you could trade on a platform that is so fast that  
you're not changing your style to accommodate 
a slightly slower broker. Other alternatives,  
unfortunately, would be a broker that charges 
commission. And that's the biggest downside.  
When you're doing a small account, you don't want 
to spend money on commissions. And the commissions  
can be hundreds of dollars a day potentially. So, 
if you're trading in a small account and your goal  
is 200 a day, you want to keep as much of that as 
you can. So, my belief is that the small account  
um challenges are best at a commission-free 
broker. So, from $2,000 or less than that up to,  
you know, 25,000, 50,000, you know, maybe a h 
100,000. But at a certain point, I find that the  
uh the limitations of the broker start creating 
issues where I can start to have diminishing  
returns. Now, I don't know exactly where that line 
is. I don't it's not at 100,000 as we can see,  
but there's somewhere there's a line. It's already 
causing some issues. So, what I actually think  
is a good idea is trading with a commission 
free broker from $2,000 up to, you know, 50K  
or maybe a little higher and then at that point 
considering to switch to a um direct access broker  
like the one that I use, which is called Lightseed 
Trading. So, I use Lightseed, which is a broker um  
that I've been using for more than a decade. And 
although they charge commissions, they allow me to  
enter and exit positions so quickly that during 
those really hot markets, I can be doing really  
fast trades and making some serious money that I 
wouldn't be able to do at Schwab or Weeble or any  
of the other commission free brokers. So, however, 
if you started here with a $2,000 account,  
then you're paying a disproportionate percentage 
of your profit in fees and commissions because the  
fees and commissions for most traders are $3 per 
trade per ticket. So, it doesn't matter if you're  
doing a 100 shares, you're doing a,000. Um, and 
to be honest, once you're doing 10,000, it's it  
makes even more sense. But, if you're trading only 
a 100 or a,000 shares, speed may not be quite as  
big of a factor, arguably. So that's where this 
is sort of most appropriate for phase one and then  
into phase two scaling to a more sophisticated 
broker when you get there. Now an important lesson  
that I struggled with um during this challenge is 
knowing when to walk away. There were a number of  
days where I stayed far longer than I should have. 
I should have just gotten out, called it a day,  
and I kept pushing it. So, it's important to know 
that on any particular day, if I give back half  
my profit, I need to walk. Because by giving back 
half my profit, I'm almost inevitably, invariably,  
emotionally compromised. I have to walk away. 
If I hit my max loss, accept that I've hit it  
and try again tomorrow. If the window in terms of 
the time of day when I trade the best is closed,  
I got to stop. If there are no longer any Aquality 
setups, I've got to stop. If the theme of the day  
is bearish, it's just a weak day, a colder market, 
I've got to stop. And I do not want to come back  
after I've left, which means I have to stop 
watching because if I stop, if I keep watching  
on my phone the price action, I'll just get FOMO 
if something moves and then I'll try to come back,  
try to overcompensate, and I just usually end up 
making a mistake and making the bad day worse.  
So, it was very clear that um I had a number 
of days where I didn't walk away soon enough  
um and I traded lower quality setups. And 
these were both um issues related to being  
emotionally compromised and being impatient or 
giving into FOMO. So, this is something that  
um I acknowledge I struggled with during the 
challenge and I continue to struggle with  
in my trading today. And you know, I could have 
capped all these losses at a much smaller amount,  
but I got stubborn. my emotions got the best of 
me. Now, the recommended reading includes the two  
books I already suggested, thinking in bets and 
quit, the power of knowing when to walk away. But  
I would also add trade mindfully. And these three 
books all cover the topic of trading psychology,  
which is one of the most um one of the most 
important things to master after you've gotten  
down the basic, you know, mechanics of trading, 
understanding stock selection, entry points,  
and exit indicators. Today is day 46 of the 
small account challenge and I locked up over  
$11,000 of profit which has pushed my account 
now up over $15,000. This has been an incredible  
challenge. I've been really grateful that we had 
such incredible momentum the last couple of days.  
Uh the account's now up over 5,000% from when 
I started on day one, maintaining 70% accuracy,  
which is a little above average. And uh the profit 
loss ratio around 1:1 was a little lower than  
I was hoping, but this has been a really good 
challenge. And for those of you guys that want  
to continue studying and want to keep learning, I 
encourage you to download the PDF worksheets I've  
put together for you or check out the twoeek trial 
here at Warrior Trading where you can actually see  
what it's like trading in this community 
using this software every single day. So,  
I hope you join us. And remember, as always, when 
you guys hit the thumbs up, I'm adding an extra  
dollar to how much I'm donating to charity as 
part of this small account challenge series. So,  
thank you for helping make this challenge 
possible. This has been so exciting. And  
now there's a big question of what happens 
next. So, leave your comments down below  
with what you'd like to see me do uh as I've now 
crossed this big milestone. Reminder, as always,  
trading is risky. My results are not 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 and always  
practice in a simulator before putting 
real money online. With that, I'll see  
you for the next episode real soon. And I'll be 
streaming bright and early tomorrow morning at 7