Ultimate Guide to Trading in a Small Account

In this session, I'm going to present the 
ultimate guide of how to start trading in   a small account. For those you 
guys returning to the channel,   you know we're about to jump into a deep dive. 
And for those of you guys who are brand new,   let me briefly introduce myself to you. My name 
is Ross Cameron. I'm a full-time trader. I funded   my first account in 2001. And in 2013, I created 
this YouTube channel right here. Begin sharing the   strategies and the techniques that I have found 
have worked so well for me over the years. I am   probably best known for turning a small account 
with less than $600 into what is now more than   $20 million of gross profit. So everything I 
share with you today is not just theory of what   I think may work in the market. It's actually 
tried and trueue strategies and techniques   that I use and implement every single day. So 
we're going to go ahead and jump on the screen   share. We have a lot to cover. You can see 
my profits from today sitting up $21,690.15. And I should be the first to tell you that my 
results are not typical. I have been trading for   a long time. There's no guarantee that you'll find 
success in the market. And this actually reminds   me of a topic that uh came up at a birthday party 
I was recently at. Before I share that with you,   why don't you look at these nine topics that 
we'll be covering in today's deep dive. So I'm   going to walk you through how to start trading and 
I'm going to do it se sequentially going through   these nine topics which I would consider to be 
essentially the building blocks of learning how to   trade. So these are the building blocks. This is 
how we're going to set our foundation right down   here. And as I touch on each of these concepts 
and I don't know if that's nine but you get the   idea. What you're going to recognize is that I'm 
going to do initially cliffnotes. I'm going to   give you high level for each of these topics each 
of these concepts. And then what we do is we go   back to them and we add more detail, more detail, 
more detail until eventually you have a solid   foundation. And my goal is to help you prepare for 
day one of trading in that small account. Now, by   the end of this session, you're going to actually 
have a PDF worksheet that you can take away with   you and a strategy, an outline of a strategy and 
a trading plan that you can begin implementing   in your own trading starting today. Now, if you 
want to download that PDF, I'll put the link in   the top of the comments and I'll also put in the 
description so you can download the PDF resources.   You can print them out and you can follow along 
with them as we go through this class. Now, before   I jump into uh part one, which is alpha phase of 
sim trading, let me tell you about this little   um story. So, I was at a birthday party uh 
recently and uh someone came up to me and   they were asking me what I do for a living and 
I said that I'm a trader and I also said that   I'm a teacher and I provide a lot of content on 
YouTube and so on so forth. But they were really   curious about trading and I explained to them that 
of course that I am a trader and they said, "Well,   so what do you do? Do you trade, you know, the 
S&P 500? Do you trade oil and gold?" You know,   they had no idea the area of the market that I 
traded. They asked me this question. They said,   "How do you know what to trade?" And I said, "I'm 
going to explain it." And and when I explain you,   it's going to click. And so what I said is that I 
am a volatility trader, which means I make money   trading things that are moving. If something's 
not moving, I can't make any money on it. And   so what is typically the catalyst that gives us 
a move? And I asked the question and they said,   "A catalyst that gives you a move? I I guess 
some type of breaking news." I said, "Exactly   right." And so they said, "Oh, so you must sit 
what reading the Wall Street Journal and reading   the news like all day long. Is that what you Do 
you listen to Bloomberg and this and that? I said,   "No, I don't do that because there are hundreds 
and hundreds of news stories coming out probably   every hour of the day. You'd be inundated with 
news. You would never know where to begin. So,   no, I don't read all the headlines. I work the 
other way around. I look for stocks that are   already starting to move. And if a stock is up 
10%, just by being up 10%, it's doing something   that 99% of the stocks on the market are not doing 
on any given day. Most days stocks go up and down   a little bit. Going up 10% is statistically 
significant. So once a stock has broken that   first threshold, now I just have to go and check 
to see whether or not there's a catalyst. And nine   times out of 10, there is a catalyst. So rather 
than reading all the news headlines and trying   to comb through what's good, what's bad, I just 
wait for the stocks to show themselves to me.   So does it mean that I missed the first 10% of the 
move? It sure does. And I'm okay with that because   typically when we have a stock with a really 
good catalyst, a company that comes out with FDA   approval for a new drug that's, you know, going to 
treat a very common illness, that type of catalyst   can send a stock up 500% in a single day. So 
even if I miss the first 10%, it doesn't matter.   I'm still going to be getting in very early. So 
she said, "Well, this all makes sense. In fact,   it sounds downright simple. You just look for 
stocks that are moving. you check the catalyst and   then you you you get in. And I said, "Exactly." 
She said, "But I've heard from people that trading   is very difficult and people lose money. Why? 
Why do they lose if it's so simple?" And I said,   "That's right. It is simple." And yet people 
continue to struggle. Why is that? It's because   they can't get out of their own way. And this is 
the most important thing that I want you to learn   right here, right? The very beginning. Success in 
trading is about following a playbook, following   a set of rules. It's about a system. And what 
traders who lose often do is they think they know   better and they break the rules of the strategy. 
Why would you do that? It's because your intuition   of what you think you know feels right. I'll give 
you an example. If you've ever gone fishing as a   kid or even as an adult, whatever. If you ever got 
a fish hook in your in your thumb or in your hand,   your instinct, what's your instinct to do? 
Your instinct is to pull it to pull it out.   Now, if you pull it, the barb is going to hook 
even deeper. In fact, what you need to do is you   need to push it in to release the barb. You got 
to push it in. Now, pushing it in feels like the   exact opposite of what you should do. Give you 
another analogy. Think about being in quicksand.   What do people do? They flail. They flail and 
they sink deeper. What do you have to do? You've   got to stop. You've got to spread yourself out. 
So, sometimes, as is the case in other aspects   of life, your intuition doesn't serve you well. 
your gut response, your gut reaction. And that's   exactly the case in the market. Your gut reaction 
of when to buy and when to sell by default will   lose you money. That's the reality. So we actually 
have to follow a very specific outline, a system,   a set of rules in order to achieve predictable 
results. And so what I'm going to share with you   is exactly that blueprint. I'm going to make 
it as simple as I can, but it requires you   to have the discipline to follow the rules, and 
that's what can be very challenging. All right,   so we're going to go ahead and dive right in 
here. We've got a lot to cover. Um I'm going   to begin right here with um alpha phase one. And 
as I already mentioned, everything that I share   with you here is actually based on my own success. 
It's based on my own trading profits. This is not   just a theory of what I think might work well in 
the market. This is all based on what I actually   know to work well in the market. It's data from 
over $22 million of trading profit. And this is   as of today. I just exported this um just this 
morning so I could have this updated. Now, I also   want to share with you that um I am no stranger 
to these small account challenges as you already   know. And I'm actually getting ready to begin a 
brand new challenge. And every time I do these   small account challenges, I also couple them with 
a fundraiser. And so for this challenge, every   dollar that I make will get donated to charity. 
However, I will give you guys the opportunity to   help me double that donation. So, in addition to 
me donating all of the trading profit that I make,   I'm also going to offer a double. So, I'll go 
ahead and double whatever I make in trading.   And the way you guys can unlock that double or 
that match is every time you hit the thumbs up   on the episodes in this series, I'll add an extra 
dollar to how much I'm donating. So, right now,   you guys by hitting the thumbs up can add a dollar 
to our fundraiser for charity. We've already   raised over $200,000 right here, which brings our 
total fundraising to just shy of $2 million. But   this is just from the last uh couple of challenges 
that I've been doing. So, every time I do these   challenges, it's an opportunity to raise awareness 
and uh raise money for good causes. And so these   are some of the charities I've been donating to 
during this last round. Primarily, as you can see,   children's hospitals um and um humane societies 
and things like that. Okay, so let's go ahead and   jump right into the alpha phase. So alpha phase is 
when you are practicing in a simulator. Practicing   in a simulator is critical before you ever put 
real money on the line. Now, it doesn't matter   if you use our simulator that we've built here at 
Warrior Trading or you use a different simulator.   This is our simulator right here. And this gives 
you the chance to pull up a stock, whatever it is.   And you can see the market data, which I'm going 
to walk you through um what all these numbers mean   during today's session. You can see the charts, 
you can see the news headlines, and you can   actually go ahead and you click the the price, you 
can click the buy button, and boom, you're going   to execute a trade, and you're in. And now you 
decide you want to get out. You click down here,   you click sell, and you're back out. So, this 
was a break even trade. I was in, I was out,   I was break even. But every single time you take 
a trade in the simulator, we're aggregating your   data. So, you can go at the end of the day or the 
end of the week or the end of the month, whatever   the case might be that you like to do, and you 
can review all of your metrics. And this is very   important because you should never trade with 
real money until you've first proven you could   be profitable in a simulator. All right. So, phase 
one is trading in the simulator. That's the first   step. By trading in the simulator, you're going 
to gain a ton of experience. And this is how you   begin to build your educated intuition. There's a 
process of converting knowledge into skill. Just   because you read a book about skydiving doesn't 
mean you should jump out of a plane. You've got   to practice. Just because you've watched a a 
workshop or a class like this on day trading   doesn't mean you're ready to trade with real 
money. You've got to do some time, pay your dues,   and and do some time in a simulator practicing. 
So, I encourage you guys to start right away. And   during your time in a simulator, alpha phase 
is all about gaining lots of experience. It's   about taking as many trades as possible. Most 
days there are enough stocks experiencing some   degree of volatility throughout the entire day to 
give you the opportunity to put time in studying   the level two, getting in, getting out, studying 
the tape, getting better at reading when there's   hidden buyers, hidden sellers, looking at chart 
patterns, and getting into all of the technicals   that make up the the the skills that you need 
to learn in order to be a successful trader.   So, we're going to begin this class with a 
reminder to always trade in a simulator before   putting real money on the line. Part two, risk 
management. You know, trading is risky. You've   heard it from me a million times. I'm going to 
say it again. How do we minimize our risk? It   first requires understanding that for most 
traders, what most traders do is they come   into the market and initially they first put 
money into the market and they lose it because   they do not have a strategy. They don't have a 
system and they don't have a set of rules. So,   they're really just shooting from the hip. They 
throw that money into the market and that creates,   as you would imagine, a poor track record. So, 
you begin with a poor track record. What does that   lead to? That leads to poor self-confidence. That 
then leads to increased pressure, desperation,   and reckless trading because now you feel a sense 
of loss and you want to make back that money.   And so again, even though the logical response to 
the loss would be to stop doing what you're doing,   most people try to muscle through it. They say, 
"I'm going to get to the other side of this.   I just have to stick with it." And they end up 
taking more trades, increasing their risk in an   attempt to recoup previous losses, and that just 
further accelerates the poor track record. And   what that ends up doing is creating a downward 
spiral. I don't want you to go on a downward   spiral. I want you to go on an upward spiral. So 
the first element of risk management is trading   a quality stocks. Making sure you're trading the 
right stocks is the most important thing because   when you're trading the wrong stocks, that's when 
you get yourself into trouble. So what are the   right stocks? We're going to talk about that in 
a moment with stock selection. But before we do,   I'll just show you today ENVB, WLDDS, those are 
two stocks I made the most on today. And look at   this. These two stocks right here are the top 
gainers in the entire US equities market today   combined. 200 million shares of volume up 129% 
up 90%. Both of them have breaking news. So these   were the right stocks to trade. The most important 
thing is you're trading the right stock. Getting   into the exact entry point and the exact ent exit 
point. We'll get there. But first things first,   you want to make sure you're managing your risk by 
trading the right stocks. Because when you trade   the wrong stocks, what ends up happening is you 
subject yourself to unnecessary losses. You're   taking risk, as we all do whenever we trade, but 
you never really stood to gain that much. When   you trade an Aquality stock, you're trading the 
type of stock that has the potential to go up 30,   40, 50%, maybe even 100% within the next 10, 15 
minutes. So if you're risking 5% to make 50% we   would consider that to be a good riskto-reward 
ratio. That's the way I think about trading and   that's the way everyone should think about it is 
risk and reward. So if you are risking $1 to make   $1, how often do you have to be right to break 
even? 50% of the time. Right? Now, if you risk   $2 to make only $1, you would have to be right 66% 
of the time just to break even. On the other hand,   if you risk $1 to make $2, you only need to be 
right 33% of the time in order to break even. Now,   I would say that's setting the bar pretty low. 
You could be wrong nearly 70% of the time and   you'd still be a break even trader. Isn't that 
Isn't that exactly what you want to do? You want   to set the bar so low that it's easier for you 
to be successful. That's what lo That's what   the logic would tell us. So now, if we pull 
my metrics back up here, let's just take a   look at where I'm performing. I'm at about 68.5% 
accuracy. And this is on over 33,000 trades that   span more than a decade. What's my average profit 
loss ratio? As of this 10 plus year period, my   average winners are about $1,600. And my average 
losers are about $1,400, which gives me, you know,   a slightly better than one:1 profit to loss 
ratio. Now, if we looked at just the last year,   we just look at last year for instance, last 
year was a $6.5 million year with 71% accuracy,   as you can see right here. And the average winners 
were 3500, and the average losers were only 2,000,   which was getting closer to a 2:1 profit to loss 
ratio. One of the things I'll tell you is that   when the market is stronger and we're in a bullish 
market, the winners become bigger and accuracy   becomes bigger. But when you're in a cooler 
market, obviously the losers become a little bit   bigger, accuracy declines. And so it averages out 
over the span of 5 10 years, so on and so forth.   So what's really important to take away here is 
that if you think first about risk, how much am   I risking on this trade? and then asking myself, 
can I double whatever I'm risking? That you're   you're then by doing that positioning the trade in 
a structural way where you're setting yourself up   statistically to succeed as long as you're trading 
the right stock. This is very important. This   is where you want to be. Now, even if you don't 
end up here, even if you don't average two times   whatever you you were risking, if that was at 
least a reasonable target, it justifies taking the   trade. And that's what's important. And so, a lot 
of beginner traders when you begin trading, and I   was no different, you don't even think about that. 
You're not thinking about profit to loss ratio.   you're not think we don't think in those terms 
which again is a reminder that our our sort of uh   default instinct of the way we think about trading 
is not aligned for uh what is required in order to   have success. So getting into a positive feedback 
loop means you begin first with and we'll just go   back to this previous slide here real quick. So 
we we begin first with high accuracy focusing on   trading aquality stocks. By trading high quality 
stocks will invariably have a better average   winner versus average loser ratio, also called 
the profit to loss ratio. And that's going to then   breed higher levels of consistency. When you've 
got high accuracy, a better profit loss ratio,   and consistency, that's going to create a strong 
track record, which creates self-confidence. Now,   that self-confidence is going to increase 
profitability because now you could justify taking   larger positions on every trade you take. When you 
look at my metrics right now and you see that I'm   obviously doing quite well over long periods of 
time, you probably say, "Ross, why why don't you   increase your share size? Why don't you increase 
it by, you know, 10%, 20%, 50%." And the truth is,   I do. That's exactly what I do. I continue to 
gradually increase share size. Now, you can't   increase your share size 10 times overnight. 
You don't know how the market will respond,   if your strategy will still be sustainable and 
profitable at those highly elevated levels.   Will you be able to get in and out as quickly? So 
on so forth. And so you just continue to sort of   gently push at the edge of your comfort zone to 
increase your share size and therefore increase   your profitability. Which is why last year was 
my most profitable year to date. I'm increasing   profitability as I get further and further into 
my career. But this can begin even as a brand   new trader. You focus on trading the right 
stocks, building a strong track record, and   you do all of this before you ever put real money 
on the line. Now, let's talk about number three,   stock selection. So, stock selection. How do you 
choose the strongest stocks each day? This is very   simple. I don't want to over complicate it for you 
and I don't need to because I simply look at the   leading gainers in the market this day. GLTO MOVE, 
those two stocks were the leading gainers. So,   you better bet those are the stocks I was trading 
today. The leading gainers are, as you could see,   what was it? Um, ENVB, ENVB right here, and WLDDS. 
These were the leading gainers. Therefore, those   are the stocks I'm trading now. ARTL and JTI, 
those are other stocks I traded. At the time, they   were a leading gainer. They were looking good. 
And then at a certain point, they rolled over,   momentum changed. And so, some stocks will sustain 
that first position placed for a long time, the   whole day perhaps. others will be in first place 
and then there's a shift in momentum as traders   move away from that stock as perhaps another 
stock comes out with news and attention shifts   and that's very common but there's a theme a 
common denominator if we look at all of my biggest   winners and the first is that I make the most 
money on stocks that have five times higher volume   on the day that I'm trading it than their 50-day 
average. So, why would a stock have five times   more volume today than what it averages? Well, we 
can look back to this example right here. We've   got ENVB. ENVB today right now is actually trading 
1,931 times higher volume today than its average   currently. Right now, it has a 121 million shares 
of volume and yesterday it had only 1 million and   a week ago it had 10,000 20,000 shares of volume. 
So this stock basically went from having no volume   for all of this period of time right here. I mean 
I could actually measure the volume. So during all   of these days it had a combined volume. This is 
over the course of um 76 days. It had 3 million   shares of volume over 76 days. And then today so 
76 divided by 3 million whatever that is. And then   today it has 120 million shares of volume. It's 
because it had breaking news. The breaking news   catalyst is what brought in the volume. And so 
when we recognize that I do the best on stocks   that have five times above average volume, we 
realize pretty quickly that stocks don't have   that type of volume for no reason at all. They 
have it typically because there is breaking news.   But from a technical perspective, if I'm looking 
for a stock to trade, I can pretty concretely rule   out that if it doesn't have at least five times 
above average volume, it's not worth touching. And   then second is I do better when the stocks also 
have high total volume today. High total volume   means that there's millions of shares of volume, 
which means it's easier to get in and easier to   get out. It's very liquid. So more volume means 
you can take bigger positions. Bigger positions   means you can make more money. So it makes sense. 
I would do better on a stock that has millions of   shares of volume versus a stock that has only 
hundreds of thousands of shares of volume.   Then I do the best when I'm focusing on stocks 
that are gapping up. A gap is when a stock moves   up during the overnight or afterhour pre-market 
trading session before the official market open   at 9:30. And so gapping up essentially is another 
confirmation that the stock had some sort of news   that was occurring overnight. So why would a stock 
gap up on five times above average volume? It's   because of breaking news. So, I'm a volatility 
trader and I'm a discretionary trader. I trade   myself. I don't use an algorithm to trade. I 
don't have robo trading or anything like that.   I manually choose when to buy and when to sell. 
And I do it based on searching for volatility,   which is the result of stocks with breaking 
news. I also do the best on stocks between   $2 and $20. And within that range, stocks 
between five and 10 are actually my, you know,   ultimate sweet spot. as you can see right here 
representing um you know a considerable chunk   of the total profit. But between 2 and 20 is 
really where I do the best. Now the reasoning   here is that stocks between 2 and 20 offer larger 
percentage returns for account growth. And so if   I'm trading in a $2,000 account, I could buy 
a th000 shares of a stock at $2. If that stock   goes from $2 to 250 to three, all of a sudden 
I could double my account potentially in one   day or at least grow it by 40 or 50%. You simply 
cannot do that trading stocks like Tesla, Nvidia,   or any large cap company unless you're trading 
options. But of course, the risk with trading   options is that as a derivative, they have the 
risk of expiring worthless based on the movement   of the underlying asset. And a lot of beginner 
traders and even more seasoned traders really   struggle with options trading because of all of 
the factors um that that are used to determine the   premium and that you can actually be directionally 
correct. The stock can go the direction you wanted   um and you can lose money because of time decay 
or because of volatility decay. And so while some   traders may get into options, what I've always 
found to be more consistent for small account   growth is trading outright stock on lowerpriced 
securities. So between two and 20 is really the   sweet spot. And no doubt for the next small 
account challenge, I'll be focusing in this   area. Now, everything I've shared with you so 
far um is is helpful insight into the type of   stocks I make the most money on. But there's 
another criteria which is very important,   perhaps the most important, and that is the float. 
The float is the number of shares available to   trade. And stocks with floats of under 10 million 
shares make bigger percentage returns than stocks   with larger shares that are outstanding. Float 
is the number of shares available to trade. And   so when a company has a float of 5 million shares, 
that means that's the total number of shares that   have been released on the open market. So, 
if the stock is up, let's say for example,   let's just use a a large cap company. We'll 
pull up a chart for uh Bank of America here. So,   Bank of America right here has a float of 7.1 
billion shares. That's how many shares they had   to sell to investors on the open market to raise 
enough money to provide capital for the bank,   including buying all of the real estate, opening 
all of the branches, all the equipment, plus   having the money on their balance sheet. So, if 
Bank of America went up, let's say 50% in one day,   how many of these 7 billion shareholders would 
want to sell? How many of those 7 billion shares   would be up for sale because the stock is up 50%. 
Let's let's say le let's just say a quarter of   them. So, you've got, you know, a little less than 
two million two billion shares that are for sale.   Well, has this stock ever traded on even one 
billion shares of volume? And the highest   volume day that we have here just in the last 
five years is about 200 million shares. That's   the highest volume day ever. So, what that means 
is that if the stock somehow was up that much,   there would be far more selling than there was 
buying because all of these people want to lock   up their profit. And so it would in fact prevent 
the stock from ever going up even close to 50%.   Because even as it started to get up to 5% and 8% 
and 10% and 15 and 20, you would have new sellers   that are coming out to get pro to take profit 
take profit take profit. Now on the other hand,   when we have a stock like ENVB, ENVB has a total 
float of 1.8 million shares. So there were 1.8   8 million shares yesterday that were owning the 
stock and whatever and today they're up 150%. So   if all of them want to sell and cash out because 
the stock going up 150% overnight is phenomenal,   would they be able to do it without crushing the 
price? And the answer is yes. Because there are   so many people that are interested in buying this. 
Total volume today, as we can see, is actually in   excess of a 100 million shares. Now, you might 
say, how could there only be 2 million shares   rounding up available, but 100 million shares of 
buying and selling? And that's because of trading.   You buy from someone who's selling, you then sell 
to someone who's buying, and it's just this frenzy   trading back and forth, back and forth, back and 
forth. So, people are just trading the same shares   back and forth. one person's getting out, taking 
profit, and another person's buying their shares,   looking for the next leg up, and then the price 
goes higher, and then they sell to someone who,   you know, thinks it's going to go even higher yet. 
And so, it's just this constant cycling of shares.   But you need that cycling of shares to allow 
people who may have been holding it from the   day before to get out with profit. And so, this 
introduces the concept of float rotation. the   number of times that the float has rotated will 
help us understand whether or not all of those   insiders could sell. And so in this case, we've 
got float rotation of 60. The float is rolled over   60 times in terms of the amount of volume, total 
volume and the float. And so that means that right   now the stock is still up 130%. And everyone and 
anyone who wanted to sell has already sold and   it's still holding up. And that's a really good 
thing. that couldn't happen with Bank of America   because there there just really could never be 
enough volume on it that everyone who wants to   sell could sell. And so, as a result, Bank of 
America is a low volatility stock, which makes   it excellent for long-term investing. It makes it 
excellent for pension funds and and mutual funds.   It does not make it excellent for day trading. So, 
for day trading, we seek volatility. We need that   range. And that means by default we're looking at 
stocks with lower floats. So look at all of the   floats on this day right here. None of them are 
more than 20 million shares. These are the leading   gainers in the entire market. So this is a common 
denominator of these leading gainers. So stocks   need high relative volume. We have a criteria 
for volume right here which is the stock for me   to trade should already be up 30% on the day. It 
should have a breaking news headline. The price   ideally should be between five and 10 for like the 
real sweet spot with five times relative volume.   It should be a hot sector. What what is hot 
changes from time to time. So whether it's crypto,   biotech, or AI, whatever is the current hot 
theme. And the the the time of day when we see   the heightened demand is between 7 a.m. and 10 
a.m. This is an overlap between US trading and   European trading when both US and European traders 
are able to participate in the New York market   open. So even though this is quite early, it's 
Eastern Standard Time for uh West Coast traders,   they do get up in order to capitalize on this 
early morning volatility and it's later in the   day in uh in Europe, but they are still of course 
awake because it's only in the afternoon um really   at 1:00 in the afternoon and so they're trading um 
the the same time. So we have an overlap of time   zones which increases the number of participants 
in the market. So when you have all of this demand   corresponding with a very limited level of supply, 
that is when we see these really big moves. That's   when things get exciting. And here's an example 
right here. MLGO 432% on the day with 300 million   shares of volume. Yes, absolutely. I would trade 
this every single day I see it. So to break down   my five pillars of stock selection, it's the stock 
at a minimum should be up 10%, five times relative   volume, breaking news, between two and 20, and 
less than 10 million shares. We can in we can   tighten up those filters a little bit by boosting 
up the percentage return, boosting up the relative   volume or dialing in the price to get into a 
really sweet spot. But if you make it too dialed   in, then you might run out of opportunities. So, 
by the way, everything that I'm sharing with you   right now, you could download and it's in the my 
PDF. So, I have these PDFs I've put together as   worksheets that accompany these classes and are 
also available for members of Warrior Trading.   But those of you guys tuning in on YouTube, you're 
welcome to download these. They will be a resource   that you can utilize in your own trading starting 
right now. And it it prevents you from having   to memorize or take notes on everything that I'm 
walking you through right here. So now let's go to   number four. Understanding candlesticks. So what 
we've talked about so far is trading a simulator,   understanding risk management and stock selection. 
Candlesticks are the universal language of the   financial markets. We utilize candlestick 
charts to give us context around price action   to understand if the price is strong or if it's 
weak relative to where it's been. If you say,   "Hey Ross, the stock's $5. I don't know if that's 
good or bad. I don't know where the stock has   been." So candlesticks give us the context. So 
I'm going to give you a quick lesson on decoding   candlestick shapes. Every candlestick is made 
with four pieces of information. Every candlestick   represents a period of time. The period of time is 
based on the candlestick chart. And so if I pull   up this chart right here, I actually have four 
charts of the same stock. This is a daily chart,   which means every single one of these candlesticks 
represents a day of time. Now, this is a stock,   as you can see, has sold off for a long time. But 
each one of these candlesticks represents one day   of time. So, that's one day of price action. So, 
the four pieces of information is the open, the   close, which is our current price, the high, and 
the low. Those are our four pieces of information.   This candle's currently green because it opened 
low and is closing higher. Now, in this case, the   candle is still forming. Yesterday's candle here 
opened at the top, closed at the bottom. That was   the low. And the high of day was also uh the open 
price. So that was a very weak candle. Now this   is a 10-second chart, which means these candles 
are closing every 10 seconds. They're forming   that quickly. This is a high-speed time frame for 
people who are very actively trading the markets.   A lot of brokers don't offer 10-second charts 
because they use too much bandwidth. Uh we do   offer them for our simulator and for our members 
at Warrior Trading, so you can utilize them. and   I use them in my own trading. This is a one minute 
chart, meaning each candle represents one minute   of time. And this is a five minute chart, meaning 
each candle represents five minutes of time. So,   we've got the open, we've got the close, we've 
got the high, and we've got the low. Those are our   four pieces of information that every candlestick 
communicates. This is the open and the low and the   close and the low and the high. So red opens at 
the top and closes at the bottom whereas green   opens at the bottom and closes at the top. So we 
do need our our candlesticks um differentiated   as being red or green. Historically in the age of 
black and white, you know, everything uh a green   candle was white, it was hollow, and a red candle 
was uh black and was solid filled. So now you know   the anatomy of an individual candlestick. 
Let's go over a few candlestick shapes.   The long body candle is a candle that has a very 
long body and a short body candle is a candle that   has a very short body. So a longbody candle being 
very tall is very bullish. It can it communicates   very strong sentiment. Traders are very euphoric. 
They're very enthusiastic. There's a lot of greed.   Maybe there's fear of missing out. People are 
being very aggressive buying up the stock.   So if I see a stock and it's moving higher and I 
see a candle, let's say that's a long body candle   like that, I understand the communication there is 
that this is strong. So the next candle then adds   context and the previous one adds context. If the 
previous candle was smaller like this, then what   this is showing is that it's gaining momentum, 
right? If the next candle's bigger, the momentum   is continuing and the previous one's smaller than 
that. Or if the next candle starts to get smaller,   then we're kind of running out of momentum. We're 
cooling off. So, you can see based on the shape   of the candle whether momentum is building or it's 
waning. The areas that I pay the closest attention   are when I think the trend is about to shift from 
moving higher to moving lower. So, then it slows   down right down here. and we might think, uhoh, 
the trend is getting ready to shift again. And so,   we're looking for that first green candle and then 
a rally back up. Now, that's a very big swing,   but you get the idea that the areas I focus are 
where the trend is about to change. The quicker   you are at identifying changes in trend, the more 
money you'll make. You'll be buying before the   trend changes or right as it changes from down to 
up, and you'll be selling just before it changes   from up back to down. And what you'll find is 
that most stocks trade in sort of these waves   where they move up and down and up and down. And 
so you get many opportunities throughout the day   to time these entries and exits right around 
the pivots in price. So long body candles are   very bullish and smaller body candles or short 
body candles are a little bit more bearish,   communicating a bit weaker sentiment. We then 
have dogee candlesticks. A dogee candlestick   is defined by a candle that opens and closes 
at nearly the same price as these ones that   are circled do. So open and closing at the same 
price, which is giving us that flat line. Opening,   closing at the same price right here. Opening and 
closing at the same price right here. But in this   case right here, this is called a gravestone 
dogee. And it's called that because while   the price opened and closed at the same spot, it 
pushed higher and then dropped back down. That's   ominous. It's bad. What it means is that while the 
stock squeezed up, the sellers pulled the price   back down and ended up closing flat. Whereas down 
here, the Dragonfly Dogee, Dragonflyy's uh lifting   off is bullish because although the price sold 
off at the bottom of this candle wick, it rallied   back up and closed at the top. Now, this one here 
opened and closed at the same price, but popped   up and and dropped back down, which communicates 
indecision. So if we are looking for a potential   change in trend, these would be great indicators 
to be searching for looking for these dogeis   because they communicate indecision. If a stock 
is indecisive after having just made a big move   up or a big move down, then that indecisiveness 
could be the beginning of a change in trend. A   spinning top candle is similarly indecisive. 
There's a small body, but there's an upper   candle wick and a lower candle wick. The hammer 
candle is present at the bottom of a sell-off.   You have the lower candle wick right here, which 
is bullish because while the price sold off, the   buyers came in and rallied it back up. And then 
this little small body takes the form visually of   almost like a mallet. And so we say it's hammering 
out the base. So a hammer here is bullish. Now,   in this case, an inverted hammer after a big 
squeeze up is considered bearish because you've   got that big topping tail candle and then you've 
got the drop back down and you've got this small   little body right here. Shooting stars come 
back down to earth. So, this is indicating a   possible change in trend. Now, the shooting star 
could be green or it could be red. If it's red,   it indicates the reversal has already begun and 
then it's confirmed that it continues as those   next candles drop further. This is a tweezer top. 
two topping tails back to back. This is bearish.   These tweezer tops typically mean that this is 
the top. There's resistance and the price cannot   go higher. Whereas a tweezer bottom represents 
support and the price is holding that level for   reversal back up. So what you're learning here 
are the building blocks. Individual candlesticks   are letters of the alphabet and they combine 
to form words. And those words are buy or sell.   That's how I interpret them. So the individual 
candlesticks combine to form multicandlestick   chart patterns. And those multi-candlestick chart 
patterns are what we teach and I go over in depth   for members at Warrior Trading. Now I want 
to share with you so you can walk away today   with one multi-candlestick pattern that you can 
begin trading. I want to share with you one of my   favorites. This simple pattern is something that 
I trade almost every single day and it and it's so   logical when you think about it. So, first we have 
a stock squeezing up very quickly. So, how do we   find it? We'll find the stock squeezing up on the 
scanners. So, in this case, UPXI hits my scanners   right here. And these are the same scanners. This 
is um a high of day momentum scanner. And so what   it's doing is it's searching the entire market in 
real time for stocks that are moving higher. You   set your audio alerts on it and then you'll get 
a ding through your speakers on your computer and   you'll hear ding ding ding. We've got something 
moving. So when I see something moving like this,   I click the stock. I pull up the chart and I 
look for the pattern. So what's the pattern?   I let it squeeze up and I wait for a pullback. 
I let it dip. And now what I'm looking for is   a change in trend. So, sometimes we'll have a 
a dogee here. Sometimes we'll have a hammer,   a bottoming tail. Other times we just have a 
small little red candle, a short body candle,   and then the next candle we're looking to go 
green. So, right here, as that candle goes green,   the change in trend has occurred. So, what 
is the moment that the change occurred? The   moment is when this green candle broke the high 
of this candle right here. That's the moment the   change occurred. And so that's the moment that 
I buy. What's my max loss on this trade? My max   loss becomes the low of the pullback. So now 
I'm risking 1x for max loss and profit target   has to be 2x, right? To justify the 2:1 profit 
loss ratio. And that would give me a target of   back to the high a day. Now retesting high a day 
is a logical target. Usually stocks will retest   the high a day and then they'll push a little bit 
higher before then giving another pullback which   presents yet another opportunity to take another 
trade. And that's the beginning of these waves   that we see in the market. So, I'm going to give 
you a little pop quiz here. All right. So, we're   going to look at the actual chart. Now, you've 
seen the green candle squeezing up, the little   pullback. And what we're looking for is that first 
candle to make a new high. So, would you be a   buyer right here if that next candle goes green? I 
hope the answer was yes. You can see right there,   that was the apex, the moment that candle made a 
new high, and then we squeezed all the way back to   a new high of day. And that's a simple base hit. 
jumping in, jumping out, and taking profit. Now,   I do have specific exit indicators that I 
rely on which tell me when to get out. So,   I don't sell too soon, and so I also don't hold 
too long. But, uh, the entry is arguably more   important so you're not chasing. You've got to 
make sure you've got a good entry. So, we focus   on entries first. What about this one? We've 
got all these green candles in a row. We wait   for a pullback. Now, we have that bottoming tail. 
Not quite a hammer, but almost. We're looking for   first candle to make a new high right there and 
then a retest a high a day. This one goes even   higher. That's great. That's an entry at about 
370 and a squeeze all the way up to over $4.70   right up here. That's phenomenal. It's a dollar a 
share. That's a great risk-to-reward ratio. Now,   what about this right here? Okay, so in this case, 
this is a little bit different. We already had a   pop. We had a pullback right here, which was good. 
That was fine. But now we have a little bit higher   selling. These are bigger red candles. Notice the 
volume profile. We're seeing more selling. The   problem when you start to see high volume selling 
coming in is that these stocks often unwind. So,   the amount of volume on any given candle helps 
communicate whether these are going to go up or   go down. One of the things that you guys have the 
benefit of is that for members at least at Warrior   Trading, you can listen to my real-time market 
commentary as I'm trading. You get to see my   positions window. You get to see as I'm getting in 
and getting out of trades. And so you get to hear   me share with you my interpretation of the price 
action and call out things like, "Hey, we've got   higher volume selling right here." Now, I might be 
wrong. I'm not right on everything, but it seems   to me that it makes a lot of sense to listen to 
someone with real money on the line who's been   trading for a long time, especially as a beginner 
versus trying to just figure this all out yourself   because it's so easy to miss one of these little 
subtle indicators. So, is this an entry right down   here? The answer is no. There is no setup here. 
The stock had setups earlier in this area, but now   it's just going sideways. There's no trades there. 
This one, what about this? Well, unfortunately,   you might say it looks good, but this indicator 
right down here shows us that the blue line has   gone below the orange. That's a negative MACD, 
which is a divergence. We don't like that. This   is a no trade. And boom, that's a no trade. It 
doesn't work. What about this one? Higher volume   selling. Once again, that's a problem. So, we look 
at the volume profile. What about this one? Now,   this is okay. High volume building. Yes, 
you've got a red candle here, but but in total,   the buying volume is much stronger. Our MACD is 
positive. And this is a good entry spot. Boom.   That's a nice squeeze higher. And so, it once you 
start using your technical indicators, once you   start recognizing these buy and sell signals, it's 
very quick to eliminate setups that just aren't   going to work, and you don't trade them. What 
about this one? Now, this looks pretty good to   me. That's a nice squeeze. Yes. You have a little 
higher volume on the top candle, but nice little   pullback. We stayed positive on the MACD, higher 
volume on these green candles, which is good.   Volume comes back in. We break through the high. 
This is another one right here. Higher volume now.   Little pullback. MACD is still open. We push 
a little bit higher and then we kind of stall   out up here. Then the MACD goes negative. Higher 
volume coming in. And this becomes a little bit   choppier. You might not end up taking that trade 
right there. Right there because of this initial   move. So, I usually find that I do the very best 
at the beginning of a move. and I don't want to   overstay my welcome. Now, in order to trade, 
I have to execute my orders using market data   and level two. So, when you pull up your trading 
software, and this is one of the platforms that   I use, but you could also see um our simulator 
right up here. When you pull up this software,   um you actually see all of these numbers. This is 
market data, and this is communicating to us all   of the buyers on the left and all of the sellers 
on the right. The bid is what people are bidding   to buy. The ask is what people are asking to 
sell. And because these people are selling at 439,   you could buy from them right now. You click 
437, whatever. You click buy and those shares are   yours. If you want to get out, let's say at 437, 
438. I put my sell order at 437. And now I've got   to wait for the price to go up. I've got to wait 
for someone to come and buy my shares at 437. So,   I could wait and wait and wait. And I might be 
okay doing that, especially if I'm already up   on the position. Or if I decide, you know what, I 
think I should just get out. What I could also do   is I could sell at any time to one of these buyers 
right here. And so in this market, you can buy the   moment you want to and you can sell the moment 
you want to to any one of the buyers or sellers   that are right here sitting on the book. Now, some 
of the buyers and sellers on the book are market   makers. They make the market through arbitrage. So 
they're always buying from someone who sells and   they're always selling to someone who wants to buy 
and they profit from the spread. So essentially   some market maker institution bank with very deep 
pockets just sits there providing some degree of   liquidity all day long. So now as it comes back 
up to 37 38. There we go. There's 39. I put my   order at 39. Let the price go up and my order got 
filled and I'm out. Let's see. I got filled at 30   38 I guess it was. So I'm out with profit and 
that's good. Now this is an important concept.   Whenever you're trading, you're buying from 
someone who's selling. Whenever you're selling,   you're selling from someone who's buying. And so, 
we're actively participating in this market. So,   what if we pull up a stock, we look at this 
level two data, it's called level two data,   and we saw that there was a 100,000 share buyer. 
That tells us that there's someone out there that   wants to buy a lot of shares. That's very bullish. 
That's a positive thing. What if we see there's   a 100,000 share seller? Well, that's a weakness. 
And so using the market data in combination with   our charts and indicators, we now can form a very 
strong bias or well I don't want to say a bias,   a thesis of what we think the stock is going to 
do. And so that gives me confidence in taking my   trades. So I execute my orders using level two 
market data. And what's very important is that   whenever I'm trading, I am using hotkeys. So I am 
empowering um I I am empowered through my keyboard   to execute these orders very quickly. So if we go 
back to here, if I press shift one, it'll buy a   thousand shares. So shift one, I'm in. And then 
control Z, I'm out. And just like that, I can   buy and I can sell and I can buy and I could sell 
and I could do that all day long. Now, of course,   if you just buy and sell like that, as you could 
see, you're not really making money. The price has   to be going up. But what you want is software that 
allows you to get in and out that quickly. Now,   uh I do have a list of brokers that I'm a big 
fan of that I think are phenomenal and have great   software and a list of brokers that I would never 
use. So, I have other episodes here on YouTube   where I rank the best brokers and the fastest 
brokers, which you guys could check out. But,   um all that is to say, not all brokers are created 
equally. Is you want to make sure that when you're   first practicing, of course, you're using a 
simulator. Some brokers don't offer simulators   because they don't make money when you're trading 
a simulator. They just want you to use real money.   So, unfortunately, most simulators you might have 
to pay for a little bit just to cover the market   data cost, but you want to make sure when you're 
trading that you've got software that allows you   to get in and out quickly. The last thing that 
you want to have happen is have a stock pop up   40 or 50 cents a share and you can't sell and take 
profit because you're fumbling with your keyboard   to point and click and enter the correct price 
and the correct numbers and your fingers are too   fat and you can't press the buttons right and then 
finally h now the price is down and you miss the   whole move. It used to happen to me all the time 
until I learned that there's brokers out there   that are better. And lo and behold, that's what 
a lot of the more successful traders are using,   better brokers. You use better tools. And so, 
it's important to match the tools for the type   of trading you're trying to do. Number seven, 
you've got to understand your metrics before you   ever trade with real money. And what that means 
is reviewing your performance. Your performance   by day of the week, your performance by time 
of the day, your performance by the price. So,   we aggregate all of the data for you guys. So you 
can look, for those of you guys who are trading in   our simulator at least, so you can see how you're 
performing. If you're not using our simulator,   you can still upload your metrics to a third-party 
um uh uh platform. I use Trader View. This is the   platform that I've been using now for more than 
a decade. So all of my trades in Trader View   um I mean, I've just I've I've been thrilled with 
the platform. It's been really solid. I don't have   any affiliate relationship with them, so it makes 
really no difference to me one way or the other   what you might choose to use. Um, but it it's been 
really good. And what I like about it is the way   you can kind of break down your performance. 
So you can go into a detailed report and you   can look at your profitability based on, you 
know, based on time of day, based on, of course,   the price and the volume. So you see, oh, I make 
the most on this price range, right? That's good   to know based on, you know, all of these details. 
And as I go through them, I recognize the stocks I   make the most money on. Well, what do these stocks 
have in common? What's the sector? You start to   develop a connection of you start to see patterns. 
And picking up on patterns is critical to success   in the market. You recognize a pattern of this 
is where I make the most money, you want to lean   into that. You recognize a pattern of this is 
where I'm struggling, you want to pull away from   that. And that's ultimately what trading is. It's 
using your metrics to make informed decisions.   You're not making decisions based on gut, what 
you think, based just on what you know. Now, part   eight is the beta phase in the sim. Transitioning 
from a simulator to real money has to be done   carefully. And so, your first phase is alpha phase 
where you're just trading as much as possible.   Getting in, getting out, getting in, getting 
out. And now we move forward to the beta phase,   which is your dry run for going live. During the 
beta phase, I encourage traders to focus on just   taking one trade a day. Keeping it really simple. 
getting in, getting green, getting out. Success   is about keeping it simple. You can make a living 
trading doing just one trade a day. There's people   that trade hundreds of times a day and they don't 
make money. Just focus on finding one really good   setup, getting in, getting out, maximizing your 
buying power on that opportunity, and capitalizing   on it. So the one trade a day challenge for uh 
for the beta phase is focusing on stocks that   meet all five pillars of stock selection. Looking 
for one of the entries such as the first pullback   which I already shared with you and getting in 
at that apex and then not selling until you see a   valid exit indicator. During this first 10 days of 
taking one trade a day, by the end of it, you will   know whether your accuracy very very simply is 
greater than 60%. You want it to be greater than   60% and you want to be profitable. If you are, 
you then replicate that same first 10 days with   real money. Each day you report on your trades 
using this trade reporting dock and each week   you report on your progress. And as you uh watch 
your progress, you monitor where you're seeing   improvement and where you're struggling and you 
make adjustments as needed. So, the decision to go   live and to start trading real money is not taken 
lightly. You don't do it until you've first proven   you can make money through the beta phase. So, one 
trade a day. And I've asked members to send over   some of their calendars so I could share them with 
you. And most traders are really good about this,   taking one, maybe two trades a day. Some take a 
few more, some take a few less. But I want to see   you have a calendar like this before you go live 
with real money. The reason is I want you to have   a track record that you can anchor yourself to 
that is your source of self-confidence that you   know it's worth putting real money on the line 
because of what you've done in the past. It's so   important. So here's your next step. We have just 
scratched the surface and there is so much more   to cover. So what I'm going to do is I'm going 
to put links to a couple other episodes right   here that I think you guys will enjoy. They're a 
deeper dive. They continue further. There will be   more episodes in this series leading up to my next 
small account challenge. If you want to watch over   my shoulder during this challenge or any of my 
upcoming challenges, there will also be a link   for a twoe trial at Warrior Trading, which is 20 
bucks. $20 for two weeks watching over my shoulder   going through a selection of classes for my full 
length Warrior Pro curriculum. You're going to get   a lot out of it. Now, if you found value in this 
episode, I hope you hit the thumbs up. Remember,   every thumbs up will add an extra dollar to the 
match for donating money to charity. And so,   I want to thank you guys for participating in this 
challenge with me. It's really exciting. And stay   tuned for the next episode coming real soon. And a 
final reminder as always that trading is risky and   my results aren't typical. So, manage your risk 
by always practicing a simulator before putting   real money on the line. And make sure you check 
out these episodes right here and right here that   I think you will enjoy for a deeper dive. We've 
got a lot more to learn. So let's keep studying.