👉 Picking Stocks was HARD Until I Learned This 5 Step Trick transcript

In today's episode, I'm going to teach you an easy five-step trick for finding the strongest stocks to day trade on any given day. And guess what? Today, we have a picture perfect example of a stock that I use the five-step trick on. In fact, this stock squeezed up over 300% this morning. And when it first came to my attention, it was way down here at $3.35. I ended up making over $11,000 on it. as the stock squeezed from $3.35 all the way up to a high of just under $1250.

Now, this is a stock that has over a 100 million shares of volume on it. Now, for those of you guys tuning in perhaps for the first time, let me introduce myself. My name is Ross Cameron. I'm a full-time trader. And when I funded my first account, it was way back in 2001, nearly 25 years ago. Now, in those days, the approach that a lot of traders took was just to get to know one or two stocks really well and to trade those same stocks every single day.

Now, I struggled with that and I would still struggle with that if I was doing it today. And here's why. In those days, I had a small account. And so, when people said get to know one or two stocks, they typically meant get to know Apple or get to know the S&P 500. But here's the problem. If you sit down and you try to trade Apple every single day, how much do you think Apple moves on any given day? This is the typical range.

On a typical day, it doesn't go up or down more than 2%, which means you've got a 4% range from the very low to the very high. Now, you never capture that full move from the low to the high. In fact, it's rare that you would even capture 50% of it. You might only capture a quarter of it. So, here's the problem. A quarter of a 4% move is a 1% move. How do you make good money trading a 1% move? The only way you could do it is if you have a huge account and you buy a lot of stock and then a 1% move, well, you can make some money on it.

But I didn't have a large account and I bet you don't either. So trading stocks that don't move much isn't going to produce a lot of profit. And I had to learn all of that the hard way. So the trick that I'm going to share with you today is back tested and proven. I've been trading it full-time for my whole professional career. And this is a system that will identify the strongest stocks every single morning. Now, to accompany today's class, I have a set of PDF resources that you guys can download.

It's going to document everything that I teach to you today, but you can print it out, you can save it, and you can utilize it and implement it in your own trading starting today. So, if I jump back on the screen share, I'm going to give you guys a link where you can download my ultimate beginners kit. This will give you instant access to my stock selection PDF and the five-step trick that I'm about to teach you here today.

So, let's look at another example of a stock that was the number one leading percentage gainer in the market. This is a stock that went up again over 294%. It actually peaked a little over 300% in this case on 21 million shares of volume. Now, what I want you to pick up on here is the theme. What do these stocks all have in common? Now, on this stock, I ended up making over $51,000, and I made money on a couple other stocks on that same day.

BBLG right here, this was the third leading gainer in the market. And then these other stocks at the times I traded them were the leading gainers, but they pulled back a little bit. So, being able to trade the stocks that are moving requires a willingness to jump around the market. At any given moment, there may be a different stock that is the leading percentage gainer, but what do they all have in common? Let's look at another example.

So here, PRTG. This is a stock that ended up going up about 178%, 15 million shares of volume. The price is $9 a share. You can see on this one, I locked up $53,000 of profit. Now, I'll give you another example. This one's BTCM. 314% gain on 36 million shares of volume. On this stock, I locked up nearly $80,000. These stocks share a few common characteristics. They share similar price ranges. These are all stocks under $20.

They all have a pretty substantial amount of volume, certainly in excess of 10 million shares. And clearly, they're all up quite a bit. Now, what you might not know is that a number of these stocks are biotech stocks. This is a very common theme in the market when a biotech stock comes out with breaking news. And it could be that the stock has just received FDA approval for a new drug they've been testing or that their clinical trials are going really well.

This type of headline has the power to be a gamecher for these types of companies. And in an instant, nearly an instant within a few hours, the stock can squeeze up 50 75 100% 200% 300% even in this case 682% in one day. That is a massive move. So, the stocks that make the biggest percentage gains tend to share similar characteristics. And this is what I want to begin breaking down for you. Everything that I share with you is based on over $20 million of trading profits.

This is my data. So, I can mine all of this data to extract patterns in the market. And these are patterns that have been occurring for the past decade. This is 10 years of trading history. So, let's start with one of our first data points. We're going to look at the volume. And it's not just the volume in total shares traded. It's the volume today relative to what's normal for the stock. So think about Apple for instance.

We'll go back to that big large cap company that you're probably familiar with. So Apple on any given day, what do you think the volume looks like? Well, we'll pull up the chart. So if I pull up the chart here on Apple, what you're going to notice is that it typically trades with similar amounts of volume on any given day. So you can see here, these are the volume bars down here. And although Apple does move up and down, and there a few days here and there that have higher volume, these are going to tend to correlate with spikes in the overall market.

So when the overall market is experiencing heightened volatility, Apple naturally will as well. And so on a typical day, Apple is experiencing what we would consider to be average volume, relative volume. Uh the relative volume is going to be around one. So, if I look at Apple right here on my stock quote window, I can actually pull this down and I can actually look at what the relative volume is today. The relative volume is a metric and it compares today's volume versus the 50-day average.

So, today right now, Apple is trading, it's on track to trade by the end of the day at 1.28 times average volume. So, average volume is one, below average would be less than one, above average would be higher than one. So, a ratio of one means the relative volume is just the same. Now, Nerve, this biotech stock that I traded today, the relative volume is 262 times higher than its 50-day average. Holy smokes. So, let's look at this stock just on the daily average.

So, today we've got 150 million shares of volume. How much volume did we have yesterday? 48,000 shares. That's it. Yesterday, nobody thought anything about this stock. and then today is the leading gainer in the entire market. How does that work? Well, we're going to draw some conclusions about how that works. So, first we're just going to look at the data before we draw those conclusions. So, what you'll see here is that over 90% of my profit right down here comes from stocks that have 500 times higher relative volume than the 50-day average. 500 times is 5x.

So, 5x times above average volume. So that means what we're going to start doing here right now is we're going to create a profile. This is a profile of the type of stock that could go up 50% or more in one day because this is a type of stock that if you have a small account, you're going to really be focused on. Now, think about when I've done these small account challenges, and you've probably seen them here on YouTube. $500 small account challenge, $1,000 small account challenge, $2,000 small account challenge.

When you've got a $2,000 account, you're trading a stock like Apple that goes up maybe 4% and you capture only 1% of it. You're up 20 bucks, 30 bucks. This is not enough to make money. You can't justify sitting here for two or three hours and spending all this time studying to make $20 a day. You'd be better off doing something else. On the other hand, we've got a stock like Nerve today that goes up 300%. Not that you would put the entire account into that one trade necessarily or that you would get the perfect entry at the very bottom and sell at the very top, but 300% even if you only get a sliver of that 20%.

Well, now the account's up 400 bucks. This is a meaningful difference in one day. So, the first profile um data point that we're going to add here is relative volume. I'm just going to put RV and we're going to go for uh five five times. So, it's got to be five or higher. So, that's the actual metric that we're going to scan for. And what we can do, and I'm going to teach you how to do this, is we're going to use these scanners, and these are going to search the entire market.

There's thousands and thousands of stocks in the market. And what we're searching for is the needle in the hay stack. We're trying to figure out how do we find a stock like Nerve right down here at $3.35. How did I get that alert right there? Well, you're going to learn. So the first profile point, the first data point in our profile is the relative volume. So we need the relative volume to be at least five times above average.

So five. Now we also noticed a theme that I made more money that on stocks had higher volume today. In fact, 25 million shares and higher is where I did the best. However, it's worth noting that this is measuring the amount of volume a stock traded by the end of the day, not necessarily before I took my first trade. So, it may have only had a million shares of volume when I took the first trade, but by the end of the day, it had 25 million shares of volume.

So, how do we then predict that a stock will have in excess of 25 million shares of volume in one day? We're going to have to figure that out. So number two, 25 million shares of volume today. And we're going to say potential. So it doesn't need it right now, but it needs that potential. Okay. So now we've got our second data point that we're going to look at. Let's look at the third one. The stock should be gapping higher in pre-market versus the prior days close.

So when the prior day closes, that's the closing price. And if the next day the stock is already up more than 2% in the pre-market session, that for me is obviously a big indicator of where I'm going to make the majority of my profit. So why would a stock move up 2% during the pre-market session? Well, I think this is really asking a big question. Why would a stock gap up five times and have the potential to have 25 million shares of volume?

It's because the stock has breaking news. So what I ended up becoming is a is a catalyst driven trader. I'm a news trader. I'm a volatility trader. I don't make money buying something at five and selling it at five or buying at 50 or selling at 50. It doesn't matter. I make money. If I can buy something at five and sell it at 550 for a 10% return. And if I can do that in less than three minutes, that's a pretty awesome trade.

So then what's going to send a stock up 10% in less than three minutes? Here we go. Breaking news. So this is the catalyst that is moving these stocks. But there's more to it than just that. If we really dive into my metrics, and the metrics that I use, for what it's worth, can go into an incredible amount of detail on the days of the week that I make the most money, the time of the day, the price, the volume, the instrument, market behavior, my win loss expectation, the liquidity.

So, I'm highlighting what I think are the most critical components or the most critical data points that really will help us scan and search the market in real time for these big moves. So, what I know is that I have made more money on stocks between 2 and 20 than on stocks that are either higher priced above 20 or stocks that are lower priced below 20, below two. So, the $2 to $20 range is going to be our sweet spot.

We're going to add that as another data point. So, number three, whoops, gapping up 2% 2% gap up. And we're going to add number four that we are a price between um 2 and 20 price. We're starting to run out of space, but that's okay because we're almost at our fifth trick. So, this is these are the tricks for finding a stock in real time. These are the data points that we're going to search for. So, the next is the float.

The float represents the number of shares available to trade. Stocks with a float of under 10 million shares make much bigger percentage moves. Just look at this a screenshot here. So these this is a sort of data looking at the biggest percentage movers in the entire market on this day. What is something these all have in common? The float or the number of shares available to trade on all of these, the highest one is 19 million shares.

So they're all under 20 million shares. What about the price? The price on all of these is below $20. Now you will see that there are some that are below $2 and they're a little cheaper. And it's not to say that you couldn't trade these and some people certainly will. I just have found that I personally don't make as much money on them. I have some ideas of why that's the case. Maybe we can get into that a little bit later.

So, when we're looking for stocks that are making big moves, we're looking at these different criteria, these different data points. This is the relative volume column right here. There's a couple that are below five. Um, but they're all these ones are on the cusp. Um, although this one's cheaper and I wouldn't have traded it. So on this stock, it's got a 1 million share float and 1 million shares of volume, right? Whereas this stock has 300 million shares of volume and has a float of less than a million shares.

So there's no question that this was definitely the most obvious stock to be trading on that particular day. So what we've learned is that when a stock has a low float plus a high level of demand, we can get a significant rate of change. That's when we get these big moves. So, this stock went up 400% on 300 million shares of volume. And this is a stock that fit this profile. Now, if we dive into this a little bit deeper, right, let's just take one step back here and look at this specific stock.

So, if we look at this stock, MLGO, I'm going to flip over my whiteboard here. So, MLGO price on this one was well, $13 at this time. So, the price was 13. The relative volume was 74. The percentage change was 400%. I'm just going to round it, but 400% the volume was 300 million shares. Okay. So now if we look at this on the whiteboard, this was this particular stock MLGO on this particular day. So I want to do a little bit of a comparison here.

I want to just speculate what if Oh, and the float the float was I'm just going to do 1 million shares just to keep it round, but it was actually 797,000 shares. So I want to speculate just for a moment that if this stock had a float, which is the number of shares available to trade that was higher. Let's say the float was 10 million shares. What would that mean? That would mean the number of shares available to trade was 10 million instead of 1 million. 10 times higher.

So if I had the same amount of volume, we have a different relationship between supply and demand. The demand is the same, but the supply is 10 times higher. So the percentage change I would argue would be 40%, one/10enth versus 400%. Right? And this is simply because the supply and demand characteristics have changed. Now we could do another comparison. What if the float was 500,000 shares? What if it was half of what it was on the same amount of volume?

We might have had an 800% move. Or perhaps we had the same 1 million share float, but we had 600 million shares of volume. We would still Oh, we would still have 800%. So this is the interesting relationship between supply which is the float and demand which is the volume. Now the reason the volume gets so high the demand gets so high on these is because of an initial catalyst. So when we're thinking about what comes first the chicken or the egg what comes first is definitely the news catalyst.

You need that news headline. So these are my five criteria for stock selection. We've got four criteria that represent demand and one that represent supply. The stock has to be up at least 10% on the day already before I'm even going to look at it. It needs to have five times relative volume. There needs to be news and most day traders prefer stocks between 2 and 20. The supply, the number of shares available to trade should be less than 10 million shares.

Now, it doesn't mean that I won't occasionally trade um a stock that's a 15 or 20 million share float. I I will from time to time, but we want to see we'd prefer to see that the float is lower. So when we have this setup right here where we've all five criteria are met, that's when we have an imbalance between supply and demand. The demand is higher than the supply and the price moves up very quickly. So now there's something else that we should add to this, which is performance by time of day.

So, I have learned that I make the most money between 7 a.m. approximately and 11:00 a.m. You can see how it increases here and between 7 and and 9:30 is sort of the sweet spot right there where I do the very best. But we could even take that a step further. This is the distribution of trades by hour of the day. And this actually breaks it down into 15minute increments. So notice this increase in trading at 7, at 8, at 8:30, at 9, and then at 9:30.

Do you know why that is happening? It's because of the news cycle. Most headlines, if they came out before 7 am, the soonest most US traders will be able to trade them is at exactly 7 am. So, at 7 a.m., there's a lot of trading in response to all of the news that came out overnight and between 4:00 a.m. and 7 a.m., which is the early pre-market session. So, starting at 7 a.m., there's a high frequency of trades. At 7:30, there's a a high likelihood of stocks coming out with breaking news.

But we often find is that a lot of these stocks put out news at 8 a.m. Now, let's go back to Nerve Today. Nerve today, the stock that I traded and made the most on, the news came out at exactly 8 a.m. right here. So, this was the first alert down here at $3.35. So, this uh company raised uh $200 million to advance their schizophrenia drug. So, this is a big headline. It's a it's a good it's a good thing. the company was able to raise $200 million because the testing the clinical testing of the drug is going well.

So at 8 a.m. all of a sudden that comes out. That's breaking news. So stocks typically companies typically put out news at 8, 8:30 and 9:00 a.m. We do see some headlines at 7 and some at 7:30 as well, but my trades are distributed primarily around the times that these companies are putting out breaking news. Now, another interesting metric is the length of my trades. Look at this. So this is less than one minute long.

This is between 1 and two minutes, two and five minutes, 5 and 10 minutes, 10 and 20 minutes, 20 and uh 40 minutes, 40 minutes to an hour, longer than an hour, longer than 2 hours, longer than 4 hours. So you can see that the majority of my profit comes on uh trades I held for little I guess we could say if we cut it off here, less than 10 minutes. And some of them are very quick. So, if we look at nerve today, and we will look at it in more detail, you'll see this is a stock that I traded and jumped in and out of very quickly.

So, now what I want to do is I want to take a really close look at this particular trade this morning on Nerve. And again, this is just one example, but this is the same thing that I'm doing every single day. I'm sitting down. I'm waiting for a stock to hit my scanner, and it's got to be a stock that meets all five pillars of stock selection. So the first thing that happened is at 8 am the company put out breaking news.

So boom, that news hits the newswire. As soon as it hits the newswire right here, what happens? The stock starts moving up. And so what that means is that traders saw the news and immediately began buying. Now, one of the problems with seeing the news and being the first person to see a headline potentially is that you may not know if the news is good or bad, unless you know the context of this company and you're maybe an expert at biotech stocks.

So rather than look at every single news headline that is coming out, which would be overwhelming, I wait for the news headline to come out and I wait for the stock to hit my scanner. And so the first scanner alert took 9 seconds. At 8:09 8, it was 8 a.m. and 9 seconds. We got our first alert right here when the stock was at $3.35. Now, at this point right here, it was beginning to trigger my first scanner, which is that the stock was simply squeezing up more than 10%.

Now, the stock did not yet meet my my uh criteria or the parameters for relative volume. You can see the relative volume was still only 66. So still even less than the than the uh 50-day average at that moment. Granted, the volume was quite light, but that's okay. I still wanted to be alerted that the stock was moving because going up more than 10% in less than 5 minutes is highly unusual. It doesn't happen often. And so when that's happening at 8 a.m. and the float is less than 10 million shares and the price is within my sweet spot of 2 and 20 and the stock has news.

Yeah, that's definitely something that I want to pay close attention to. So it pops up. It hits my scanner. So what do I do next? I actually click on the alert right there. I click that. That's a link. It's underlined. I click it. And when I click it, I pull up the news headline. I see that there's breaking news on it. Now, at the same time, the stock continues to trigger alerts. It's now hitting new alerts. It's hitting the alert for a scan that searches for former momentum stocks.

These are stocks that have previously made big moves. It's also hitting the alert for hitting a 52- week high, meaning it's hitting its highest price in a year. It's also hitting my low float high relative volume alert as now the volume relative volume is going up to 4.6. So, it's moving up rapidly and within moments it's at 7.5, it's at 12.65. And now we've really got something we can work with. And the stock's up over a 100%.

At this point, it still only has three million shares of volume, but now I can make the prediction that very likely by the end of the day, we will be exceeding 25 million shares. We already at the right price, the right gap, the relative volume, and we have news and the float. Yeah, this is a really good scenario. So, as I'm reading the news, the chart is also loading, and it of course doesn't take long to load, but the chart is pulling up.

So, as the chart pulls up now, I begin looking at the chart and asking myself, where can I buy this stock? And so, what you may know if you've watched other episodes I've uploaded here on YouTube or you've taken the classes that are part of our Warrior Pro Curriculum is that I love buying pullbacks like this. So, I love buying those dips. This is my favorite pattern to trade, especially on stocks with breaking news. So you get that quick squeeze up.

I buy the first pullback, next leg up, next leg up, sideways, and I buy those dips for the next leg higher. Now, in this case, I actually execute my trades over on my broker window. So that's where I'm looking at the market data. I'm entering my order right here, and I'm clicking the buy button. Alternatively, I can buy just by pressing shift one, which is my hotkey for rapid order execution. So when these stocks pop up, I am trading them very quickly.

And in this case, we're looking at a matter a chart that is 10 seconds. Each candle is 10 seconds of time. So, this is a chart that was less than a couple minutes. We're talking about 3 minutes and the stock goes up, you know, 200%. That is incredible rate of change. So, how do I know when to stop trading it? When the MAC D goes negative on the one minute chart, which happened right here, that's when I stopped trading it.

That is the end of the first leg higher. Now, the first leg higher, the first leg up can sometimes go up 3, four, 500%. Other times, we get a pull back and then it goes even higher still. So, if we look at our chart here of nerve as the day went on, you can see that we actually did squeeze all the way up to a high of 1250. It then pulled back. It came back up later and then kind of rejected back down and sold off. I wasn't trading it at this point.

Now, if you wanted to, you could have considered trading it later in the day, but as a beginner, you would have been playing with fire because this is a higher risk area to trade. It's usually the first move that's the cleanest. In this case, you did get a nice second move, but that's not as common. Okay, so this is what we're looking at in real time. And this is the small account growth strategy that I trade every single day between the hours of 7 am.

I use 10% risk and 10% reward parameters. My target accuracy on this strategy is 75%. My target growth each week when I'm doing a small account challenge is to grow the account by 25% per week. It doesn't happen every single week, although there are also uh weeks where I far exceed that and I end up um growing the account by even 25% in a single day. Now, for those of you guys that want to watch me trading this strategy in real time, I'm going to put a link in the description and I'll pin it to the top comment where you can do a two-eek trial.

During that trial, you'll be able to watch over my shoulder as I'm trading. You'll see my P&L on the screen share in real time. So, you'll see when I'm making money, you'll see when I'm losing money, full transparency. And what's even better is that during your twoe trial, you'll get access to this software right here. So you can use the same scanners that I use every single day to identify the strongest stocks to trade in real time.

So if you're ready to take the leap, we'd love to have you become a member over at Warrior Trading. But let me be the first to tell you, trading is risky and my results aren't typical. So I want you to manage your risk and always practice in a simulator before putting real money on the line. Now, if you want to check out a couple other episodes I upload to YouTube, I'll put links to them right here. I'll see you for the next upload real soon.