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

Welcome to today's fulllength course where I'm going to teach you how to start day trading. Specifically, the momentum day trading strategy that I implement every single day in my own trading. My name is Ross Cameron. I'm a full-time trader and I funded my first account back in 2001. I'm probably best known for turning an account with less than $600 into more than $20 million of fully verified and independently audited trading profits. Now, I share that with you not because I want you to assume my results are typical, because they're not. But I want you to

know that the person that you're about to learn how to day trade from actually knows what the heck they're talking about. I am putting real money behind the strategy that I'm going to teach you here today every single day. Now, about 30 days ago, I decided to reset my account back down to $2,000 to demonstrate what it would be like to grow a small account in today's market. So, today is day 30 of my brand new small account challenge. And guess what? Over the last 30 days, I've been able to grow my account from a

starting balance of $2,000 to over $65,000. That's right, in 30 days. And just today, my account is up over 44%. Well, we've got a stock and the ticker is right here, um, YXT. This stock today went up over 500%. So, for my account to be up 44%, it's not unreasonable. In fact, I I could have produced a bigger percentage gain if I had taken more trades or been a little bit more aggressive. But, nonetheless, I'm not complaining. 44% is still phenomenal. And growing the account from $2,000 to $65,000 in 30 days is really solid. So,

what I want to do here, especially for those of you guys who are just getting started, is I want to lay out the five simple steps that I've been following every single day to grow my account. By the end of this class, you're going to walk away with an overview of a strategy that you can start implementing in your own trading starting today. But I want you to make one promise. I do not want you to put real money on the line until you've first proven you can make money trading this strategy in a simulator.

If you can't make money in a simulator, I hate to say it, But you've got no business putting real money on the line. So, take it slow. Trading is a marathon. It's not a sprint. It's not about overnight success. You got to stick with it for a while. In fact, I funded my first account in 2001, and I didn't cross my first million dollars of trading profits until 2019. So, it took me a long time. Now, I took some breaks from trading. I wasn't sticking with it every single day for that period of time. But

nonetheless, it gives you the idea that it takes time. Anything worth it, though, you've got to put in the effort. So, let's talk about what we're going to be going over in today's class. These are the five steps that I'm going to be teaching you. Number one, how to find the strongest stocks to trade on any given day. Today, I found YXT when it was up about 75 80%. It went on to go up over 500% on the day. So there was a lot of opportunity to continue to trade that after I had identified it

as a good candidate. Number two, I'm going to walk you through the process that I use every single day to find the best entries on candlestick charts. The language of the financial markets is read through charts, And I'm going to teach you how I read them in today's class. Number three, I'm going to walk you through how I use level two market data to interpret sentiment and make my final decision to execute a trade. Number four, I'm going to share with you the exit indicators I use to tell me when to pull the rip cord

and get out and also when to walk away on any given day. And number five, I'm going to walk you through the process that I use every single day to record and analyze my metrics so I can continue to improve my trading performance and my ability to extract profit from the market. Now, in case you didn't know, all of the profit from these small account challenges gets donated to charity. That's right. And we've now raised over $427,000 with the goal of donating to a children's hospital in every single state in the United States. We have

now donated to 40 children's hospitals. This is awesome. And every time you guys hit the thumbs up on the episodes in this series, I add an extra dollar to how much we're donating. So you actually can help increase the amount we donate by hitting the thumbs up on this episode right now. All right. So, That's super exciting. Now, as part of this course that I'm about to teach you, I have some PDF handouts that I'd like you guys to download. I have a link. It's pinned at the top of the comments and in the description

where you can download the following PDF worksheets. My small account strategy, my trading plan worksheet, my stock selection guide, and the trade log that I want you guys to start using to record your performance. So with that, let's go ahead and dive right in with step one, finding a strong stock to trade. So the process of finding strong stocks to trade for me, I am relying on stock scanners. Now there are some traders out there that trade different strategies. For me, maybe a trader who focuses on trading Bitcoin every single day or who trades Tesla

and Nvidia, you know, one of these large cap stocks every single day. they might not need a scanner because they're trading the same instrument every single day. However, in my experience, when I tried doing that, I found that my accuracy declined because I felt like what I was essentially doing was playing chess against the computer. Now, The computer always wins, but when you trade against the high frequency trading algorithms, trading large caps, you really don't have a good edge. And so the system that I use with level two and with candlestick chart patterns does not

work very well on those types of instruments. So while there may be other strategies to trade them, the way I trade is by focusing on trading volatility, I like to find things that are moving. So in other words, I don't make money, as you would imagine, by buying something at five and selling it at five. Right? That's going to be a break even trade. I'd like to buy something at five and sell it at 550 550 for a plus 10% return. Now, I'm not going to put my entire account into that trade. But if I

put, let's just say, a quarter of my account into that trade, my account would be up 2.5% on that specific trade in one day. Now, if I get four trades like that, my account could be up 10% in a single day, or as we saw today, as much as 44% in a single day. So, in order for me to make money, I need the underlying asset to be moving. And so, rather than just trading from a basket of the same stocks every single day, I use stock scanners to help me find stocks that are moving

right now. And so, this scanner that I'm running, this is part of the Day Trade Dash software that I actually began building in 2017. So, these are our own custom scanners that are available for members at Warrior Trading. You can use scanners that are off the shelf that are free, but the problem is they're going to be on delayed data. And if you're on delayed data, you'll be 15 or 20 minutes behind. Well, me, a trader that's using real time data. And 15 20 minutes can make a pretty big difference when a company either comes

out with breaking news or suddenly shorts are getting squeezed and it starts to move higher. So, this is the scanner right here that X that YXT first popped up on. Now, when it first alerted, it had only 45,000 shares of volume. There was not much volume. It was up 76% and I wasn't really clear on what the catalyst was or why it was moving higher, but I was aware of at least a couple of things including the price that it was up 76% and moving higher, that the total volume uh was low, but that the

relative volume was high. We're going to get into a little bit More detail about that as I walk you through my five pillars of stock selection. So, these are the five criteria that I programmed into my scanners. Four of these criteria reference demand and one of them references supply. In order for a stock to go up 400 500% in one day, there has to be an imbalance between supply and demand. It's as simple as that. And so the supply is the number of shares that are available to trade. And the demand is typically created by

a breaking news event. But there are some other factors as you can see here that increase demand. So let me start with relative volume. So uh in this case here um what I have found consistently over my entire career and you can see this is like this is a very clear uh metric is that I make the most money on stocks that have 500 times the relative volume today as what is typical. So what does that mean? Every stock has average volume. Average is what it typically trades on an average day over the last 50

days. So, every stock has a 50-day average in the amount of volume that they trade on. So, if a stock is trading on five times higher volume than the 50-day average, that's the day that I want to Be trading with it on it. Now, why would a stock have five times above average volume? And it's typically because there's some type of underlying catalyst. It's usually breaking news. Now, that's not always the case, and today's trade was an exception to that, but that's typically the case. So, trading stocks with five times above average volume, therefore, has

to be one of my first criteria or pillars of stock selection, five times relative volume. So, right now, if you scanned the entire market just for stocks with five times relative volume, there wouldn't be very many stocks on your scan. What I'm going to do here is I'm actually going to pull up my scanners for you, and I'm going to demonstrate this. So, let's see. So, we've got um X YXT right here, as you can see, sort of balancing out. So, I'm going to go to my toolkit here, and I'm just going to go to

uh top relative volume. So in the entire market right now, how many stocks have relative volume of more than five? Let's see. So we've got a 100 um stocks on this scanner. So we've got about a hundred, but as you can see, a lot of them are kind of right on the cusp of being just a hair over five times Relative volume. And in fact, if we looked at how many had relative volume of more than 20, it looks like it's about 20 stocks in the whole market. So XYT or YXT sorry um has relative

volume of 14,000 times above average. So today it has 44 million shares of volume whereas yesterday it had 500 shares. That's crazy. That's that's unbelievable. So that's a huge swing in demand, right? This stock is experiencing huge swing in demand. So, if you ran a scanner just searching for relative volume of greater than five, you would get an alert. You would get probably about a 100 stocks on a scan. If you did relative volume of greater than 20, you'd probably have closer to 20 stocks on your scanner on any given day. And just like that,

with this one filter right here, you have reduced the possible candidates of stocks to trade in the market from over 10,000 stocks, ETFs, etc. down to about 20. Wow. I think that by itself is an awesome filter because what I want to do is I want to filter out the noise and get focused on this signal. I want to be trading stocks that actually have the potential to do something interesting. So number one criteria, five times Above average volume. Number two, I typically do better when stocks also have just high total volume. Having high relative

volume is great, but there will be some examples where you've got a stock like this one here, JAB, that has really high relative volume, but the total volume is only 1.4 million shares. So, or this one here where the total volume is only 800,000 shares, whereas this one's got 44 million shares. So, total volume does make a difference at a certain point. It's not it's not absolutely required that you've got 25 million shares of volume before you take the trade, but as you can see, I tend to make more money as stocks have higher volume.

I also do better focusing on trading stocks that are gapping higher, which means they're opening up at least 2% from the prior day's close. Why would a stock be opening 2% higher than the prior day close? It's typically again because there's some type of underlying catalyst. So gapping up high val high high total volume high relative volume normally it's because a stock has breaking news. Now I have also found that I tend to do the best on stocks between two and 20. So today we had the stock That went up over 500% and it started

around $23 a share. So realistically, if that stock had started at $20 a share, gosh, I mean, it would have had to go up to 80, $100, $200 a share to get that same four 400% 500% return. It's just not realistic that that would happen. It can, but it's very uncommon. However, on lower price stocks, we see stocks go from $2 to $4 routinely. That's nothing unusual, and that's a 100% return. So, I typically do find that I make more money on stocks between two and 20, especially when they have high total volume and high

relative volume because that's when I can buy bigger positions if I'd like to. And then those are the so those first four pillars of stock selection are all based on demand. Stocks with five times above average volume have higher demand. Stocks up at least 10% have higher is inherent an indicator of high demand. Stocks that have um breaking news of course have higher demand. That's what creates the demand. And stocks that are priced between 2 and 20 have more demand. Now number five is supply and this is the float or the number of shares available

to trade. So the number of shares available to trade is determined By the company when they do their initial public offering. It's the when they sell shares onto the open market and from that day forward those shares are part of the public float. the total number of shares available to trade. So in the case of YXT, the total number of shares available to trade is about 2.87 million shares. And this is very interesting. That means the total number of shares out there in total is less than 3 million shares. And yet, as you could see

here, it's got over 40 million shares of volume. How is that possible? This is because traders are rapidly buying and selling from each other. One trader thinks it's going to continue higher, one trader disagrees, they take a short position, then another trader covers, another trader buys, another trader sells. So, it's this frenzied volume of buying and selling, buying and selling. In a sense, it's kind of like hot potato. Traders want a piece of it, but they're also fickle, and they don't want to be caught holding when it's really extended and it rolls over. So the

result is that we see very high volumes in trading activity. Now in 2019 all brokers well all big US retail brokers went to Commissionfree trading and commission free trading really changed the game because it allowed people to jump in and out without paying a fee. Prior to that we saw less volume in the market. But now because commission free you can get in, get out, get in, get out. And there's some traders who will take hundreds of trades in a single day because why not? It's commission free. So they're just getting in, getting out, getting

in, getting out. So all of that creates a lot of volume. And that volume is a good thing because here's something interesting. Because the float is about 3 million shares. We just round up. There are 3 million shares out there that are currently up 500%. Now, if you had the good fortune to be holding a stock that went up 500% in one day, what do you think you would do? You would probably sell. You would take some profit off the table. And so, an interesting example here today is that we also had a big move

in Shopify. So, Shopify is a big S&P, you know, company. It's it's a huge company. They've got a 1.3 billion share float. They put out earnings this morning and the stock promptly went from about $120 a share Up to $165. It went up 36%. But it did it on less than 1 million shares of volume. In other words, 1 million shares is less than 1 1,000th of all of the shares available to trade on shop. And so I said, what if some of these remaining 1,000 just in terms of ratio shares decide they want to

sell? Are there going to be enough buyers here to hold up the price plus 36%? And I said that the answer would be no. And so, not surprisingly, Shopify has been coming back down as some of the shareholders that were holding yesterday have decided to take profit. In fact, it's holding up a little bit better than I would have expected, up 16%. But nonetheless, it's down quite a bit from its peak of up 36%. But that was not an issue in the case of X of YXT. YXT had such a low float that all of

those shareholders could have easily sold. In fact, they could have sold many times over and the stock was continuing to move higher. To a certain degree, these types of stocks become a bit of a self-fulfilling prophecy in the market where traders look at the float and immediately realize when the stock's up over 100% and is traded at least the amount of volume of the Float that most likely anyone who wanted to sell could have. And yet the stock is still holding and that means upside resistance is relatively limited. So these are the five pillars of

stock selection that I'm using every single day. And if a stock doesn't meet all five of these pillars, I'm going to be cautious. So number one, we've got to we've got to and this is the criteria for a big big move for the stock to be up 30%. I would love that breaking news between five and 10 is a real sweet spot. Five times relative volume. And then further if the stock is in a hot sector crypto, biotech, AI or in the case of this company, it's a Chinese company. So Chinese text tech stocks, tech,

you know, companies have been popular. And then the time between 7 a.m. and 10:00 a.m. All of this becomes kind of the sweet spot for a big move, especially when you've got a float of less than 20 million shares. And lower generally is going to be better. So today uh well this is an example actually um of a different stock but this is a stock that went up 432% on 300 million shares of volume and it's just an example of basically the same pattern that we had today from $3 here Up to $16 a share.

These are incredible moves. So the first the really the the first thing that I'm looking at number one is I need to see the stock meets my five pillars of stock selection. The only exception that I'll make is that the stock doesn't need to have news if it's clearly moving really well and is one of the most obvious stocks today. So, YXT here up 500%. It was the number one leading gainer in the entire market. That by itself made it a really good candidate to pay attention to. All right. So, we look at this from

all five pillars. The price is fine between two and 20. Now, it got a little more expensive, but it did start down at three or four, so that was fine. The total volume is great. The relative volume is great. The percentage change is great. The float is great. The only thing this didn't have was a clear catalyst, but this is a tech company obviously making a big move and so traders were willing to jump on it. So, that was, you know, that was the one area where it carried a little bit more risk, but was

still worth um, at least in my opinion, it was still worth consideration. So, as a beginner, If you stick to focusing on quality over quantity, the most important thing is that you're trading the right stocks on any given day. And I had someone this morning who said, Ross, take a look at Shopify. I say, you know what? I don't think Shopify is going to work. It's got a really big float. I just think that's the type of stock that we could get into some real trouble on. It's not reasonable to expect that it's going to

be able to hold these levels. And so, naturally, I disregard it. That was definitely the right move. But for a beginner, sometimes they'll say, "Oh, well, maybe the float doesn't matter because, you know, it is moving quite a bit." It's very rare the float doesn't matter. Rare that the price doesn't matter. When you have a stock that's $150 or $160 a share, it's just too expensive for most traders. Now, if you've got the gain, you've got the relative volume, the price is good, and the float's good, and there's no news, what typically happens is traders

think and believe that someone out there knows something. That's a funny thing. You sort of are like, well, it's it's like if all of a sudden everyone starts running Out of a building, you're like, well, they must know something, right? And so traders are kind of like that. They're like, well, if the crowd says it's bad, it's bad. I don't know. If the crowd says it's good, it's good. And so while eventually it matters whether or not the company actually has news in the context of the next 10, 15, 20 minutes of taking a day

trade, if we've got relative volume, total volume, percentage gain, it's an obvious stock with the right float and we have a candlestick chart pattern that we understand it is to me a trade worth taking. Step one, stock selection. It is the most important step that you can make as a trader. You trade the strongest stocks on any given day. Step two is stocks. Step two is the specific entry pattern. So waiting for a pullback. Now this was interesting on YXT because we got this initial pop. It dropped down. It popped up. It dropped down. And

then right here it squeezes up and then it pulls back. Then it pushes higher and it pulls back. Each one of these pullbacks right here represented a fantastic opportunity to take a trade. Now, I did not take a trade on this first one. I was watching it. I had My order ready to go, but I was hesitating just a little bit because I had noticed it had hit this $6 level a couple times. Once, twice, three times, and four times, and it kept not breaking. Why? Because there was a big seller right at six. So,

I was not sure it was going to work. And then it broke through that level and it went straight up to $8 a share. Wow, that's an incredible move. I missed it. On the next pullback right here, that's where I took my first trade. Boom. Right there. And we'll break that down in more detail when we get into the recap. So, it's very important once you first find the right stock to trade that you're able to patiently wait for a pattern to form. Look, there are times where we've got a stock that is a a

quality stock. It meets all five pillars of stock selection, but it doesn't give me any good patterns. And while that's disappointing, it's better not to take a trade than to jump in something that's not forming a safe pattern where I can understand my risk and my reward. So, this pullback pattern right here, what I like about it is that I don't have to chase it. I can let the stock squeeze higher. So, it starts moving up, Moving higher, moving higher. And as the stock is moving higher, it'll be hitting my scanners. So, that's when boom,

I'm seeing the scanners right here. These are stocks that are moving higher. I have my audio alerts turned on. So, ding, ding, ding. I'm getting the alert. Stocks moving higher. And now, I'm just watching it, right? So, I let it squeeze, let it go up, and then I'm waiting for this pullback. Now, even Shopify did give a little pullback here and a rally back higher. Although the goal and target of this pattern is a retest of the high a day and then continuation higher which as you could see is what we got on um on

the stock from today. So on the stock today we got the pullback right here and then it pushed a lot higher from a 8 750 $8 a share range all the way up to about 1150 which was awesome. So we get that first squeeze up and then we let it pull back. So, as it's pulling back, there's a couple of things I pay really close attention to. Number one, when it's pulling back, I do not want to see should not do not Well, sorry. Sometimes when I'm talking and and writing, it's a little hard. Um,

does not doesn't There we go. That's even faster. Doesn't retrace more than 50% of the move. So, in other words, if the stock squeezes up like this, but then comes all the way back down like that, then this area here, no, no, no, no. That I can't trust that. This is what we want for it to pull back right here, but not more than about 50% of the initial move. And then we look for that move higher. So, it should not retrace more than 50% of the move. That's number one. Number two, the volume should

be higher on green candles than on red candles. And this is very important because this volume profile communicates to us what other traders are thinking. So as we see the stock popping up, if it's squeezing up on high volume on the green candle, that's bullish. Light volume on the red candles, that's fine. And then we want to see higher volume coming back in as the candle's moving higher. Now, this actually looks like it retraced more than 50% of the move. So, let's just imagine that this candle had started a couple candles back and it had

moved quite a bit higher before giving us this little pullback right there. So, it should not retrace more than 50% of the move. It should not have high volume on the red Candles. It should not break below VWAP. So, break below VWAP, the volume weighted average price, which is a technical indicator. And number four, it should not break below the 9 EMA. So, a perfect uh pullback pattern. So, we got a pullback pattern here. And a perfect pullback pattern will have a nice big green candle, maybe two or three, but then as it pulls back,

it doesn't retrace more than 50%. High volume on the green candles, light on the red, doesn't break VWAP, doesn't break the 90 EMA. And another thing that we want to pay attention to on these pullback patterns as it's squeezing higher, we want to watch for topping tails. Those are upper candle wicks. So, when you have basically when you have a stock that has um I'll just do it on this side. Uh let's see. We'll do green so we're matching the right color. So, we have a squeeze here, moves higher, and then this one ends up

being like this with a large topping tail. A topping tail like that inherently is bearish. The next candle opens right here around the close, goes lower, goes a little bit lower, comes down. Bottoming tails are bullish. So, if this starts to rally back up here, It's a little bit tricky to feel safe buying in this area here where there was previously all of this selling. Yes, it squeezed up, but then the sellers pushed it right back down. So, we prefer that we not see topping tails and instead, you know, it just sort of stops at

the top and then dips back down. That would be our preference. It's we don't always get the picture perfect pattern, but, you know, if we were going to be picky, that's what we would want to see. So, we're going to be watching the volume profile now in real time. This is what it looks like. The candle starts squeezing higher. It pushes a little higher. You've got a little topping tail there. It dips down. It bottoms. And then my entry here is the crossing candle. The first candle to make a new high. The candle that crosses

over the high of the previous candle. So, the high of this previous candle is the top of that wick. And the moment this candle breaks that new high, the trend is shifting. We were moving higher here and then we had a couple red candles and we were moving lower and now we've based out and we're moving higher again. And so that's the shift in Momentum. And now I'm I'm holding this until I get a valid exit indicator, which we'll talk about in a moment. So that entry right there is the spot where I'm a buyer.

The first candle to make a new high. That's specifically what I'm looking at. But what's my max loss on this pattern? My max loss is the low of the pullback. And this is why it's so important to wait for a pullback. Because if you jumped in right here, what's your max loss? It's way back down before the move started. If you got in up here or up here, your max loss is even further back here. But once it pulls back, the stock is doing two things. It's proving it can hold this level. It's giving people

that have already been holding a chance to sell, but it's proving that it can hold this level. And it's giving the opportunity now for fresh traders to come and look at this and see, wow, this stock right now is up 75%, whatever the case is, it's holding up. Anyone who wanted to sell could have certainly sold. It hasn't gone lower. Sometimes they will. Sometimes they'll come all the way back down, but in this case, it's holding. And so this then becomes the low of that pullback. And that is your stop. So that's your max loss.

So if your stop is here and let's just say your entry is here, you know the difference there. Let's just say that's 10 cents per share. All right, so whatever it's 10 cents per share, then can you make at least 20 cents per share of profit? And in this case, I would say you could. I like to aim to have at least a 2:1 profit to loss ratio. We know that day trading is risky. So our job has to be that we're managers of risk. I'm a manager of risk and a hunter of volatility. I

don't make money buying in some and selling something at five. So, I could certainly manage my risk by buying something not moving, but that's not going to work because I won't get profit. So, I need to take some risk. And I do that by trading stocks that are more volatile, but I also need to keep my risk in check. So, this profit to loss table right here shows you that if you risk a dollar to make a dollar, you've got to be right 50% of the time in order to break even. All right, that's reasonable.

If you risk $1 to make $2, you only need to be right 33% of the time in order to break even. On the other hand, if you risk $2 to make only $1, Your break even point is 67%. And that's not a realistic break. That's not a realistic level of accuracy for your beginner trader to achieve. If a beginner trader can be at 50%, that's good. So then, shouldn't we set the bar low and have you trade at a a 2:1 profit to loss ratio where you risk a dollar to make a dollar, knowing that

you actually only need to be right 33% of the time in order to break even. So, if you can be at 50%, which is sort of a coin toss, then you're doing well. This is the problem. A lot of beginner traders don't understand these metrics. The the issue is that beginner traders end up holding their losers too long and the result is that their average losers do become bigger. Even though they might only have, you know, a few losses from time to time, when they happen, they are bigger. So, I like to think that day

trading profitably requires three core components. Your accuracy, which is the percentage of the time that you're right. the profit to loss ratio, which is the relationship of your average winners versus your average losers. And then those two produce your consistency, which is the amount of weeks In a row that you're profitable, or the amount out of the last six weeks that you've been green. And if you're green four or five out of the last six weeks, if your accuracy is 60 70%, if your profit loss ratio is 2:1, you will be a successful trader. But

a lot of traders say, "Well, geez, I'm not successful. Where do I begin?" The place to begin is very interesting. It's not at profitability. It's not at, oh, I just need to make more money. My winners need to be bigger. In fact, it starts with accuracy. This is the spiral that a lot of beginner traders find themselves in. They have a poor track record, a history of losing, poor decisions, and emotionally influence trading. You get frustrated, you get stubborn, so you just slam the the buy button. You hold losers too long and that leads to

poor self-confidence. Pressure increases. You've put time and money into learning how to trade. You're not seeing results. So now you've got more pressure. You start to get desperate. That leads to reckless trading. That therefore increases your losses. You're taking more trades with bigger size, taking on more risk, but without a track record to support it. The Emotions get even bigger, which makes your track record worse. And this is a negative feedback loop where you spiral. you don't want this to happen to you. I want you on a positive feedback loop. So, we do that by

focusing on quality, both quality of the stock, trading stocks that meet four, at least four of the five pillars of stock selection, and by trading the best candlestick chart patterns. And my personal favorite is that first pullback pattern that I just showed you. If you focus on trading the right stocks first and foremost, you're narrowing down the possible candles in the market from, you know, 10,000 down to just 15 to 20 each day because we said it was 20 stocks when you were applying just the relative volume filter. Just the relative volume filter put it

down to 20. So now you add a couple more filters and you say, well, I also only want to trade something that, let's just go back on this side, um, only has a float of less than 20 million shares. So that knocks a few of these off the scan. And then you say the I also have to make sure the stock is at least um up you know 10 20% on the day. Some of these are down so that doesn't work. And you need The relative volume. Oh well this we are the you need the

total volume and then looking for you know a catalyst or a certain percentage change. And all of a sudden you've narrowed down your list of stocks that you could trade on any given day from 10,000 to three or four. So now you're trading the right stock. You trade the right stock and you wait for the right pattern. Your accuracy will improve. Accuracy will improve your profit to loss ratio because invariably you'll be eliminating some of those big outlier losses that were dragging down your metrics. The profit loss ratio being better will also improve your consistency.

More green days, more green weeks. That improves what? Self-confidence. Now you've got a strong track record. Your confidence is going up and that further increases profitability. This becomes a positive feedback loop. And every trader goes on a spectrum of having stretches and periods where you're feeling very confident and you're taking increasingly more risk. You're being more aggressive and you're making more and more and more money until you have a loss and it falls apart and then you have a setback and You've got to reset and go back to basics and focus on high quality setups

only. Just slow it down a little bit more. But some traders at that fork in the road after a big loss end up flailing. they they revert just to pure emotion, desperation, and suddenly they end up being a trader with a P&L that looks like this. And tell me if this is familiar to any of you. You have some nice progress and then one day you give it all back. Some nice progress, one day you give it all back. Nice progress, one day you give it all back. This is a break even trader. Now, don't

take for granted that you're keeping your head above water. Now, some traders might have sort of a P&L that looks like this. little profit, little profit, little profit, and you're actually losing money. So, we don't want to be there, and I'm sure some of you are. We want to get you first to break even, and then what's the difference between break being break even and profitable? It's knowing on these days to walk away sooner. So, instead of going all the way down that far, you go down that far. Then it's faster to recover, right? And

spacing out the time between these Losses. Now, if you look at my own, if we look at my own metrics, and of course, I share these with you guys all the time. But if you look at my metrics here uh from the small account challenge, you will see that I had a relatively big red day uh 4 days ago, right? I was down $7,000 as you can see here. This happens. If we looked at just my regular trading account over the last, you know, 90 days or whatever, losses happen. I take red days, I have

a loss, then I rally back up. Couple really big green days, and then a loss. I mean, this is part of trading to a certain extent, but the difference that separates a beginner trader from those that are um, you know, more experienced is how frequently the losses are happening and how deep you're going when you have the draw down. So, I really want you to focus on doing everything possible to trade in a way that supports the growth of your self-confidence. Profits are a byproduct of the process. If you focus just on building your consistency,

just on the process and your confidence, the profits will follow. So, it's really important to think of it that way. Now, in the case this morning of YXT, We had the initial squeeze up on our scanners. So, the stock started hitting the scanner. Ding, ding, ding, ding, ding. It popped up. I looked at it. I saw it squeezing higher and I said, "All right, where's the dip?" The first dip, I missed it, right? But on the second dip, I jumped in. I got that trade and we got that really nice squeeze higher. So, let's actually

look how I was managing the risk. And we're going to talk about this getting into now step three of executing the trade using this window right here, which you can see is level two market data. So, level two market data shows us the orders behind the scenes that essentially create the boundaries for how much a stock can go up or can go down and that allow stocks to make these big moves. So in the case of YXT, as we had squeezed higher right here and right here, I had not yet taken any trades on it.

But as it was pulling back right in this area, it dipped down and I noticed that there was support at about $7.50. $7.50 is a half dollar. There's a great degree of psychological support around half dollars and whole dollars in the market. If a stock's holding above 750, The next level of resistance is 8. But then if it can hold over eight, the next level is 850. If it's over 850, the next level is 9. Then 950 and 10 and so on so forth. It's very common that stocks trade with this respect to the half

dollar and the whole dollar. So as I noticed it was holding around 750, I started to see that we were also at the same time getting this pattern right here. So check the time. It was 818 and 59 seconds, which meant that this red candle was about to close. These candles close at the top of every minute. And this is a one minute chart. So, I had given it a chance to squeeze up. It pulled back for one candle for a second candle. And then right here, as that candle closed, I recognized that the crossing

candle would be at about $7.65. And so what I decided to do was I got in just a little bit before that crossing candle using 750 as my stop and about 760 as my entry. So my entry was $7.60 and my hard stop was $7.45 which is a 15 stop. I bought 5,000 shares which meant I took $750 of risk. My profit target was $8 but I was hoping we would get a squeeze to $850. So, optimistic profit target was about 90 Cents per share, but between $2,000 and $4,500 of profit. So, would you risk

$750 to make $2,000 to $4,500? And I and you actually the answer would be I don't know. How often am I right? So, if you're right 75% of the time, then the answer should be yes. I would take that trade as long as I knew I could take 10 more trades right after it because over the course of those 10 trades, I would make money. And that's what happened. So, this was my entry right here. This is Thinker Swim, uh, Charles Schwab, showing the 5,000 share order at $7.60. And we got this squeeze all the

way up here to a high. My best exit was at $1010, which was phenomenal. That was when I saw my first exit indicator. And then I sold more at $979 and more at $9 as it came back down. So, we should probably spend some time talking about those exit indicators. But before we do, I want to do a little pop quiz to see what you're learning. So, is this a spot right here where you should be a buyer as you look at the stock? The chart pattern should be telling you no. You don't know all

the details about the stock. I mean, clearly we see it's up quite a bit on the day. It's got a lot of volume. You see it's a 1.43 million share float. So, it's a low float. So, it probably meets at least four of our five pillars of stock selection. But right here, there is not a candlestick chart pattern to work with. In fact, there's a recent rejection right there. And if you had taken that trade, it would have sold off. What about this setup right here? Should you take this trade? This is another stock with

a 1.3 million share float. Had squeezed up, pulled back, pushed higher, pulled back, stalled out, sort of dipped down. Then it rallied up, pulled back, popped up. Right here, it has retraced more than 50% of this initial candle. It's pulled back too much. The price is below the 9 EMA. This is not a good setup. I would not take that trade. What about this one? Now, here we've got a push higher, a pullback. It worked. A pullback right here. We're above the 90 EMA. Low volume on the selling candles, high volume on the green candles.

That's an entry that we should be taking. And that gave you a nice trade back up to the high. Some work out better than others, but that was a decent trade from here to here. What About this next one? Now, this is the same one, actually. So, you already know what's going to happen. You've got the pullback here. You have a little higher volume on that initial candle, but it's not terrible. But first candle to make a new high as we break through this 180 level and you get a squeeze back up towards $23 a

share, which is nice. So number four, respecting my exit indicators. This is very important. I do not want to cap my winners, which means I will not sell just because I'm up 20 cents. Even though my profit target on this was 50 cents to a dollar or 25 to 50 cents a share, whatever it was, 50 cents to a dollar a share, it was $8 to 850. Just because it hit eight or 850, doesn't mean I sell. If I am so fortunate that I picked a setup that is going up two or $3 a share,

I want to benefit from as much of that move as possible. So, I will hold until I see an exit indicator. What are the exit indicators that I respect? a big seller appearing on the level two can be one of them. Now, we know that anyone could put a big sell order out and it's possible that someone could put an order out just to fake out other traders. That is illegal. You're not supposed to do it, but some people will do it. So, an order just flashing isn't enough, but if it's st if it's sitting

there, if it's a if it feels like a real sell order, that will be an exit indicator for me. Imagine you're in a stock and suddenly someone puts out a sell order for 1 million shares. That's a huge sell order. You're probably best just to get out of the way. So, a big sell order, I'm going to be out of the way. 50,000 shares, 100,000 shares, those are big sell orders as well. I'm just going to get out and take my profit. Number two, it has the obvious appearance of a hidden seller. A hidden seller

is when there's lots of buying, but the price is not moving higher because there's a iceberg, a big seller unloading shares. When we have a hidden seller, I usually get out. Now, these are exit indicators. Whether I'm up 5 cents a share, 50 cents a share, or $5 a share. If I don't see an exit indicator until I'm up a ton, then hey, that's awesome. If I see one and I'm only up two, three cents a share, it's disappointing, but it is what it is. I got to get out. I got to just jump right

out because the exit indicator has to be Respected. Number three, if I see a large burst of red on the tape, that indicates a surge of selling and a possible false breakout. On the next slide, I'll show you an example what that looks like. Number four, if initially we pop and then we have a dramatic reversal, that will form a topping tail candle and a false breakout. Number five, if buying is slowing down, and we can visualize that on the time and sales as well. And number six, the formation of a topping tail candle or

a red candle. So if we look at YXT right here on this chart, you can see that this candle right here has a big topping tail. That green candle has that large top where it went all the way up to 1169 and then flushed back down. Topping tails by itself are a concern. And so the exit indicators that I identified on this first was a lot of red on the tape at about 11:30. A lot of red on the tape. Didn't like that. Then a big seller as it started to flush back down. It was

now down a dollar a share. And that was the formation of the topping tail candle. Read on the tape. Topping tail. Big sellers. That's my cue to get out. It doesn't mean I'm done with it. This was at $11.69. And as We know, the stock ended up going up to a high of what was it? Over $20 a share. So yxt right here. Um it yes it went higher later but at that moment it was time to get out and so I respected my exit indicators. Now is there another trader out there who got in

around the same spot as me didn't sell up here came all the way back down to almost being break even and then it goes all the way to 21 and then they get out there. Are they a hero? I don't really think so. I think it's better to get in and get out and get in and get out. And if you want to get in and keep getting out, you could do that as long as you want until you know that you've reached a point in the day when statistically you're not as likely to continue

to make money. So let's look at my metrics right here. Now, well, let's let's not get ahead of ourselves. We're going to do that on step five. So let's just back this up for here for one second and go back to the slide. So, if this is when I get out of a specific trade, if it's if I see one of these five exit indicators or my six ex exit indicators, when do I know when to stop trading on any given day, right? Am I leaving money on the table or am I giving back profit?

I suppose every day you're doing one or the other. You're either giving back or you're leaving money on the table. So, here's my lesson of when to walk away. And a lot of this has been guided by this book right here, which I recommend to you guys. quit. The power of knowing when to walk away. This seems like this would be written literally for a day trader. Um it's not, but uh there's a lot of overlap that makes great sense. So check this book out. This was written by um a professional poker player, Annie Duke,

made millions of dollars playing poker, and knowing when to walk away is certainly relevant in that um line of work as well. So, I walk away if I lose half of my day, half of the profit I've made on the day at any time. If I lose half, I walk away. Why? Because I find that losing half, I can no longer look at the glass as half full when it is literally less than half full. Uh, so I really need to walk away if I've given back half because I'm more apt to become emotionally compromised,

which means I'm more likely to be stubborn, frustrated, and then incur additional losses. And if it is not fun to lose half of the day, It's even worse to lose the whole day. Number two, I have to walk away if I hit my max loss. My max loss is equal to my average daily gain. So, my average daily gain, as you could see right here, on over $23 million of trading profit is a little under $10,000. So, generally, that's around where I keep my max daily loss. However, what's really important is to look at your

last 30 days. So, my last 30 days, I've been averaging quite a bit more than that, $19,000 per day, which means my max daily loss could be a little bit bigger. Now, that's not the case with my small account, but I also been trading in my main account during this challenge. So, $20,000 daily max loss for me is sort of my comfort zone. But the whole idea is you don't want to lose more than you can make in one good day. Number three, if the window when I trade the best has closed, it's time to

walk away. All right, so let's look at the metrics here that I was about to show you just a moment ago. So, well, this here um is actually a good one. So, if you look at days and times here, you will see that I'm doing really well until suddenly, boop, between 10 and 11:00 a.m. I'm losing money. And So if you saw these metrics in another trader, what would you recommend that they do? Perhaps just simply don't trade past 10:00 a.m. That would be the first most simple uh thing to do. Um maybe you could

look a little deeper is what's going on here exactly? Is there something that you can correct? But the simplest is just to stop doing what's not working. And usually the simple answer is the right answer with trading. If it's not working, stop doing it. So for me right now, 10 a.m. is pretty much my hard stop. After 10 am, I'm pretty much done trading because statistically I'm more likely to lose money. So even if the stock still looks good, I just know that after 10 a.m. for whatever reason, I don't do as well. So the

window when I trade the best is closed and it's time for me to walk away. Number four, if there are no longer any aquality stocks. So this is really important. There are some days where there will not be a stock that even meets four of the five pillars of stock selection. during the small account challenge that I've just done. Um, let's see. We'll pull up to look at the calendar and we'll see how many of these days I didn't end Up taking any trades at all. And we'll do this based on um, we'll just do

yearto date. So, small account challenge is only day 30, but I'm just going to give it more time. All right. So, we're going to go to overview and we're going to look at the calendar right here. And this is when I started the challenge uh, back in June. And so you could see already uh no trade, no trade, no trade, no trade. Um then we had no trades. That was the fourth of July. That was a holiday. Uh no trades, no trades, no trades, no trades. So I've had some no trade days. It I've been

averaging one no trade day per week. I had a no trade day um on Let's see. Actually, no, I didn't. What was this day? Um, well, now that makes me think, did I did I not trade? Oh, you know what? I didn't I didn't take any trades there. Uh, that was a no trade day. What am I talking about? So, in any case, um, I had traded on Monday and then today's Wednesday. So, nonetheless, I've had about one no trade day per week. So, yes, there will be days where there are not a quality setups

and if that's the case, you're better off just walking away. And then number five, if the theme of the day is bearish, If we are seeing stocks pop up, but they're having a really nasty reversal and rejection, then it's just best to call it and walk away. Maybe it's just not a day where there's good momentum in the market. And there's any number of reasons why that could be the case, but it doesn't really matter. If the momentum is not there, don't fight it. Now, a hard rule for me is don't come back after I've

left. Stop watching. Because if I leave and then I come back, I'm apt to give into FOMO because I feel like I've missed something. You know, I missed a big move. Now I'm coming back and I'm compensating for what I missed. And that usually gets me into trouble. In fact, the right time to walk away usually feels too soon. That was something that um Annie Duke shared in her book. Now, number five. So that's number one through four. We've now gone through um where to find the strong how to find the strongest stocks using our

scanners. Number two, finding the the what I think are the highest probability candlestick chart patterns, which for me is the first pullback. Now, in the book with Annie Duke, she talks about how her brother taught her to play poker and he didn't Teach her every single hand you could possibly play. He taught her the top most what he felt high probability hands and he said only play these while you're learning. That became her foundation. So as I'm teaching you this pattern of trading the first pullback that is your foundation. If you got good at just

trading that one pattern you could do well as a trader. You don't need more than that. Now you can add more than that. You could do the first pullback on the one minute time frame. You could also do it on the five minute. You could also do it on the 10-second. Then you could add in an ABCD pattern. Then you could add in a cup and handle formation, an inverted head and shoulders. There's a lot of different patterns that I trade at this point in my career, but as a beginner, get good at one pattern

that becomes your bread and butter. Then number three, we talked about those precise entries using level two. Number four, we talked about your exit indicators. And now number five, we're going to talk about how to record your trades. It's very important that you're analyzing your metrics. I would not be here today with over $20 million of trading profits if I had not been Tracking my trades from the very beginning. Here's the reason I started doing it. When I first learned about the stock market, it was part of a class at school and we had to

track every single trade that we were taking in a ledger. It was like a, you know, a spreadsheet but on paper. And that got me into the habit of recording every trade. So when I started trading with real money in 2001, my first account, I continued doing that. When I came back number of years later and said, I'm going to try to become a day trader. I tracked every single trade. When things got tough, when I got frustrated, I could then sort those metrics to look at my biggest loser and ask myself, what did I

do wrong? So right here, we've got my trades from this small account challenge. We're going to go to trades right over here and we can sort by profitability. We can look at my biggest winners and my biggest losers. My biggest loser right here is INLF from this challenge. What did I do wrong on this trade? Well, where do I begin? Look at this setup. Look at where I got in and look at where I got out. Now, it's fair to say that I did get in here to anticipate a first Candle to make a new

high. That is true. Look at where I got out. I waited way too long to sell. I should have sold right there. I didn't. So, the loss was bigger than it should have been. Now, the fact is that was my first trade on the stock. I hadn't traded it back here when it pulled away on the first pullback. I didn't get this one. I didn't get this one. I finally broke the ice. It was extended. I was feeling FOMO. It was 10:30 in the morning. I had already left for the day and done some other

stuff. I came back and then took this trade. That was a rookie mistake. So, there's a lesson in that loss. Now, this one on YXT today, that was tolerable. I gave back a little bit of profit on one of the trades and I don't really regret that because I look at that trade and I say, "Yep, no, I know what I was thinking there. I got in. I was looking for that push higher. It didn't work." That's fine. So, that's okay. You will have some losses that are like, "Yep, no, I I think that's fine.

What about this one here? This one here, well, I chased it. That entry is too high. I should have been in down here. So, it was a bad entry." Now, if you're not tracking your trades, you don't have the opportunity to learn from your mistakes, right? So, if we look at my metrics right here and we looked at time of day, we would see, uhoh, well, just alone, if I stop at 10:00 a.m., that would have improved my performance for the last, you know, 30 days. So, what about price and volume? Any trends there? Ah,

doing well pretty much across the board. So, there's nothing there. That's fine. Profitability by stock, I mean, no, nothing too much here. This is all pretty much fine. So, you know, the big finding here really would be more specific to the exact entry points number one and making sure I'm respecting my exits. Getting a little stubborn in the small account has cost me. So, I really want you to track every single trade that you're taking. And there's a lot of different software platforms you can use. Whether you use the same one I'm using or use

something else doesn't really matter. But it's so important that you data mine every trade that you've taken. You have to do that. This is how you'll become a better trader. You look at what you're doing that works and you double Down on that and you look at what you're doing that doesn't work and you stop doing it. Now, I think a big problem and the reason that a lot of traders struggle is they overcomplicate things. And that's why it's so important for me to try to keep it simple. One, two, three, four, five steps. Number

one, it has always made the most sense to me to focus on the number one leading gainer stock in the market, the stock that is up the most. Look for good entries on that stock. Ride the momentum. Don't over complicate it. If you're getting into the weeds trading stocks that aren't obvious, you're going to struggle. So, make sure you're trading the right stocks first and foremost. And if you haven't already downloaded the stock selection guide, um the PDF resources I put together are for you guys to support you in your journey of learning how to

trade. and they go even deeper than we had time to get into in today's class. Uh, and for those of you guys that actually want to use the software I'm using every single day for charting, scanning, breaking news, who want to listen to me while I'm trading, I run a broadcast so you can actually watch me while I'm Trading. Watch over my shoulder and you can see my entries, you can see my exit. And you know, look, you'll see me win, you'll see me lose, you see everything. So, I don't win every day, but I

don't lose every day either. and uh this these past 30 days in the small account challenge. I've had two red days. Uh but boy, it's been um it's been really awesome growing this account and donating the profit to charity. So you guys, I hope if you enjoyed this class today, you hit the thumbs up. It'll add an extra dollar to how much we donate. And if you want to learn about the process of reading candlestick charts, this has been a topic that we can go really deep on. I've got a class I'll put a link

to right here that you guys should definitely check out, a deep dive into technical analysis. So, thank you as always for tuning in. I'll remind you, trading is risky. My results aren't typical, and there's no guarantee you'll find success whether you trade with me or you learn on your own. So, please manage your risk by practicing in a simulator before you ever put real money on the line. And with that, I will see you guys for the next upload real soon.