27 Years of Trading Knowledge in 3hrs and 5mins transcript

[Music] in today's episode I'm going to share with you everything that you need to know to begin day trading today my name is Ross Cameron I'm a full-time Trader and in this episode I'm going to share with you 27 years of trading knowledge I'm going to walk you through the basic concepts of how trading works I'm going to share with you how to find the strongest stocks to trade on any given day I'm going to teach you how to analyze those stocks both from the perspective of fundamental analysis and technical analysis that means I'm going to teach you how to read Candlestick charts how to analyze the correct places to buy and sell how to manage your risk and I'm going to present to you a trading plan with a written step-by-step strategy that you can Implement in your own trading starting today and even better I'm going to show you how to get started without taking any risk I'm going to teach you to trade in a simulated environment that way you can practice the strategy that I'm trading every single day and that you're learning without risking real money once you meet the certain metrics for success in the simulator I'm going to teach you how to transition from simulated trading to real money I first got interested in the market during theom bubble of the late 1990s all of my experience in the market culminated with me funding an account with $583 15 and growing it to more than $10 million of verified and independently audited Trading profits now I'll be the first to tell you that my results are not typical but it is my unique experience that puts me in the position to be able to share with you what is actually working in today's market because guess what I show up to trade every single day and so everything I'm sharing with you the strategies the techniques are being put to the test with real money by me every single day now before we jump into this episode I want to caution you of one thing if you don't have the attention to watch Just 5 minutes of this episode before you click away and get to acted and do something else I've got some bad news for you you probably don't have what it takes to be a successful Trader the reason I say that is because success in trading requires a tremendous amount of dedication discipline and drive but if you really want to learn if you're ready to learn I'll tell you what I'm going to share my strategy with you so all you have to do is bring the 3DS you bring the dedication the discipline and the drive and we can make some fun stuff happen so let's go ahead and jump into this class now I'm going to go ahead and make this slide Deck full screen we have a lot of topics to cover today I'm going to be condensing 27 years of trading knowledge into this ultimate guide of how to start day trading and I want to begin by helping you identify your purpose let's jump onto the Whiteboard this is the reason why you want to day trade now I think for a lot of people they come with this very simple answer that it's about the money and while I think that that's fine to be motivated by money I want to take it a step further and help you identify what is it that this money is going to help you achieve the reason I think it's really important to clearly identify your purpose is because learning to trade can be very difficult I sometimes say that this is the hardest easy job in the world and the reason I say that is because on the one hand sitting here and punching a couple of keys and then looking at your p&l and being up $3,744 as you can see I am this morning in less than 9 minutes is pretty impressive that's certainly nothing like swinging a hammer up on a roof in July right I mean this is a this is a very cushy job but it's also very hard and the area that it's hard is that and this is the blessing and the curse of the market is you can actually spend years struggling to just make $10 a day and you might think this is crazy I'm not trying to drive a Lamborghini I'm not trying to do anything fancy I'm just trying to make $10 a day why is this so hard and the reason that it is so hard is because you won't make $10 a day consistently until you have a consistent system and a process or a strategy that you follow every single day but here's the the blessing of the market once you have that strategy why would you stop at $10 a day let's say you're making $10 a day trading with 10 shares you go up to 100 shares you're making 100 a day you go up to a th000 you're making a th000 you go up to 10,000 you're making 10,000 right you start to scale your Strat stry up and so through this episode I'm going to share with you how to lay the foundation of a strategy and I'll share with you the strategy that I think is the most consistent and this has been in my own experience and then how you scale that strategy up once you begin to find some early signs of success but we have to talk about the real purpose here because for me what I found when I got started was that what motivated me actually was not the money and I've known a lot of people who came into the market focused just on how much money they can make and they end up spiraling and they blow up their account and they're gone because they're focused just on the money what I want to encourage you to focus on is not the money but the process what I consider um the money to be is a byproduct of a successful process and this has Step One stock selection criteria step two risk management you've got rules for um technical analysis and when you follow this process to the every single day then profits are the byproduct so what's going to motivate you to go through this learning curve to get to the point where hopefully you're able to produce consistency so for me it wasn't the money that was the motivator for me it was freedom and the reason I say that is because when I got started I I had graduated college just after um the well it was a Great Recession so 2008 2009 we had this Great Recession then we had this sort of Market recovery and I gradu situated into an economy where the job market was dismal there was nothing you couldn't find a job even if you had a master's degree it was very hard to find work and I realized very early on that I couldn't depend on anyone else in fact my mom worked at a hospital for over 40 years before being unceremoniously laid off they let her go and to me that was really sad that someone could have that much tenure and that much loyalty to one place and they don't have loyalty to you so you have to put yourself first and having seen that and that happened right when I was finishing College seeing that firsthand just gave me this it just gave me such a terrible feeling about entering the job market what's the point there's a quote by Jim Carrey he says that one of the things his father taught him is that you can you can you can work very very hard doing something you don't like and still fail so you might as well try to do something you really love that's not word for word but it's something like that and that really resonated with me so for me when I came into the job market I was at a point in my life where my father had just passed away I was a I was a young adult I was kind of on my own trying to figure out what I was going to do I had a college degree that felt more or less useless and I wanted to find a way that I could cover my cost of living so I could spend time figuring out what I really wanted to do with my life that was my goal and I wanted to find a job where I could make that kind of money without having to work 8 10 hours a day because then that would take up all of my time and I wouldn't be able to spend time exploring the things I might really like to be doing with my life and so I had a friend that had made money trading penny stocks in high school he made $116,000 on a penny stock and as a young man would who's in high school he bought a used Nissan Pathfinder he bought a big screen TV in his basement and he even had a um one of those arcade machines like an old arcade machine that they used to have at um Pizza Hut and it was amazing but that inspired me when I got out of college I thought you know if Ben could do it maybe just maybe I could do it too and so I came into the market with this goal of just trying to find maybe one or two opportunities a year thinking that would be enough to maybe make3 $50,000 just to keep my head above water while I figure out what I really want to do so for me my motivator for learning how to trade was Freedom uh the potential to be uh To Be My Own Boss essentially to be self-employed but the problem with a lot of um times where you're self-employed is that you your clients become your boss if you're self-employed as a contractor a general contractor subcontractor or something like that you still sort of have a boss I mean you're Your Own Boss but but only sort of so Freedom the ability to be my own boss and something that I really admired um in trading was time that I could have more time in my life because what I knew was that most active Traders were really only trading for a few hours each day and then the rest of the day they had all this time to do other things that they might like to do or even have second or third sources of income that they're generating from that time so for me trading wasn't something that I was planning on doing for eight hours a day or 40 hours a week it was something that I thought could also supplement other things that I might start doing just wasn't sure what those things were just yet now as we go through the class one of the things I'm going to encourage you to do is to actually print out some of the perfect examples of charts to put them around your desk so it's inspiration when you see an a quality setup you'll reference that chart you'll be like oh wait a second I know that right I printed this out from you know Ross's PDF or whatever so I've got it right here that's what I'm looking for now I'm seeing it in real time boom but what I also encourage you to do is to sort of put that image of the light that you want around your desk this is the life of self-sufficiency this is the life of Freedom this is the life of spending more time with my family because that is what's going to help you stay disciplined in those moments where you need to dig deep where you need need to dig deep because learning to trade is difficult because you're getting frustrated because perhaps you've taken a loss and while it may only be in a simulator you may feel that moment of disappointment and I want you to understand that you're not alone in feeling that way I feel those same feelings feelings I get really frustrated at times when I have a big loss I get disappointed the difference between me and perhaps a beginner Trader is that I don't act on those emotions I've gotten better at having the discipline to recognize that I'm feeling frustrated I'm feeling emotionally activated and if I continue to trade in this state of mind I will not be trading at 100% and that's why the next topic that we have to cover is on mindset the mindset of winning something that I've noticed in the market which I think is really unfortunate is that sometimes it feels that the people who need the money the least are the ones who make the most and it's the traders who really desperately need money like I like I did when I was getting started who who really struggle and why is that I think that that all ties together to mindset so success is about in a lot of ways a state of mind traders who have a lot of money who come into the market and they already have a lot of money whether it's because they had another job or they have savings or whatever it doesn't matter they come into the market with money they come in with a certain degree of confidence they don't need to make money from trading this week or this month to pay their bills the way someone like you or I might so they're able to approach trading from this place of genuine curiosity like hey if this works out and I can make some extra money trading that's awesome and if it doesn't work out n that's okay too and that Detachment is an emotional Detachment and it detaches you from that big emotion of anger and disappointment that comes with losing money or from the feeling of being so elated when you make money with beginner traders who are really tight on money the emotional highs and lows can be really big and here's the problem with that we jump onto the Whiteboard you have these big highs and lows in your emotions and what you'll notice is that this will correlate with a very erratic Equity curve so traders who experience this will have profit loss um curves where they'll go up and then they'll have a big loss and then they'll go back up and then they'll go back down they'll go back up they'll go back down they'll go back up they'll go back down they'll be maybe a break even Trader they're not making money and it's the traders who have more of this sort of narrow band of emotional range who end up being the traders who just have this sort of I'll do it a different color so it's easier to read have this kind of just nice graph ual slow and steady ascending Equity curve and I'll actually show you if we look at my Equity curve right now we can just look at the last 90 days just as uh as for example the last 30 days the last 90 days you can see how this is the equity curve of a Trader who clearly has solid metrics great profit loss ratio great accuracy a strategy that's working but at the end of the day these types of uh metrics here this creates a tremendous amount of self confidence so this creates a Trader who is no doubt going to be in the mindset of being a winner so the winning mindset it's more than just actually making money and this is sort of a tricky thing because if you have to have a winning mindset in order to make money how can you come to having a winning mindset if you're not yet a winner how can you in other words fake it until you make it and so I think the question here is what is it that makes people who have more money just seem like they're able to approach it from this perspective of nonchalant I'm just going to learn and whatever I learn is just genuinely great they've taken the risk off the table of if they have a big loss that means dot dot dot right if I have a big loss that means I won't be able to pay my mortgage this month or I won't be able to pay my car payment this month when you start stacking up all of these pressures related directly to your performance Trading you get essentially performance anxiety and this is one of the things that people don't always anticipate with trading this is a performance career it's a it's not sport but performance sport just like a performance sport it's a performance career where if you have if you perform really well you can have a great year if you perform really badly you could have a bad year and the truth is I've had years where I've done twice or three times as much profit as I did in the previous year and then I've had years where I made half as much so I found that trading can be a bit more volatile with the ups and the downs and a lot of beginners are not prepared for that this is a performance-based sport so as the the better you are at identifying those strong setups at doing your technical analysis at choosing the right places to buy at adhering to your exit indicators naturally the better you'll perform but what happens to a lot of Traders is that they become emotionally compromised the pressure to perform starts to get them to the point where and I speak from my own experience it gets me to the point where all of a sudden I'm like I need to hit this number this month and so in order to take the number of Trades required to make that amount of money if I'm not seeing high quality trades you know what I end up doing I reduce my quality threshold so let's jump back onto the Whiteboard here let's just say that we have a month where the Market's a little bit slower and so a quality setups let's say at the rate of um typically 10 a quality setups per day so in a um in a hot Market maybe we have 15 to 25 in a u medium Market we have you know let's just say um 10 to to 15 and in a cold Market let's say we have you know Zer zero to to 10 so we might have some days where we have almost no setups and so if I'm at a point where I'm thinking okay this is where I'm at on the month and this is where I want to get to right here based on me averaging what $1,000 of profit per trade and with accuracy of about 70% so I'll have out of every 10 trades I'll have three losers but seven winners then in order for me to get here I'm just statistically going to need at least let's say you know 100 trades this month all right so 100 trades will get me there I'm not going to get there if I don't take at least 100 trades but if the Market's cold then a quality setups if I'm only getting 0 to 10 a day let's say I'm getting two a day two setups a day well we only have 20 trading days in the whole month so that means I'm only going to get 40 trades in the whole month and I need 100 to get to my goal so then what do I do I start saying well I get a little desperate I say you know what maybe I'll take some B quality setups and in a hot Market be quality sets you might have you know 40 40 to 75 right and in the cold Market it's going to be less but by reducing my quality threshold I can now introduce more trades but let me present to you with this uh reality a quality setups for me produce generally about 70% accuracy I take these setups I'm right about 70% of the time I start reducing my quality threshold and trading B quality setups 60% I go down to cquality setups 50% I go down to lower than that and I could go down to anywhere from 30 to 50% accuracy right so now you get to a point where you're taking more trades but your accuracy is declining you're taking more losers and so instead of seeing this Equity curve like this you've reduced your quality threshold so now instead you're seeing something like this big losses right because you're taking these lower quality setups that in invariably result in big losses and this is such a myth that beginner Traders fall into that they think in order to achieve this goal I just need to take more trades and because there aren't a quality setups in this current market I'm going to reduce my quality threshold whereas a more seasoned Trader would say I'm not going to get here this month that's not going to happen that's gone but this is what's going to happen if I reduce my quality threshold to trading B and C quality setups I don't want to do that either instead I would rather be content with getting only to here but continuing to maintain these metrics right here of a quality setups because if I continue to trade right in here you know what I'm going to be able to maintain I'm going to maintain confidence I'm going to maintain that mindset of a winning Trader in trading psychology plays a really big role and we're going to talk about it a little bit more as we continue on with this uh class today but one of the things I want to touch on and I'll put up my whiteboard here again is that there's this phenomenon that I've noticed among Traders which we call spiraling so if you spiral what does that mean typically what this means is the trader find finds themselves in a negative feedback loop where they start taking losses and the losses get bigger and bigger and bigger and it usually begins with one surprise loss so number one is you know big unexpected loss and this is part of trading I'm not going to lie to you and tell you you won't have losses because we will we all do and you will as well if you start trading so you just have a big unexpected loss and it's unfortunate but these things happen but rather than having the emotional state of mind to say all right I'm just going to take a break I'm going to wait instead you start Revenge trading you desperately try to make back the loss you've just incurred and the reason that so many of us do this is because of the fear of loss it doesn't really make sense because we've just taken a loss so the last thing we should do is like double down on the next trade but in fact because we've just taken a big loss we often feel that we need to make back that loss as quickly as possible right that kind of erases it and so then you want to take a trade as quick as possible and since your emotion is so strong to help you no longer feel like a loser but to feel like a winner you're probably willing to reduce your quality threshold and take a b quality or C quality setup but what that typically results in is number two secondary losses so now you have secondary losses and You Begin a sort of stair stepping down where your Equity curve which at one time may have been looking uh you know quite nice has now taken one big step down and now another big step down so at this point this is where the emotion of desperation sets in so you have one loss and then you reduce your quality standard here and so what happens the result is your accuracy goes down so you go from being a 70% accurate Trader to being a 60% accurate Trader and now your number three losers average losers get bigger they get bigger because you've introduced more losers in total and you're trading from a point of emotional compromise or emotional hijack so then number four total losses get bigger right so total dollar amount negative gets bigger number five loss of confidence loss of confidence loss of account size and if you have a small account let's say you started at number one with a $5,000 account and by Point number five here you're down to a $2,500 account you've now lost 50% of your account in order to get back to 5,000 now you've got to grow your account by 100% And so what you've essentially done is now even if you were calm cool collected you've made it that much more difficult to grow your account this is all self-inflicted this type of spiral what I want to present to you is an alternative I want to put you instead of on the path to spiral on the path to a positive feedback loop so a positive feedback loop looks like this high accuracy trading leads to strong profit to loss ratio which means your average winners are bigger than your average losers which leads to confidence which leads to bigger size bigger Pro bigger uh bigger share size which leads to even higher profits which leads to even more confidence and this is where you have accounts that grow like this they start growing fast because now you're on a positive feedback loop it's the exact opposite of what occurs during a spiral this is the mindset of being a winner so I'm going to be honest in order to be a really good winner you might think it just means taking bigger size and being more aggressive and there's no question that those are parts of it but being a really good winner requires you to be an amazing loser to be really good at losing there's a saying that by being a good loser at trading that is perhaps the only path to success you have to got to be a great loser and what that means is that you're cutting your losses very quickly and when you take losses you don't allow yourself to fall victim to emotional hijack the challenge here is that that emotional hijack happens so quickly it creeps up on you and once you become truly compromised truly hijacked it's very hard to have the self-awareness the presence of Mind in that moment that you're starting to spiral usually the way you think of it is oh I just had one loss I'm going to take another trade real quick and then you're like three losses in you're like I'm just going to take one more trade and next thing you know you look back and you're like I just took 11 losses in a row what happened I I wasn't even thinking and the truth in that statement is that you were not thinking you not thinking with your analytical mind you are thinking from a pure state of fight or flight emotion because loss can trigger this big emotion the way I train people to be really good at losing is to practice trading in a simulated environment you practice in a simulator because when you lose in a simulator while it hurts your metrics of profitability it hurts your accuracy your profit loss ratio it hurts the timeline of when you'll be able to go live with real money it doesn't cost you actual dollars in that moment and so you start to get really good at exiting trades in the simulator based on the exit indicators that I'm going to share with you during this class you get so good at it it becomes second nature it becomes an instinct to sell when you see that exit indicator once you achieve the metrics of success in the simulator and you transition to real money the way we transition is by having you trade with such small size with real money that you desensitize yourself to the emotion that comes with loss so you start with 50 shares sometimes it's even smaller 10 shares then it's 50 then it's 100 then it's 200 500 1,000 2,000 4,000 6,000 20,000 right you eventually scale all the way up but there's no way you could start on day one with 10,000 shares of real money 20,000 shares it'd be impossible because the gains and losses the numbers would be so big so quickly it would be impossible that it doesn't trigger an emotional reaction I'm at a point now where I can trade with 10,000 20,000 40 50,000 shares and for the most part I'm cool as a cucumber I'm not feeling my heart pounding you know my Palms aren't sweating I have such a degree of uh confidence in my strategy and I've been able to desensitize myself to to losing $5,000 in you know a few minutes that I can take that risk but it takes time to scale up up to it I'll say right now I'm in a kind of unique position because having been making YouTube content here for o over a decade really over a decade I created this YouTube channel in 2013 so for over 10 years I've been uploading videos to YouTube I've got to really see the whole spectrum of different Traders commenting on my videos and of course at Warrior trading I see the whole spectrum of traders who are in our program who are learning how to trade now usually the traders who join a program who are going through a curriculum they're usually taking it more seriously than some of the people that are just watching on YouTube and are kind of like you know watch a couple episodes but they don't really sink in but one of the things that I can tell you is that I've been able to identify that there are two leading causes of failure when it comes to trading the first is that Traders don't have a strategy and I saw this a lot during uh I guess the covid pandemic where we had these Inc this incredible bull market I mean the market was unbelievable the pandemic was really an amazing time for a lot of traders in the stock market and it was a difficult time in other aspects of the world but for the market it was very strong of course we had Tesla we had all these large cap companies that were going higher and then we had the GameStop short squeeze and it was like these back-to- back incredible opportunities and so traders who came into that market with a strategy like myself did exceptionally well and I've got a number of members at Warrior trading that earned their million doll badges during that period of time because the market was just so high now I'll say as always my results aren't typical and neither are the results of some of those exceptional Traders but one of the things that I noticed is that a lot of people came in during the pandemic and they were kind of throwing darts you know at a at a dart board and they were getting lucky they were just buying a stock and it would go higher and they would make money and and it felt like a lot of people benefited from beginner's luck they were just at the right place at the right time and while beginners luck is wonderful it's certainly better than not having it at all I suppose there's also a curse to having beginners luck because you get a false sense of confidence you start to think that wow I'm I'm untouchable right everything I trade turns to goal I'm just I'm winning at everything but that luck runs out and that did run out for a lot of people in 2022 when the bare Market set in with interest rate hikes and then 2023 and 2024 was the realization for a lot of these traders that they really didn't have a viable strategy they didn't know what they were doing so the the first group of traders that fail fail because they don't have a strategy they don't really have a repeatable process of stock selection of where to buy of exit indicators it's not systemized so the results they produce are inconsistent you have to follow a very consistent process if you want to achieve consistent results and then the second group of Traders the second group of Traders lose not because they don't have a strategy they have a strategy but they lack the discipline to follow the rules of the strategy and this is one of the most frustrating things and this is actually something that I struggled with for a long time when I was getting started I I eventually got to a place where I had a strategy that was more or less working but I was My Own Worst Enemy because when I would have a red day I wasn't able to be a good loser I would turn a small loss into a snowball I would spiral and so this was what my Equity curve looked like when I was getting started I'd have a little bit of progress here and then one day boom I'd give back a month of progress and then I'd spend another month rebuilding I'd make a new high and then sure enough there it would come again and then I would get some progress get some progress get some progress and then boom there again I have a member at Warrior trading who's earned his $1.5 million badge and I did an interview with him and I asked him I said Jess what was your Turning Point can you identify a specific moment where you kind of went from being a struggling Trader to being consistent Trader and he said I didn't have a turning point I just slowly started to suck a little bit less and so what his Equity curve looked like was kind of like this but we'll sort of Zoom it out even bigger so we'd have a little bit of progress and then give it all back a little bit of progress give it all back and then what started to happen is he would make a little more progress before those days where he would give it all back or give a lot back so what happened where these red days would start to get a little bit more spread out and he got a little bit better at recognizing those red days and what was happening before he let them get hug like this so he's able to recognize okay this is a red day I've been here before I know what's going on and eventually his red days just got spaced out more and more and more they still happen it's not about not having red days but it's about how can I have this happen basically how can I reduce the frequency as much as possible and what I want to show you here from my own metrics is Discovery that I made in my trading and this is going to help you better understand position management so I went into my trading and I decided to compare winning days and losing days this is a nice report that you can look at and so what I noticed was that on my winning days if you added up all the winning days I've ever had I've got $16 million of profit with an average daily gain of $10,000 on my winning days that's all great and look at my accuracy 71% on winning days that means no doubt I'm trading a quality setups right for sure right this is great that everything about this looks good my average winning trade is 1,300 bucks my average losing trade is 1,000 everything about this looks great now let's look at this right here on my average losing days I lose $8,000 fortunately the loss there is smaller than on my average winner but this is something really critical on my losing days my accuracy is only 50% and what this tells you is that there is no doubt that on my losing days I deviate from my strategy historically I've tended to deviate from my strategy and stop trading AE equality sets I start trading lower quality setups this is a discovery that even after all of my years of trading 27 26 and a half years of trading experience trading knowledge comes to the point where I look at this report in a way I had never looked at it before and I looked at this right here my accuracy and then I asked myself how could I identify that today is going to be a losing day as early as possible so I stopped trading on that day and I realized that if on every single day I sit down on any given day I sit down and I start the day at zero right I'm not holding any positions from the previous day so I start each day at $0 so in way my highest risk is on trade number one because on trade number number one if it goes wrong I'm going to go into the negative but if on trade number one I immediately have $2,000 of profit then right away I've got a profit cushion and now I'm in the driver's seat and so I said what if I set a new rule for myself and this is a rule that I now follow that's not designed about making a lot of money it's about controlling downside risk I said what if I trade with a Max position of one4 of full size so whatever a full sizee position would be for you maybe it's a th shares then I'm going to trade with a Max of 250 shares until I have made 20 cents per share of profit which in the case uh here would be $50 and then once I'm up $50 then and only then will I start trading with my full size position and what this did for me was it helped me on days when the market was genuinely cold and there were not a lot of a quality setups it helped me avoid going deep into the red because it's true that on losing Days part of the reason I have lower accuracy is because even the a quality setups aren't working as well on a hot day a good Green Day they're working at the rate of 70% but perhaps on a colder day even in a quality setup accuracy might reduce to 65% or something like that it's not as bad as 50% the reason my accuracy dro down that low was because I started grasping for straws in a state of emotional compromise trying to find anything that was moving to avoid having to lock up a red day and so I realized if I trade with small size on those first few trades and I go red the amount that I'm red will be at the rate of only quarter size position so I won't be that deep in the red in fact I won't be R enough that I become emotionally compromised and I'll be able to recognize very quickly wait a second I just had three losses in a row for my first three trades today is not the day to push it let's keep myself at small size until I'm up 20 cents a share and if that just doesn't happen then I'm going to stop right here and I'm not going to allow myself to go further into the red since making this discovery and this was in um this was in June of uh this past year that I made this discovery we then we can look um let's look at year-to date so we'll look year-to date here So currently sitting at just under $800,000 of profit year to date with a million doll goal we look at my calendar here and since making that Discovery in the end of June it was right in here that I made the discovery I then went on to have it was about 45 consecutive green days in a row through all of July through all of August and through the first part of September and then here in September I've had two red uh days so far out of the whole month we look at the month of August total profit $171,000 we look at the month of July total profit $232,000 and each day I started with this approach right here this is designed to help me be a great loser that's all it is it it it does come at a sacrifice because I won't be able to make quite as much by starting each day with a quarter position but what I learned is it helps me reduce the red days and the draw down and that is worth more than the gains I might have made with a full-size position on that first or second trade so now we've talked about finding your purpose we've talked about the mindset of winning we've talked about how to be a great loser let's talk about how to start trading with no money I think this is something that um a lot of Traders face a lot of Traders have an interest in the market and they have no money for me when I was learning about the market during the com bubble of the late 1990s I was still in school so I didn't have a real money account in fact I did we had a school semester that was dedicated to learning about the stock market we partnered up in in groups so my partner was named Cooper he lived in in my town in Vermont and so he and I had basically a simulated trading account a pretend account and we were buying and selling different stocks and we were updating our Ledger it was all written every single day and I would this for me was such a pivotal moment because I got so inspired and so excited by the potential in the stock market so during that period of time I had $100 the first job that I ever had was as a newspaper boy in a small town in Vermont I was delivering a newspaper and I made $5 a week and no it was in N not in 1950 it was I was working below the minimum wage earning $5 a week to deliver these newspapers that's a dollar a day um Monday through Friday anyways delivering the newspaper and I I had $100 saved and so I went to my local stock broker office and you know it's Vermont you don't really have a stock broker but you have you have office of a financial advisor and I knocked on their door and I think actually called them but anyways I called them and I said I'd like to buy $100 of this penny stock that I've heard about and they told me well I'm sorry son we charge a commission $50 to buy $50 to sell come back when you've got more money and so that was it there was nothing I could do I didn't have enough money to actually go into the market but that didn't stop me from studying so I kept learning about the market I learned as much as I could I was asking people I was my mom had uh I guess like a 401k you know investment account so I was looking at what are the positions that you're holding I was looking at all of them I started tracking them I got really interested in the market and then in when I was in high school a couple years later I funded my first account with um a merit trade and I funded it with $1,000 now that was at that point my life savings it had grown a little bit I'd been mowing some Lawns and keeping myself busy so I now $1,000 I funded that account and you know what I did I bought shares of companies that I was familiar with I bought American ski comp no um sorry um American Electric Power I bought Exon Mobile fizer caterpillar you know some of these big companies that household names but the problem was over the course of three months which was summer break I was hoping that this account would grow that I would make more money in the stock market than I would have made mowing lawns that was not the case because I only had 1,000 bucks so 1,000 bucks invested in the market over the course of three 3 months the market grew like 3% I mean it didn't grow very much at all so my account was more or less unchanged and in those days you had to pay $10 to buy and $10 to sell so with the fees and the commissions I had nothing to show for it so that was my kind of attempt but once again I came up with this struggle of I don't have enough money but my problem there really wasn't money the problem was that I didn't know the right type of stocks I should be trading based on the amount of money I had now during that time I've been learning about Investors like Peter Lynch who ran the mellin fund at Fidelity I learned about Warren Buffett benjam Graham some of these big well-known investors some of them have books that you can read and I read some of them the problem was a lot of those books and a lot of the strategies that these big investors use are totally not applicable to someone with a th000 bucks someone that has basically no money investing in a company that might grow 10% or 12% a year it's going to take way too long to grow your account so what I ended up discovering was that there's a different place in the market depending on the amount of money you're coming into the market with and your appetite for risk and your aptitude to actively trade the market and so for those of you that are coming to the table with nothing you have no money and maybe you're saying Ross I've got $15 in a Robin Hood account what should I do to grow it what I would tell you right now is that you're not going to be able to likely grow a $15 account in any meaningful way but what that account is good for is something much more it's good for proof of concept because what you could do is you could trade with one share of maybe some stocks or you could even just use the simulated trading mode which is the better thing to do so you flip to the trading simulator pretend money you set your account let's say $11,000 or $3,000 you give yourself a little bit of a cushion and you start practicing the strategies that I'm going to be sharing with you as we continue on this episode and what you're going to find is that even with a relatively small account when you're trading the right stocks you can grow a small account and so the right way to get started is to prove through proof of concept in a simulated trading account that you're capable of growing it now during this time you continue doing other things that can earn you money whether it's driving Uber or door Dash or whatever the case is you do your side hustles you continue to make money and you save as much of that as you can so once you've proven that you have the skill and the strategy that is producing consistent results then at that point you're ready to deploy cash behind that strategy so I really believe that there is a path to learning even for people that have basically no money money it's not the path that's exactly the same as someone who comes in with a $50,000 or a $500,000 account but you know what let's let's play devil's advocate for a second let's talk about some of the inherent advantages that come with starting with basically nothing if you start with basically nothing or you have a very small account or you just a couple thousand dollars whatever it is there's an advantage in that that you might be overlooking and the advantage is that if you make a mistake you're going to hit rock bottom very quickly but when you hit rock bottom for a lot of people that will force them to take a look in the mirror and ask what am I doing right now that's really working and what am I doing that's continuing this downward spiral and so that's the opportunity to stop to go back to the drawing board and say wait a second what do I have to do differently now honestly even for me the discovery of this position management strategy was what came just after having a big loss in June I had a big loss and that forced me to take a look in the mirror and ask myself what am I doing right now what's working and what's not working and I'm getting frustrated and so that process by itself became the Catalyst for a discovery I'm in a position where even though the the forcing of that moment is not based on the sort of monetary like I lost that amount of money and I'm now desperate for me it's more about performance because I have so many people here on YouTube that are watching over my shoulder every single day and they're expecting me to per form that are expecting me to trade my strategy consistently and to follow the rules of my strategy so when I deviate for me it's very embarrassing from this sort of public perspective of there's so many people watching so that creates a little bit of a different pressure but it's still enough for me to take a look in the mirror and be like you're an idiot what are you doing you got to make a change you got to go back to performing really well because there's a lot of people counting on you there's a lot of people watching you every single day that expect you being at your top of your game top performance what's pressuring you to have that realization with a small account can be wow I just took a loss and I blew up my account the account's gone and so something as a word of caution for Traders who are coming into the market with a big account maybe high five figures or six figures or even seven figures be careful with that because sometimes having an account that big can encourage you to continue to take risks and risks and risks and start to spiral that account and Rock bottom is a long ways away so I would actually say that I think for every Trader no matter how much money you have the best way to start is to practice in a simulator and the best way to transition from the simulator to real money is by transitioning with small size and slowly increasing risk so in fact it puts us all on Level Playing Field no matter how much money you might have we all start exactly the same way and it's because I really think that that is the right way to learn now while it's possible to start trading with no money and I think it's actually advisable to start with a very small account the next thing I want to talk about is finding a mentor whose strategy you like now obviously you're tuning into this episode and you may find that you like the way I teach and you like the way I trade and if that's the case that's wonderful and I'm happy to continue to teach and for you to continue to learn from me whether it's on YouTube videos like this or by becoming a member of warrior trading either way is fine but you have to find a mentor whose strategy and level of risk relates to what where you're at for me if I made Warren Buffett my mentor and of course you don't have to know someone personally for them to be your Mentor for them to be someone you idolize and for that strategy to be what you aspire to but if I tried to be like Warren Buffett or I tried to be like some of these other big investors it would be really silly because their risk tolerance is completely different from mine and their account sizes are completely different from mine that's most notable so for them making 10% on a multi-billion dollar account is fantastic making 10% on a $5,000 account that's $500 for the whole year that's not going to pay for your time to spend every single day in front of the computer so if you're starting with a small account you need to learn from someone who's also trading in small accounts so one of the things that I prided myself in is that I essentially am perpetually keeping myself in small account status relatively speaking so when my account grows I take the money out I drop it back down my account grows again I take the money out I drop back down I start again and for me I'm always in this state of just trying to hit these base hits percentage Gainer 15 20% winner lock it up lock it up lock it up I want to just continually grow my account now right now I'm in the middle of a small account challenge I'm using thinker swim as my broker it's a cash only account I can only trade one trade per day and my goal is to grow this account to $225,000 as quickly as I can and I'm making really great progress I think I'm I'm probably a week or maybe two away from hitting 25 Grand and and the strategy that I trade in that account it's the exact same strategy that I trade when I'm just trading in my regular account which has six figures in it usually 100 $150,000 the only difference is that in the small account challenge I can only trade once per day usually that's the Restriction I can take one trade per day using the full balance and then I have to wait till the next day whereas in my big account I can trade 10 or 15 times or as I mean I could trade as much as I want each day as long long as there's still a quality setups at the end of the day you want to find a mentor whose strategy you like and who you feel that you can learn from for those of you guys that want to learn more about my strategy I'm actually going to put a link it's going to be pinned to the top of this uh top of the comments in this video right here down below and I'll also pin it to the top of the description that link is where you can download a set of PDFs that accompany this class right here there will be a trading plan that you can download which I'm going to be sharing with you as we continue on it'll also include my small account strategy my stock selection PDF and the micro pullback strategy PDF all of these downloads these are it's a free bundle of downloads they're PDFs you can download them you can print them out and what I want you to do is I want you to put them around your desk so some of these are going to have uh charts that you can pin up to your monitors or right next to your monitors others are stepbystep guides of this is the process of stock selection where I get in where I get out everything else so the more that you can Embrace fully immersing yourself in the strategy that other people are trading right now I think the better off you'll be that's my belief so if that strategy is mine then I want to encourage you to just get fully immersed and learn as much as you can about the way that I trade so now that you've um now that you understand finding a mentor is very important we're going to talk about stock selection so when we talk about stock selection um I'm going to break down for you the five pillars of stock selection so this is going to be five pillars right here and this is in the PDF that you guys can download so when you download it it could be a supplement to what I'm going to share with you right now now when we're talking about stock selection one of the things that um we're going to talk about is price percentage change today relative volume RV which I'll explain in a second news and Float these are the most number these are the five most important criteria that if a stock doesn't meet the criteria for each of these I'm about to share with you I will not trade it now there are some additional criteria that we'll talk about um over on this side which are I would say bonus uh criteria but if a stock doesn't meet it but it does meet these five I'll still probably trade it the bonus criteria just make that setup that that stock that much better now one of the things that I should mention um before we talk about stock selection is that when I was learning to trade I didn't have the benefit of having a mentor I was completely self-taught and that was because I was learning to trade during a time when day trading wasn't really that popular it was popular during the dot bubble of the 1990s and then after the Great Recession you know I mean after the bubble burst in the turn of the the century we didn't have a whole lot of interest in day trading there was a sort of big decrease and then it picked back up and then we had the Great recession right the financial crisis so all of a sudden people were not interested in trading but that was when I came into the market so I came in during a period where there weren't a lot of people that you could learn from in fact one of the best ways to learn in those days was to move to New York City and get a job working at a fund now funny enough I actually was living in New York City at this time and I applied to get a job working at a hedge fund because I wanted to get my foot in the door and you know what they said get out of here there's other people more qualified than you who have a degree in finance who are applying for this unpaid internship we're going to choose them first you're your qualifications don't line up for an unpaid internship well look working at a hedge fund you mean that you know there were people lining up and and I was not first in line so it's funny because you know I've ended up becoming a very successful Trader but I wasn't able to do it during that through that path My Hope was that I could learn by working with these people and that just wasn't an option today it's still probably as difficult to get a job at some of these big hedge funds and to be honest if you got a job at Citadel or one of these huge funds you'd probably be sort of pigeonholed into just you know crunching numbers as some analyst and you wouldn't really gain a lot of experience about what it's like to be a Trader you might make good money but you wouldn't be actively trading so finding a mentor for me wasn't really an option which is why I spent years of trial and error just sort of trying to figure out what worked and one of the things that I discovered through that period of time was that um one of the biggest gifts that I had from U my Early Education in the stock market was the importance of tracking all of your trades so I was and this was from the very beginning I tracked all of my trades in a written Ledger in the late 1990s that was the same in 2001 2002 when I was trading uh while I was in high school with a AER trade and so when I started trading again uh just after the Great Recession I was tracking every single trade and by tracking my trades and analyzing this data I've been able to develop some U to understand essentially where in the market I make the most money so if I gave you this data and I'm going to kind of walk you through it this right here pretty much describes exactly how the type of stocks that I make the most money on what you can see here is that my profit comes from lower price stocks this is all from stocks under uh $20 a share right there's the $20 cut off so between two and five between 5 and 10 and between 10 and 20 and this is millions of dollars of profit now the reason I like trading these lower price stocks is because they make big percentage moves I've seen $2 stocks go from $2 to $8 in one day so when you have a 400% move a 500% move a 6 7 800% move the I think the biggest percentage move I've ever seen was about 3,000 maybe 4,000% in one day so when you see a really big move like that that's a dream for a small account Trader because if you bought even a small position but the underlying asset goes up 3x or 4X you're going to have a huge winner now if you trade $50 $60 stocks they don't double in one day they they never they almost never go up 100% in one day but $3 stocks $4 stocks they'll go up 100% in one day and we see that all the time in fact if we look today um let's see well this is a um this is an interesting day we can look at our biggest percentage gainers today we've got um 75% 73% 62% 38% and the stock that I traded this morning which was onco here this one went up about 100% it peaked at about 100% um between yesterday and today so you could see here we started down here a little under 350 and we squeezed up to uh just over 650 so that was a really solid move and you don't see moves like that on higher price stocks it's just it's very uncommon I think the reality is most retail Traders like you and I Traders with relatively small accounts we end up gravitating towards low price stocks because we can a afford to buy more shares when you could buy more shares that 10% 15% 20% move in the underlying asset is a bigger uh a bigger profit so then number one for stock selection criteria we have to say price ideally is under 20 now when I'm doing my small account challenges I will sometimes drop that to under 10 I'll just say look it's a small account I've got a th000 bucks I can't trade anything that's $20 a share so I'll drop it down but for generally speaking regular trading account under $20 now one of the things that um is also worth noting is that I don't typically trade penny stocks and even stocks under $2 have only made up about 4% of the well less than 4% of the 13 milon of profit it's only $400,000 here so one of the things that I learned is that lower price stocks while you might think that that's even better because you could buy a 10-cent stock and sell it at 20 or 30 cents like my friend Ben did when I was in high school what I've actually learned is that penny stocks can be very difficult because when stocks are below $1 a share they actually trade down to the 1/1 100th of a penny and so what that means is if if you looked at a stock that's um 10 cents it's not trading 10 cents by 11 cents and if it goes up 10 cents a share it'll be at 20 cents it actually trades typically 10 cents well it looks more like this so 10 one for instance by 102 it could actually look like that trading down to the 1/100th of a penny so to go from 10 cents to 20 cents is 10 cents each one has 100 hundredths of a pen so that's actually 1,000 price increments to go from 10 cents to 20 cents whereas as soon as a stock trades over $1 they trade with a spread of one cent so to go from a dollar to A110 really is only 10 cents and it's only 10 price increments so typically we find stocks below a dollar are slower moving and then once they break a dollar that's when it gets more exciting the only problem is that there's a lot of Traders when a stock is below a dollar who will buy two three 400,000 share positions you buy 400,000 shares of a stock uh down here at you know 10 point 10 cents 01 and you're you're putting such a small amount of money in and you you know that you're risking well I got in here um the spread is is like this you're only risking a couple hundred bucks so all of a sudden that stock starts to move really fast it comes up here to a dollar A110 and you're going to put that sell order on the ask and so usually we'll end up seeing these massive sell orders on these low price stocks we'll talk about that a little bit more when we get into reading the tape but uh for that reason I found that the lower price stocks and the stocks that start below a dollar tend to be a little bit tricky so in general I would say definitely under 20 and sweet spot for me is going to be between two and 20 so over $2 less than 20 That's The Sweet Spot all right now let's talk about price change this is criteria number two again all these criteria are also documented in my uh small account strategy PDF and the stock selection PDF which you guys can download with the links that are pinned at the top of the comments and in the description so now let's look at instrument So based on percentage change what we're going to do we're going to scroll this down here and I'm going to show you that 99% of my profit right here comes from stocks that are up at least 10% if a stock is not does not have the potential to go up 10% from my entry I should not even trade it and so that means when I'm looking at a chart I'm pulling up the chart and I'm saying hm all right let's just pull up an example right here of um of onco so I pull this up right here as it's starting to move higher and in this area we got some really nice trades and I was asking myself does this have the potential to go up 50 cents or a dollar a share right from 5 to 550 550 to 6 this definitely has a potential to go up 50 cents a share it's it's and it clearly did this is the type of stock that can move quickly uh but if we pulled up something like um I don't know Bank of America we'll just pull up Bank of America for a second so Bank of America currently priced at $39 a share could this go up 10% there's not a chance this isn't this wouldn't move 10% I mean it would have to have incredible news it would have to go from here all the way up to here what's going to drive it to do that I mean like I said amazing absolutely incredible news but it's unlikely it doesn't happen and you know what that's okay because there's stocks in the market like this that are great for investors like Warren Buffett who don't want billion dooll positions going up or down 10% or more in a single day but then there's Traders like you and I who need to grow small accounts and we're not going to do it trading Bank of America we need to trade the stuff that's moving the stuff that's volatile so this stock here CN that goes from 65 up to 90 up to a125 $130 that's that's more interesting now it's a little on the cheaper side of my price range um cut off but it's still worth trading uh perhaps uh I didn't trade it today I I actually still thought it was a little too cheap but nonetheless that's the type of um rate of change and the type of potential that you want to see so number two we want stocks that are up 10% minimum not not only they're up 10% but have the potential to go another 10% number three is RV this stands for relative volume so the amount of volume a stock has is relative you might say oh there's a stock today that has a lot of volume and I might say oh okay a lot of volume what what does that mean it's got a million shares of volume and I'd say well it's not really a lot of volume there's a lot of stocks today that probably well once again let's just pull up the scans and and take a peek how many shares of volume does CNE have 208 million shares of volume right onco has 32 million shares of volume so that's pretty good volume a million shares that doesn't sound like a lot of volume but it's all relative relative to what's normal for that individual stock so the term relative volume is comparing today's volume relative to what's normal for that stock and so it's calculated as a ra IO so if the stock normally trades with 100,000 shares of volume and today it has 500,000 shares of volume it's got a ratio of five it's a relative volume of five it's five times higher than average if it's got a million shares of volume it's 10 times higher than average if it's got 10 million shares of volume it's a 100 times higher than average or whatever the case is it it just continues to go higher and so if we looked at these stocks we'll actually see right here on the scanners we have a measurement a column called relative volume rate and this uh top stock has a relative volume rate of 16 the second one CNY has a relative volume rate of seven the one that I traded has a relative volume rate of 273 this one has 21 this one here has relative volume rate of 1,510 that means the volume today is so so so much higher than is average and normal for the stock in fact today you could see it's got over 5 million shares of volume when yesterday it had only six th000 shares how does a stock go from having 6,000 shares of volume to 5 million shares of volume well number four news we like to see that these stocks have a catalyst so a news catalyst is what's driving the momentum the reason these stocks are going higher isn't for no reason at all I mean of course there are times where stocks go up because of Reddit and social media or because Warren Buffett takes a stake or something like that but generally the big movers they go up because they have a news Catalyst they have a reason to move higher and so what we're looking for is that Catalyst now some Traders say if I could just be the first one to find breaking news I could make so much money and I'm going to say that's not true because I tried the same thing I thought the same thing I thought if I could just be the first one to get the breaking news I'd be rich and what I learned is that if you're the first person to get breaking news you don't know what to do with it you don't know if the news is good or bad and some news sounds good but the market reacts poorly which is really confusing you might have a headline where the company says they've just signed a contract with the Department of Defense for $30 million a year and the stock plummets and you're like how is this possible this seems like a great headline but then you find out that a month ago they said they were in negotiation to sign a contract for $300 million O So signed at 30 is a lot less than potential negotiation at 300 million right so it's context so unless you're able to put every news headline in context you won't be able to really know what to do and there's no way that you you would be able it's not a reasonable expectation that you could put every headline in context so this is what I learned what I realized was that being the first one to get breaking news is not helpful because I don't know what to do with it being the first one to see a stock squeezing up right now now that's something I can work with and so that's how I came to develop these scanners right here this software that you're at I actually have a development team that's been working for me since 2017 building out this software and we it's called day trade Dash and we designed it to be the ultimate dashboard for active Traders so we've got thousands of traders who are using this software every single day and they're scanning the market using these stock scanners so what happens is the second a stock starts popping up it sends an audio alert and this Visual Alert right here and it tells you all about the stock so this is the stock this is the time this is the ticker this is the price this is the amount of volume it has this is the float which we'll talk about in a second that's the relative volume so it's only 2.5 which is good but not not phenomenal it's up 30% on the day so all of a sudden I say all right let me take a look at this stock now in full disclosure it's 2 pm on a Friday so this is a great time to be teaching a class it's not a great time to be trading because most companies don't put out great news on Friday afternoon only for it to get forgotten and you know be buried by Monday morning most companies put out great news early in the week Monday Tuesday Wednesday and then it slows down towards the end of the week so this as I check the news headline right here does not have a clear catalyst so why did it Spike up right here well it's got light volume it could have just been that some Trader out there decided to buy a position or some short seller decided to sell a position and that was enough to to pop it up a little bit but probably not enough to sustain the move because there's no real uh Catalyst or reason for it to be pushing significantly higher so in this case it's fairly easy to do quick due diligence and say N I looked at it nah I don't think it's going to work so when we're talking about stock selection once we understand our five criteria the next step is performing this fundamental analysis right here which we're going to get into in just a moment but first let's look at number five number five is the float the float is the number of shares available to trade and I prefer trading stocks with the float of under 20 million shares but lower is better 1 million share float no problem 2 million share flow that's fine 10 million good 15 18 19 million getting a little high above 20 nah probably not going to be as interesting now GameStop in 2021 had a 36 million share flip so it was a little higher but that was fine and there are exceptions but generally under 20 million on a day-to-day basis is going to work better and if we look at the stock that I traded today onco the float on onco um it's actually 23 million shares so it's it's just a little bit higher but it's right at the cusp and so in this case it had some good momentum and it really was um it was pretty clean this morning didn't end up holding up for the rest of the day but it was clean yesterday and it was clean this morning as well okay so the floats the number of shares available to trade I prefer to see a float of under 20 million shares and when it comes to relative volume by the way I like to see a minimum ratio of five so now I can do is I can take these five criteria right here I can program them into this stock scanner and let this scanner search the market for all of the stocks that meet these five criteria and then tell me the second of stock that meets these criteria starts popping up the second of stock that meets that setup is up 5% or 10% now one of the things that I'll do is I will set the filters a little looser to cast a wider net the the reason I want to cast a wider net is because I want to see what's moving I'd like to catch kind of all the fish and throw some back and say nah I don't like that I don't like that then to just be sitting there with nothing in my filter at all wondering is the filter broken or is the market just really slow is there something else happening somewhere I can't really tell so it's helpful to cast a slightly wider net and then manually filter from there there are some traders that have said well geez Ross why don't you just take this and you know add a few more criteria and try to just create a an algorithm that just trades this for you and what I have found is that while it's true that there is there are quantitative um trading firms that just trade based on highfrequency trading algorithms they are employing some of the smartest people in the world to try to crack the code to basically print money from the stock market without having to do any work you just turn on press the button print money and end of the day you're done and it's a lot easier said than done to achieve that type of consistency in fact um a lot of them end up hiring successful traders who are able to help sort of Coach them on how to make it work correctly uh to the point that you you kind of might as well be trading I don't have the ability as one person to I I can't compete against those hedge funds with trying to create that type of algorithm and generally those types of firms because they're blindly buying and selling based on the algorithm they're not going to trade the type of stocks that can go up or down 50% in one day it's just too much risk but when you're trading in a small account this is exactly what I think you want to be trading so I trade a strategy that has to be executed manually but I think is perfect for small accounts and for small account traders who like me wouldn't be able to employ some you know MIT graduate to create some algorithm for trading the market uh now one thing that I said we're going to get into fundamental analysis but I wanted to touch on a couple of bonus criteria here so these are some of the bonus criteria for um for stock selection so number one a recent IPO recent IPOs recent reverse split a reverse split has the effect of reducing the number of shares available to trade what happens is these company's IPO so first we'll start with the IPO so recent IPOs can be strong because a company begins trading on day one sometimes moves up a little bit and then usually moves down and then what often happens is you get this squeeze through new highs and you go to alltime highs and this has been true of almost every big IPO you'll at Big IPOs like Facebook um Alibaba Airbnb they have their initial pop they pull back and then they have this rip back up so I like trading if I see a stock that meets all of these criteria and I check and I see it's a recent IPO I'm going to be like bonus that's even better if I see it's a recent reverse split a reverse split occurs when a company IPOs they go down they go up and then they start just selling off they go lower and lower and lower they get down to like 10 cents a share it's really bad and in order to maintain compliance with the exchange they actually can't be below a dollar a share you can't be a NASDAQ listed company and stay below a dollar a share they'll delist you to the OTC market which is where most of the penny stocks are so what they'll do is they'll do a reverse stock split right here of 10 to one or let's say they do 20 to1 so they do 20 to1 the next day the stocks would be at $2 a share oops $2 a share and the number of shares available to trade when they ipoed let's say they sold 10 million shares they told sold 10 million shares on the IPO so if you owned all 10 million and it drops down to 10 cents a share you're sad the next day it goes to $2 and you're like amazing and then you realize wait a second where did my 10 million shares go it says I only owe own 500,000 shares right the number of shares divided by the ratio so the price goes up the shares go down and so what this means is now this company has a float of 500,000 shares which means every time a company does a reverse split the float drops down which means it could go from 20 million to a million and all of a sudden now the stock fits within our stock selection criteria specifically because of the recent reverse split so it's a stock we wouldn't have typically traded had they not done the split but it's just now coming into our range of having potential number two all time or number three alltime highs when a stock is at alltime highs we call it Blue Sky there's nothing above it no resistance above it that can be a particularly strong setup for continuation and strong upward momentum so recent IPOs recent reverse split um all-time highs these are three important ones yesterday volume less than 100,000 shares the interesting thing here is if yesterday's volume was less than 100,000 shares then when today has big volume like a million shares you're immediately going to have super high relative volume and higher relative volume usually leads to bigger percentage moves so these are four bonus criteria there are some others but this is a good a good starting point all right so let's go back into the screen share here I'm going to pull up my slide deck and we're going to talk now about fundamental analysis so my workflow each day step one for my strategy is to find a stock that's moving I do that easily by pulling up my scanners and looking at each one of the stocks that's on the scanners and asking myself how closely it meets my five criteria of stock selection Andor some of the bonus criteria generally each day my biggest winners come from the top three to four percentage gainers in the market so I already know just because these are the top five that I'm most likely to find success trading one of these so now I just have to figure out which one I like the most this one has a 71 million share float it's a little too high these ones are a little cheaper um so onco was sort of The Logical Choice here earlier especially when it was up more like 90% because at that point it was in the number one leading percentage Gainer spot so we have a stock let's say like onco that pops up on our scanners and then trying to figure out okay why is it that this stock is moving higher right what's the catalyst so I know it's important that we have a fundamental Catalyst and this gets into doing some due diligence so I pull up the stock onco and this is where we have our news window right here so this news window is telling us basically what that news headline is so I can see right here this was um yesterday at 4:06 p.m. they had this headline that came out so this headline comes out we'll scroll down and it looks like this is an acquisition so this this filing a schedule 13d is an acquisition which means this company has reported a acquisition of 2.69 million shares which is that's that's a I mean it's a significant number of shares to purchase on a stock that has a relatively small number of shares available to trade so so when we see something like that that tells us all right there's something that this company likes about this stock right it it's a vote of confidence a big vote of confidence now if this comp if this um was a well-known activist in investor like like Warren Buffett or something like that um then people would probably treat it with even more weight because it's sort of a little known investor um from Switzerland you know maybe take it with a little bit of a grain of salt but nonetheless that was enough for that that news headline right there at 4 p.m. resulted in this immediately spiking up so we immediately went from $3 up to $445 and you just have to recognize that this company is just this firm has just taken a huge position in the company and so clearly we we sort of have to think what do they know that regular Traders don't know what what do they know that makes them think this is such a good value at this price and we can only speculate but we have to assume they know something and so for that reason alone other Traders say well if they seem to know something they must know a lot more than I do so I'm going to go ahead and jump right into it and next thing you know the stock start squeezing up so there's a couple of different filings that I will pay attention to if we go over to this website called bam SEC we can actually pull up a stock like onco and we can look at all of the different filings so when we're doing fundamental analysis typically I keep my my fundamental analysis fairly limited so fundamental analysis the reason I keep my fundamental analysis limited is because as an active day trader fundamentals matter in the long run but in the short run what drives the momentum typically is emotion the sentiment people get super excited they think this stock has a potential to make this massive move and they buy and they just think it's going to go higher and higher and higher so people just get so excited so during those periods of time when people are really exuberant the price can become very disconnected from what some analysts might argue is the true value of the company this was true with GameStop there was a time in 200 uh 20 when Gamestop was generating $5 billion of Revenue but the entire company was only valued at $250 million you could have bought the entire company for $250 million and a company is doing $5 billion a year in Revenue now the problem is while it was doing $5 billion a year in Revenue uh it was actually losing money so the fact that it was losing money was of course what gave it its uh relatively poor valuation but nonetheless some were arguing that it was worth based on Book value alone based on the value of the assets they held more than 250 million and in fact they were right so the way we can learn a little bit more about the financial condition of a company is through the art of fundamental analysis and that means actually reading through some of these uh corporate filings that these companies make as part of the regulatory requirements to be listed on the NASDAQ or the New York Stock Exchange these companies have to report uh quarterly Financial results so they're being very transparent about displaying their balance sheet their profit loss and you can choose to read all of these in the statements so the statements that we look at are 10 uh 10 Q 10 Q 10K a uh the Q is for the quarterly the K is for the annual we do look at 13 G filings um 13 um D filings we look at um form form four filings and let's see um I guess those are probably oh and then we also look at um shelf registrations S1 and um S3 filings so those are the ones that we look at most commonly so in the case of uh in the case of onco right here we had the filing that came out let's see it was um what was it uh the 13d form this was for the um the large stake that someone had taken the 13d filing and then here we can see our 10q so this is our latest quarterly earnings statement and what I typically do when I'm first pulling up a stock I don't go into the filings at all I first pull up a stock onco and when I was first trading it this morning I'm trading it in this area I'm not looking up the filings I'm not pulling them up I'm going to show you how to do it because I think it's useful to know that information but I actually don't do it for most trades when I'm first trading a stock when I get to the point of pulling up the 10 um the 10 Q looking at the the quarterly filings I'm doing that because I'm starting to wonder is this stock going to continue to move higher today it's already up 50% it's going to go 100 200 300% or is this a stock that has a risk of crashing and that's a question I have to ask once the stock gets really inflated and starts moving higher and higher in value if it gets to a certain point it's just like how much higher can this go before it rolls over and so when I look at the quarterly filings um you can read a lot about the companies in these filings but one of the things that I look at is U their Consolidated balance sheet so the Consolidated balance sheet oops right here is going to tell us um how much cash they have on file uh basically what what is the amount of cash they have on off on hand so I look at Cash which in this case is $930,000 and then you can look at their total um current assets including prepaid expenses accounts receivable which is $ 100,000 and then prepaid expenses is $773,000 and inventory 160 so you've got about $2 million of assets right here and they do have some other assets um in this area some prepaid expenses long term property and Equipment they're not going to be able to sell these um in order to You Know cover cash flow Goodwill and intangible assets these are big numbers that are often on a balance sheet but that can't really be easily converted into Cash uh that's sort of the Goodwill that the the brand name I'm not familiar with this brand so I'm not sure that is really fair to say has $36 million of Goodwill but anyways we can then look at the liabilities which is um any loans that they have uh debts obligations that they have and of course the um assets and then the liabilities match out and then we look down at their revenue and the reason I look at their revenue is I ask myself how much money is this company making is it making a lot of money do they have a good net profit and in fact they have a net loss of 14.3 million for the three months that ended wait a second June 30th 2024 for the three months that ended June 30th 2023 they lost 6.8 million and then th this is for the six-month period that ended they lost 25 million this is a lot of money to be losing what in the world is going on here so what I can tell you is that when I see that usually what I end up concluding is that all right this is um so we and we can read the statements here we're going to talk about um some risk factors so these forward-looking statements include are not limited to St uh um let's see where do we have so one of the things um here with this um formally known as Bluewater biotech it's a commercial stage biotech company focused on Research development and commercialization of innovative solutions for men's health and oncology all right um historically the company's Focus was research and development the problem with companies that are primarily doing reset research and development is that they do not produce profit unless they have a drug that ends up um becoming very successful and so during the research and development phase investors are essentially financing the company continue to research by purchasing their stock and hoping that this company eventually comes out with something that's fantastic and is able to use that to sell to a big pharmaceutical company and then all of a sudden the company has a real um chance at long-term profitability but unless they can license out some treatment or some drug or sell it they really don't stand a lot of a CH lot really any chance long term so this is very common so the result here is that we have a company that is spending a lot of money and only has $2 million on the balance sheet in cash uh and current assets so what that means is that this is a company that is probably going to need to raise money how would a small company like this raise money they would raise money by selling more shares and this is a form of delusion if you've followed GameStop at all something that you might know is that GameStop as a company has been selling a lot of shares they've actually sold nearly $5 billion worth of shares it's kind of like an ability to just print money you say hey you want to buy a million shares for $5 that's five million bucks you want to buy a million it's another 5 million bucks boom boom boom boom boom they raise $50 million and that's what a lot of these small companies do now Gam stop has done it on really a almost unprecedented scale they've sold $5 billion worth of stock and that's given them a huge um cash Supply that they can now use that cash Supply to do a lot of different things they could start becoming sort of the birkshire hathway where they start investing in different companies and there could be a point where GameStop makes more money on that 5 billion well it's actually already happening because they're operating at a loss for their regular operations but the billion is generating interest so they're already making more money just in fact they would be more profitable company right now if they shut down everything they're currently doing and just earn the interest on their cash which is kind of crazy but with a smaller company like this they're not going to be able to sell5 billion worth of stock there's not enough people that would buy it but they could sell a couple million dollars worth of stock now in order for a company to sell stock on the open market they have to have filed what's called a shelf registration uh through either the um initial prospectus or through the secondary offering to which puts all shareholders on notice that this is a company that intends to raise Capital so we have a shelf registration here for this company um and they're good for three years when they file a shelf and this will allow them to raise up to $100 million of stock right here so they could sell up to $100 million of stock now since this stock is currently trading at $5 a share gosh to raise $100 million it to sell like 20 million shares given that the current float is 23 million to sell 20 million shares would dilute all of the existing shareholders you know by by double it would it doubles the float and so the problem with printing more shares is it decreases the value of every current share that's out there and this is this is a problem now this is sort of a business of confidence where if people continue to be confident in the future of the company as Gamestop shareholders are they'll continue to buy the stock even though the company is actively selling to you uh with a lot of these smaller companies you know the market is not quite as favorable to continue to just sell sell sell shares at certain point people stop buying and if the stock goes below a dollar a share remember they'll no longer be in compliance with NASDAQ or NY New York Stock Exchange which would force the company to do a reverse stock split now companies and and this is one of them that did a recent reverse stock split you could see right on the chart that s means they did recent reverse stock split and let's see if they've done any others um it doesn't look like they have but there are other companies um oh it's hard to think of one right off the top of my head but um there's other companies out there that have done uh look at oh my gosh look at the number of stock splits this one's done stock split stock split stock split stock split they keep having to do these stock splits to remain in compliance and it's allowed the stock to almost just perpet drop it can just go lower and lower and lower in fact if you pull back the chart and look at the all-time highs every time the stock goes below a dollar they do a stock split which pushes the stock above a dollar and then it drops back down to a dollar and then they do a stock split and then it goes back to a dollar and then they do it again and again and again it almost seems like a cheat code to be able to just perpetually allow your stock to keep dropping and in a sense it is uh it's a little bit of an unfair mechanism in the market um this is a particularly notorious stock it's it's almost Unthinkable when you look at um as we scroll up here it's showing that the price was1 billion dollar and that's because every time they do a split it sort of moves the chart backwards right so the way this works is if the stock start at 10 and then it goes down to 10 cents and they do a 20 to one stock split it goes up to $2 but then they've got to multiply this by 20 so then they're like 10 * 20 is 200 so to keep the chart consistent it still looks like that it just the starting point goes Higher by that multiple so it's 200 then they do another you know let's say they'd have to do 100 to one split so then it goes up to 20,000 right now it's up at 20,000 and then they do another one and now it's 400,000 it's so so on and so forth and it just makes so the price just keeps going looks like it goes Higher and Higher and what it essentially does is makes it so the stocks can just continue to go lower and lower now Regulators don't love this and they might change that at some point but uh in the interim we have the stock um here onco and so as I sat down this morning and took my first trades on it I wasn't worried about whether not it had a shelf what I knew in the first moments was that this stock met all five C criteria of stock selection it had a catalyst which was the 13 uh defiling and it was moving higher so I was like this is a stock that I'm interested in there's some opportunity in this and over the course of the next five 10 minutes there's I I have a high degree of conviction that this is going to go higher but once we got a little further into the open or or into the trading day I started asking myself is this going to go to 78910 a share and that's when I said well I got to take a look at the filings and then once I see their cash position and their profit loss statement that's where I start to get a little bit concerned and then I see this right here which came out just a couple days ago notice of delisting a notice of delisting and a failure to maintain um compliance with the stock exchange which was their why they had to do the reverse split so you know unfortunately this is going to be true with a lot of these small cap companies but what's also true is that um we can have these companies that have been beaten up for a long time as this one was this was a stock that's been beaten up for a long time it's done a couple of reverse splits as you can see here here and here and then goes in one day from $3 to nearly $24 a share small account Trader loves a move like that this was absolutely phenomenal so we look at this on a f minute chart and we're going to get into technical analysis in a moment but we see something like this and it doesn't get much better than that basically this stock started moving higher and it just kept going higher and higher and higher and higher from 5 to 6 7 to 8 to 9 to 10 to 15 to 20 to 23 I mean it's just unbelievable there was another one uh I think it was the next day prtg they made a equally impressive move uh we'll back this one up and usually I find that in trading uh when it rains it pours in both the good sense and the bad sense when one stock is hot we'll see dozens of others that are hot as well but when things get cold it get sort of cold across the board so this one went from 4 to 20 and then pulls back to 10 and goes all the way back up to $24 a share just unbelievable momentum I mean we just love to see stuff like that but now long term prtg it's another biotech company right so the price is now after that big move it's been pulling back and I was wondering are we going to see news that the company has been selling shares and we we may see that we may not in that particular case but it's certainly possible that we will so as an active day trader you could get away with doing zero fundament analysis if I'm going to be honest you really could uh if even if you just said oh there's news today there's a fresh Catalyst and that's and you didn't even read the Catalyst you would probably be fine but I think you'll definitely be better off if you can understand some of the basics of fundamental analysis and understand how this relationship of Supply demand works and why some of these companies are so inclined to sell shares onto the open market because as they sell these shares through these offerings it can just create a tremendous amount of selling and we certainly saw that with GameStop so it's good to be able to understand it so now if we jump back over to our slide deck here um I we've talked now about fundamental analysis and I want to get into technical analysis U understanding stock selection was a really big one and now that you guys know that I think you're in a really good spot because stock selection is what I would call your first level of risk management I mean well your first level is to train a simulator and then the second thing is to choose the strongest stocks each day as long as you're choosing strong stocks you're going to be doing a lot better than the majority of Traders out there who are trading the wrong stocks understanding fun fundamental analysis important but to a lesser extent and now technical analysis is very important so we're going to spend some time going over technical analysis and that's going to take us right into entry indicators and exit indicators so when it comes to technical analysis what active Traders use are Candlestick charts and that's what you've been seeing right here these are Candlestick charts which the Candlestick chart itself was created in Japan uh actually hundreds of years ago it was created for uh tracking the price changes of rice Futures and when you look at these charts um for beginner Traders it could be a little bit confusing but the way it works is that each one of these charts and there's four of them here represent different periods of time this is a 10-second chart here a one minute chart here a five minute chart here and a daily chart here and so each one of the candles represents the amount of time for that chart so if this is a 10-second chart you can see I could choose any different duration of time then every candle here is for 10 seconds of time so every 10 seconds a new candle will open now this isn't a stock that's moving a whole lot right now but if we looked at Apple or the S&P 500 or something like that where it's actively moving you'll see that these candles are constantly opening and closing so each one of these Candlestick shapes represents 10 seconds of time on the 10sec chart on the one minute chart each Candlestick represents one minute of time on the five minute chart each Candlestick represents 5 minutes of time and on the daily chart each candle represents one day of time the anatomy of a Candlestick and this is going to be um now technical analysis is a Candlestick has four pieces of information the open the close the high and the low so open close high and low we always connect the body of the open and the close and we draw a line to the top and the bottom of the high and the low and so that creates a candle now in this case this would actually be a green candle where the price moved up and we know that because it's we color it green and the open is at the bottom and the close close is at the top in the case of a red candle the open is at the top the close is at the bottom right here oops make that level right there and then the high and the low are the same so we call the center the body of a candle so we've got the body and then these are the candle wicks right up here so those are the Wicks just like a real candle you've got an upper candle wick and and then this candle has a lower candle it's Candle that burns at both both ends as it turns out so this is the open that's the close that's the low and that's the high now this is the basis of the language of the financial markets and what I'll tell you is that what I'm going to teach are the building blocks of reading this language just like learning to read the English language or any language for that matter first we're going to start with the alphabet so there are several key alphabet letters so to speak in the language of learning how to read candlesticks and so if we talk about these um individual Candlestick shapes that make up the alphabet I'm going to draw them for you and you're going to learn what they mean so this is our first letter so to speak this is called a longbody candle it's a big green candle right here and this is a candle that communicates a message the open is at the bottom the Clos is at the top it didn't make a high it closed at the High and it opened at the low this is a very strong plus plus plus very bullish candle bullish means strong to the buy side then we have the exact opposite which is a red candle where it opened at the top and went all the way down this is a very negative candle the most negative candle you could possibly get and this is a longbody candle then we have um sort of small Body candles like this which are less decisive right this is showing some some weakness this is showing some strength but clearly the sentiment is much stronger on a large candle now the next candle that I want to show you is called a candle of indecision it looks like that now it could be red or it could be green because the open and the Clos are usually more or less at the same price but this is indecisive because the price moves up it moves down and then it closes the same place it opened this is another variation of that same candle it's called a spinning top this one was called a dogee by the way a dogee and a spinning top they're both showing a degree of indecisiveness this is called a long legged dogee it's the same as a dogee except the upper and lower candle wicks are larger this is called a gravestone dogee this is called a dragonfly dogee and this candle here is called a hanging man do a couple more go to this side this so we did the man this candle here is called a shooting star so let me give you some context for some of these candles so let's say the price is moving higher longbody candle longbody candle what does this communicate strong sentiment right people are very bullish small body candle small body candle what's happening the trend is getting exhausted dogee there's indecision long body red candle they're selling small body red candle indecision dogee indecision candle moving back up now the trend is reversing long body candle longbody candle and then once again Trend gets exhausted the candles get smaller and a dogee so we often find that dois are marking tops and bottoms as we have indecision in the trading and while a doe communicates indecision let's imagine that we substitute this candle we take the dogee out and let's imagine instead we put in a a shooting star like this what would that communicate that communicates a message even stronger than a dogee it shows that not only is there indecision the reversal has already begun because the candle's gone red the stock squeezed up and then dropped back down when we see a stock that's in an uptrend and we see a large topping tail like this these topping tails are bearish they're weak they showed that while the price squeezed up sellers pulled it back down on the flip side when we see a bottoming tail like this this is actually strength because it shows the price sold off but buyers bought it back up what if in fact instead there we substitute that candle out for a hanging man right down here in this case at the bottom of a trend we would actually call this a hammer we would say that this candle is hammering out the base if we saw that same candle at the top of an uptrend that's actually where we would call it a hang in man it shows a little bit of weakness up here because that bearish sort of that drop indicates some weakness now they ask the price move back up but it's still not great to see that bottoming tail we'd rather not see it at all so a little bit of weakness up there but down here that communicates a little bit of a different message so we're able to read sentiment based on the shape of the candle and so what we end up having are multi Candlestick patterns where all of these candles begin telling a story in this case let's say right here it's 7 a.m. boom and all of a sudden out of nowhere the stock was going sideways and then boom spikes up 10% so the second it spikes up 10% we're going to see it hitting our scanners right it's going to be on our high of day momentum scanner as the stock is going up 10% especially if this stock of course already meets our five criteria of stock selection and again if you guys haven't already downloaded the PDF resources those are pinned on the top of the comments and Linked In the description so you download all of those and that's going to put documentation behind everything that I'm sharing with you so far here today so we first get that Spike up it hits the scanners we're then pulling up the chart and we're saying all right this stock is moving higher I like it first huge green candle really bullish sentiment another big green candle wow sentiment so strong another green candle where should I buy can I buy it in here gosh it I can't I can't buy it in here because it's too extended it's just going higher and higher and high higher so it ends up topping out here and then here and then we finally get that that reversal now let's say this reversal is just that small dogey right here it pulls back we have a little bit of profit taking people sell who maybe were in earlier and then as it pulls back right here this is the area where I get really excited the reason is what I like to do is I like to buy the first pullback on a strong stock when you have a stock that has breaking news so this is a stock that's got breaking news that came out at 7: a.m. let's say it's a biotech company they've got uh clinical trials that were phenomenal really good clinical trials all right so now the stock is squeezing up that first pullback is going to get bought up that first pullback gets bought up because there's so many other traders that see this opportunity to buy a strong stock but you don't want to just buy a strong stock at the very top you've got to be able to manage risk and so the way we manage risk is by waiting for that pullback and as it pulls back we see how low does it go now let's say for instance this pulls back and it just keeps going lower we just have more and more red candles comes all the way back down right well in that case we don't take a trade and it's easy to say that because of course I just drew that but there's no entry indicator so what is the entry indicator that we look for well what I'm looking for and I kind of think of this as a tide that's coming in so we get a first wave up and then it pulls back and then the next wave is going to push push even higher and it's going to pull back and then the next one's going to push even higher than that and so I want to ride the momentum momentum trading means looking for a trend and jumping on that Trend as early as possible so in this case what I'm going to look for is the first indicator that this trend which has been going up but pulling back is going to reverse for the next leg higher so how would I know it's going to reverse well I could look at some of these candles that I'm familiar with and I could ask which of these indicate there's some buying of course any candle with a bottoming tail would indicate that although there was selling the buyers came back in right and the second thing is if we have a pattern of four or five green candles in a row and then three or four red candles the first candle that simply closes green is probably significant the only problem with that is if you wait for that candle to close green what if it goes like this shoot now you're getting in with back up here that's too high so what I actually like to do is I look at each of these candles as they're coming down I wait to see if there's one that has a little bottoming tail perhaps like this and then the next candle after that bottoming Tail as soon as this next candle makes a new high right there all it has to do is actually make a new high which is breaking the high of that candle so let's say the high of that candle is $730 when this hits 730 and then I see orders in green going through on the the level two I'm buying right there at 730 and boom I'm looking for that squeeze all the way back to the highs so now my Max loss on this trade is the difference between my entry and the low of this pullback right here so let's say the low of this pullback is 710 so now I'm risking 20 cents all right so how much should I stand to profit on this trade in order to justify the risk I would say I'd like to be able to double whatever I'm risking so I'd like my profit potential to be 40 cents now there are times where you'll see a chart like this and you look at it and you'll think well you know this is only let's say 7:35 I know that doesn't make sense based on the scale of chart but let's just say h it's only 5 cents of profit I can't justify the risk and then you don't take the trade but if you look at this and and up here is you know $8 or something like that then you've got 70 cents and that's a trade I'm definitely going to take every single day now remember just because I see that awesome pattern doesn't mean I'm going to take the trade the stock has to meet my five criteria of stock selection if it doesn't doesn't matter how good the pattern is I cannot take the trade the pattern is important but the quality of the stock is number one a quality stock now if we have an a quality stock then we of course would prefer to trade an a quality pattern and this is pretty much an a quality pattern there's there are some variations that could occur here that would make it a less than a quality pattern so let me show you um a couple of indicators that I use actually before we do that I'm going to jump back up onto the slide deck here and I'm actually going to pull up I'm going to give you guys a little preview so um those of you who um have been interested in learning a little bit more about my strategy I'm actually going to give you a little preview straight from the warrior Pro curriculum so in my fulllength classes um I taught the first version of this class in uh 2 uh let's see it was uh 2014 was when I first taught this class and when I first built this slide deck it had 15 chapters and I think the slide deck was like I don't know it was like 15 slides long there was like one slide for each chapter uh it now is 1,700 plus slides long and this is only it's actually broken up into several slide text um but what I want to show you here is this one section that I think you're going to really enjoy so this is um part of chapter 8 momentum trading strategies and it's the long setup one part buying the first and second pullback so this is um that same pattern that I was just showing you here where we get the stock that squeezes up right here usually it's on breaking news we get that first move higher pullback pullback first candle dips and then that first candle that makes a new high after that pullback is the entry so I'm going to jump through these here just for right now this is what that pattern looks like on an actual chart stock squeezes up then you get that pullback oops so squeezes up right here then you get the in this case two candles to pullback pullback Green candle first candle makes a new high that's your entry right there at 424 Max loss is 418 so you're risking 6 cents a share on this 6 cents uh per per share and profit targets and moov back to the high which in this case went all the way back up towards 450 so about 25 cents of profit versus 6 cents of risk that's a 4 to1 profit to loss ratio so I'm going to animate this so you can see what it looks like the stock is squeezing Up In This Moment as it's squeezing up it's hitting our high day momentum scanner but we're not going to just Chase it we're not going to just buy it up here we're going to wait for that pull back finally a red candle it's softening it's pulling back we've got that topping tail that shows us that it's a little bit bearish sellers are pushing it down we have another candle that goes a little bit lower right here another candle here that's green now a more aggressive Trader may buy as soon as this candle closes in the green a more conservative Trader who's a beginner is going to wait to see what the next candle does as soon as that candle the following one breaks the high of this candle that's where I'm a buyer so I'd be getting in right about at this line and my Max loss is low of this pullback and my profit Target is high of day and you know what's kind of remarkable is that this is a setup that I've been trading for more than a decade I mean I trade it like every single day and You' think it it would oh would it just stop working at a certain point but the fact is this pattern represents the psychology of what so many Traders are thinking wow this stock has really strong news what happens immediately the stock starts squeezing up as people buy it and then you have a little bit of profit taking as people are like well I got to sell I got to take a little profit and then you have this next round of Traders like myself who jump in to buy the first pullback on a stock that is strong that has news the biggest challenge beginner Traders have with trading this strategy is being able to differentiate is this the type of stock that has the potential to go up 20 30% and continue higher or is just going to stall out and that requires you to really understand those five criteria of stock selection and some of the bonus criteria that give the stock the potential to do something absolutely exceptional like go up 500 600 or 700% in one day so now I want to show you a um a live trade I'm going to give you I'm going to show a clip here of an actual live trading Archive of me trading this exact pattern so when I pull up this live trading archive um you're going to notice a couple of things number one you're going to see my actual trading software which I haven't yet introduced to you but I'm going to walk you through um right now and you're also going to see how I am executing the trade and where exactly the entry