A HUGE Mistake Becomes a Turning Point (Finding Your EDGE in the Market) transcript

[Music] in today's episode I'm going to teach you how to find your Edge in the stock market at the end of the day being able to produce profit consistently requires you to have a niche a strategy a system a set of rules of how you find things to trade where you get in where you get out and you've got to have a track record that proves that when you follow that system you have predictable results now we have to recognize that as retail Traders we have the card stacked against us we're not Wall Street institutional Executives who are able to just seemingly print money we have to work doubly hard for it now I've got a great slide deck for you and what we're actually going to be talking about is a $700,000 investment in Intel I don't know how many of you guys have heard about this but there's a post on Reddit about a college student who received an $800,000 inheritance from his grandmother and what he decides to do with it is invest $700,000 of that inherit right into Intel stock and I think this is a great case study about knowing your place in the market and knowing whether or not you actually have an edge because as it turns out retail Traders trying to pick individual stocks and YOLO are full account on it we don't have an edge doing that but there are pockets of safety in the market where retail Traders seem to do better and I want to help you find your way to that that Niche I want to help you develop your Edge so you can start to develop a sense of confidence in the system and strategy that you're following I'm going to share mine with you today all right so let's go ahead and jump into our slide deck this is going to be a great class I hope you guys really enjoy it and for those of you tuning in perhaps for the first time who have never watched an episode here I'll introduce myself briefly my name is Ross Cameron I'm a full-time day trader I've been doing this for more than a decade and in fact uh as we talk about in today's episode I took my first trades uh with real money in 2001 which was 23 years ago and I started getting interested in the market in the late 1990s during thec bubble so I'm going to share with you some of the biggest mistakes that I made early on because I went through this period of trial and error before I finally found my Edge and of course I share my Edge with all retail traders who are interested in learning because it's not exclusive this is a strategy that I trade today that's been traded for decades and decades it it it's a consistent strategy once you learn to have the discipline to follow the rules of the strategy okay but let's first talk about uh the topics of today's class we're going to talk about the Intel gamble which is our case study then we're going to talk about finding your Edge and I'm going to share with you my biggest mistake and I'm actually going to share a couple of those mistakes so let's start with the Intel gamble okay so there was this post about a month ago on Reddit and this individual post he says I bought $700,000 worth of Intel stock today now some of you may have heard of this because uh it it definitely gained some traction so um the tldr is grandma died 2 months ago all right so that's unfortunate left me an $800,000 inheritance I'm a junior in college as a math major and I don't really have any use for the money nor do I have any debt well that's great I always heard about people losing their inheritance by spending it on garbage instead of investing so I told my parents I'm not going to spend a cent of this money I'm gonna invest it all and they were proud of me all right I put $100,000 into a high yield savings account and I bought $700,000 worth of Intel stock at the market open I plan on holding this position for a decade depending on how it performs so now he States the reason he likes Intel and I call this the Intel gamble so I want you to think about why would I call this a gamble number one it's naive to think that we as retail have an edge stock picking now if you've read um any books by uh let's see I've got a book here by Benjamin Graham this is a popular book on investing and if you've listened to Warren Buffett uh one of the things that he says is um diversification uh he has a quote I don't remember the exact quote but but he says um if you know what you're do if you really know what you're doing you don't diversify you put your money into what you believe in and so historically Berkshire hathway has not been a terribly divers ified fund with hundreds and hundreds of different Investments they've Consolidated across a few huge Investments you know Apple Coca-Cola Geico you know these other companies that they really believe in and that has clearly worked very well the common held belief is that to manage your risk you have to diversify don't put so to speak all your eggs in one basket and so I think that sometimes retail Traders will naively think all right I'm going to follow along with that I'm going all in on whatever it is but there's some inherent risks with putting all your eggs in one basket right so I'm going to talk a little bit more about that in a second but I think it goes without saying that when you put everything into one stock you now if that one stock crashes your account's down 50% or whatever it is I mean you could lose your whole account potentially in one trade whereas if you holding a ETF like the S&P 500 you're Diversified across 500 stocks so if one of those stocks goes to zero that's only one of 500 right so you in terms of percentage it's like even you don't even lose one percentage point with that one going to zero because you're so well Diversified and however the downside with that diversification is that when you have one stock that really performs Super well you know it kind of is it lifts up everything a little bit but but not enough so ultimately you're kind of banking up on just the overall trend but historically when we look at market returns that has been the more conservative way to invest and it's also been historically profitable over longterm periods of time putting your money in index funds works that's what we've been told that's what we know so I think it's naive for us as retail traders to put all our money into one stock and think that we know better than the market number two this position on Intel is a contrarian position versus is the current market performance and so what I'm actually going to do is I'm going to um jump out of my slide deck here just for one second um I'm going to pull up so this is the this is the Reddit thread here and this is the screenshot of Intel when he bought it he buys it and you could see of course Intel has been dropping dropping dropping his position is worth um $692,000 it's already down almost 8,000 on the day and his average position cost is is $30.45 a share but if we pull up the charts here and I'll just move this out of the way for one second um and we look at Intel what you'll see and we'll just go to like kind of right here because this is where he bought I would say this is a contrarian investment position because the stock um has been this year trending down so buying when the stock is trending down in other words you're buying and you think you know better than the market because there's the saying that the market has priced everything to Perfection the everything that's known about this company right now is known and is therefore factored into the price so investors collectively and of course retail Traders which make up only probably 20% of the volume in the market but primarily institutional Traders have priced Intel at $30 a share at that exact moment and if we look at that chart I would ask is this a momentum trade now for those of you who don't know me well I am a momentum Trader which means I built my strategy on essentially buying things that are already trending up I never buy something that's not already moving I need to see that something is moving and then I buy High essentially and sell higher so if I bought something like this up here some people would say that's high but then when you sell it up here you're selling higher so I buy high and sell higher but of course I do that with a tight Max loss a tight risk parameter on all of my trades but I have found that it is so much easier to trade with with the trend versus to try to predict when it's going to reverse because when you're trying to predict when it's going to reverse you're trading against the market you're essentially saying I know better than how the market is currently performing and how the market is currently pricing this stock so my second reason that I think that this is a gamble is because he's taking a contrarian position versus market performance and so then you could say well what is his thesis that gives him that confidence and so if we look at his thesis here he says 2024 q1 up 9% year-over-year so you know okay Intel has been heavily invested in restructuring by building out domestic Foundry business to manufacture semiconductors okay um he you know Nvidia AMD blah blah blah blah so he's got sort of you know these 10 bullet points trading at a PE ratio of 17 I like the stock and I think it's really cheap he also not notes that he's a math major but he's also a junior in college so not not to dismiss you know a lot of people do great things when they're young but um but what I would argue here is that um this has no mention of risk parameters I didn't see any mention in here of you know Max loss like I'm G to I'm going to take a loss on this if it drops 10% which would be an exit of $27 a share or something like that um and number four it is reckless to put 90% of your funds into one stock the only thing that would make that not Reckless is if you had a proven track record of success at picking stocks but I'm going to guess that this person does not have that track record based on their age based on what's been stated and shared and based on the fact that they just received this large inheritance so when we look at Intel um what ends up happening is 7 hours after he takes his position a horrible timing Intel announced that they're suspending their dividend which is literally like one of the worst things a company can do because when you get rid of your dividend I mean it's it's a sends a huge signal to the market and they're cutting 19,6 employees the stock collapses down over 10% within a day the stock is down 30% and it's at the lowest level in eight years holy smokes I mean I this is I I I remember uh once seeing a threat about someone who bought Amazon a stock and 30 minutes later Jeff Bezos resigned as CEO and he's like I can't even imagine how I could have timed this worse uh but you know what here's the thing with with Jeff Bezos resigning as CEO how many people do you want to wager kind of already knew that was coming people on the inside people who were you know had their ear to the ground and they're connected now there's a very fine line between insider trading which happens on Wall Street as we know and this just sort of collective like you're in the circle of you know the Social Circle of all these big parties in New York or LA or wherever and you just kind of know things and I feel like the this is the thing where it's about the connections and these Wall Street Executives they just have the relationships where they're going and playing golf with a CEO of some of these companies they just know stuff and to the extent that they take action on it it I don't know but we know a lot of them do and it's just the way it is so as retail Traders we don't have that edge right we simply don't have that edge we never will and we're left to essentially work with it's almost it's sad but we have to do it the oldfashioned way and as it turns out the oldfashioned way is is quite difficult uh so in the case of Intel now the stock has dropped 30% he's still in at $30 it's at $18 now it's hitting basically the lowest level in eight years and now it's uh being they're talking about it getting delisted from the Dow Jones Industrial Average um and if it's taken off the that that ETF then that's going to mean even fewer people are buying it and it's just not good for the stock at all so you know you step back and you look at this and it's like okay you know this is a stock that historically had has you know been volatile but it's been left behind you look at other companies like you know Microsoft msft you look of course at Nvidia and these are companies that have been um much much more successful with AI with chips and everything else and Intel has been left behind so to take an investment on Intel and especially take what is what is essentially a YOLO investment you only live once type of trade I would say that is gambling now redditors tend to agree um this is someone posting your nana in heaven watching you lose your entire inheritance on the Intel stock that's that's a tough that's a tough uh post and he's down 100K in 30 seconds right you should probably drop your math major because you aren't learning look I mean redditors are going to have their opinion um this is bad financial advice I'm paraphrasing that did they have a math class called putting all your eggs in one basket 101 that's that I I'll give that I'd give that the thumbs up so all right fair enough you know he got he got wrecked and it's a learning experience um so what I'm going to do now is I want to share with you how to find your Edge in the stock market clear clearly just throwing your money on one stock is is not the ticket that's not the way to do it but there is a path to success in the market and of course many people have taken that path and have found great success so I think your job as an aspiring Trader or even someone who's been doing this for a while is to learn the path that people have taken that's led to success and to try to follow it as closely as you can and to be very cognizant of the path that people have taken that lead to failure and to avoid that path at all cost it's very easy to be uh overconfident in the stock market and to be um put in your place quickly so I think the first thing for a beginner Trader is um to acknowledge the account size that you have so what account size are you working with now you guys are all in different places um I and I've been in all of these places at various times I've traded with a $5 million account when we were trading the GameStop short squeeze I've traded with a $500 account when I had $583 in my account in January of 2017 and I've done $5,000 accounts 50,500 you know everything in between so I've done all of this but what I can tell you is that your account size is important for the strategy that you're determining now that you're planning to trade now this individual on Reddit he's coming in with a 7 800,000 account so that is a naturally very large six figure account nearly seven fig account that's probably not going to be most people who are approaching the market so if your first question is your account size I think the second has to be your risk tolerance with a $500 account I think you have to be willing to risk it all and and you know look I understand that some people are like I'm going to take my $500 account and I'm only going to risk 10% of it okay all right if you want to take $50 of risk that's fine but I think you have to accept that there's a good chance when you're trading with $500 especially if you're actively trading that you could lose it all and here's kind of the problem um you know we could do a compound interest calculator if we wanted to but but if you're starting with $500 and you're only willing to risk 10% you're risking 50 bucks on that account so you know if it goes up $50 you make 10% you know you're at 550 goes up another 50% or sorry 10% you know you're at 605 you can grow the account but it's going to be slower if you're not taking more risk and if you were doing 10% and you investing in the S&P 500 this would be year 1 year two year three year four so it's just going to take you five years to get to $1,000 realistically so that's that's not going to be a good use of your time and that's not really the best way to grow a small account when you've got a small account you're thinking about how I can grow it quickly when you've got a $500,000 account or a $5 million account you're thinking about how I can preserve that account make sure I don't destroy it and how I can get you know incremental growth but without taking obscene levels of risk so this is kind of the way I think about it um and this is like kind of this isn't risk per trade this is like risk per year so with a $500 account I'm willing to lose the whole thing in in in a year and that I could tolerate that with a $5,000 account maybe I'd be willing to lose half of it all right I'm going to take some risk if I lost half of it I could tolerate it a $50,000 account now maybe there I only want to lose 20% that'd be 10 grand right you don't want to lose too much of that a $500,000 account 15% now if you put in the S&P 500 you could have a year that it goes down 15% but you could have a year where it goes up 15% so you know maybe you're okay there and then with a $5 million account you might feel like I can't put it all in the S&P 500 cuz that is too volatile I don't want to lose a full 15 or even 20% so now you're starting to think about stocks and bonds to reduce your downside risk at the end of the day you have to think about risk first because you are the one who is going to be sitting with your account when it is at its worst when we have a a terrible stock market crash we have a terrible recession you're the one that has to look at your account and be accountable and take responsibility for the value that it's at and if you can't handle looking at an account that's down 70% well hopefully I mean that would be pretty bad but 30% or 40% then you can't invest in the type of stocks that could result in that happening so yellowing your entire $700,000 account on Intel and having Intel drop 30% because they put out bad news which most likely Wall Street Executives already knew was coming right and they already moved out of the way beforehand just makes it that just adds salt to the open wound but that's the reality so then that's not the risk tolerance or the or the type of strategy you should be trading now the next question is about your time commitment now number one do you have the time to actively trade the market because in a sense what I what I do as a Trader I trade every single day and I'm trading my time for the money that I make Trading so it takes time it takes time to learn how to trade actively day trade and it takes time to trade the market every single day day trading is not passive income you have to actively trade you possess a skill it's not like just owning a bond where you just collect money each year or whatever it is on whatever the the basis is um you just collect the money you don't have to think about it it's not like that so if you have the time to actively trade the market then then that's something you could certainly consider when we think about you know sort of the the tradeoff of all right I if I'm going to spend my time let's say going to college then that's going to give me the earning potential in the next 5 10 years that I can be earning six figures I can get a nice job da da so it makes sense right now for me to spend my time focusing on going to school not trying to day trade okay that's fine but if you're at a place where you're like all right I've done School I've got a job I don't love it I'm going to start spending an hour a day focusing on Le learning how to day trade and actively trade the markets it's going to be an addition and maybe I'll get to a point where I can transition you know then okay that's the consideration that you're making either way if you have the time to actively trade the markets it's a it's a opportunity cost that you have to make of is my time spent studying and learning the market does it have the potential to earn me more than my time doing something else and then is it wor am I motivated enough to prioritize not watching you know or playing video games at night and instead learning how to trade just as as a side note I used to play video games a lot and once I got into trading I stopped playing video games it wasn't a conscientious decision it was just that I it was just the reality that I was like so focused on learning how to trade it almost became like a video game it was like I wanted to beat the next level you know I wanted to achieve this next goal and so I got so consumed with like learning the technical indicators and learning how to use my hot keys learning the entries and the exits that that was my focus and it's a lot more rewarding than playing a video game because if you win you make money right so anyways it just kind of naturally happened and I it's just like next thing I knew my PlayStation had dust on it and I hadn't played it in months uh and then it was years and now I don't even I don't even have one anymore so anyways um but that's a decision you have to make now number two you could say I can't actively trade because of you know that's the decision I've made I can't actively trade doesn't fit within my schedule right now but I can actively monitor Investments and I am interested in reading about stocks and being more active and in this position here this is where to be honest things can get a little dangerous because this is where you can get overconfident and say oh I've been watching Nvidia for a while or I've been watching Intel for a while I'm going to go ahead and you know buy this stock and maybe mismanage my risk and put 95% of my portfolio in it so you've got to be really careful here that you're thinking still about risk first but um if you're able to actively monitor Investments my kind of mental thought process on this is that most people are going to start here at sort of level three they're going to eventually get into level two because they're going to get more engaged and eventually they'll make their way to level one so and that's how it was for me when I when I first started well it's not exactly the case but when when I got some money from my father I had gotten inheritance from my father when he passed away when I was in my 20s and I took that money and I just invested into the market with a financial adviser and I didn't have to do anything and I had the benefit of just receiving passive income however that was when the market was crashing in 2008 2009 and so what ended up happening was I just get got statements each month of the account going down and down and down I was like this is ridiculous that's what motivated me to be more actively involved with it but in any case I think a lot of people will start here just maybe if they have a job with 401k or something like that just kind of investing very passively but then starting to get more interested you move up to this level you start getting more interested maybe you start making some good decisions a couple good Investments you start making enough money that it's worth investing more of your time and then you get up to this level right here so when it comes to finding your Edge my feeling is that with a $500 account and the tolerance to lose it in one year you've got to be in in my opinion not investing in S&P 500 Index Fund but but actively trading generally low pric stocks or YOLO trading now a YOLO trade sort of inherently indicates you don't know what you're doing unfortunately um and so I I'm not really an advocate of this because I don't think that this is this is like buying a lottery ticket and I think you're just going to spend $500 on a lottery ticket and most likely you're going to lose and you're going to wish you hadn't done it so while this is something that you could do um it it wouldn't probably make that much sense so I think for most Traders with small accounts actively trading low pric stocks would be sort of the most logical way to grow that $500 and if you said oh all I have the ability to do is index funds because of my time then I'm going to tell you that you're probably only going to make $40 to $50 per year on that $500 in other words you might be better off investing that $500 in yourself to increase your earning potential if you're trying to get a job or you're trying to study something new or you're trying to build your own business I mean I I see so many people that get a pressure washer next thing you know they're going house to house earning I mean they pay off the pressure washer in like a day uh you know people do that with a lawn mower also they buy a lawn mower next thing you know they're mowing lawns and they're creating their own business so that $500 you're trading essentially again for your time you buy something that you can use to help make your time more valuable if you're doing side hustles and trading is is going to be that this you're going to use this basically as a vehicle to allow you to actively trade but it's still going to take a time commitment now the next level up a $5,000 account I still think active trading is the most logical thing if you're looking to grow that account quickly however at a $5,000 account you could put it in a S&P 500 ETF and just let it ride and not think about it it's going to grow slowly but over the course of 5 10 15 years it'll probably grow to 10 15 $20,000 so you know if you keep adding to it it'll keep growing but yeah turning 5,000 into 20,000 over the course of 15 years not the not the most exciting um return but at the end of the day that is scalable and you could do the same thing with a $5 million doll account you put it away you don't look at it 20 years later it's 1520 million that's not unrealistic putting it into index funds um and bonds maybe and then maybe de delegate delegating a smaller amount of that 5 million for active trading like $25,000 worth and this is something kind of interesting because for me even though I've made a lot of money trading I don't keep all that money in my trading account I always take the money out and I put it into a long-term uh investment account that looks like this I don't want to really lose more than 10% of that account that's money I've made trading so I put it in index funds and I put it in uh bonds and it's invested very conservatively because all I want really is to see it just continuing to grow a little it passively without taking a lot of risk that it's going to you know that I'm going to lose 50% of it so I would never put the $5 million in Nvidia while it's true that if I had done that two years ago I could have turned you know the 5 million that I made in my Roth IRA in 2020 and 2021 into 10 or 15 million I would have literally had to be comfortable with potentially losing 50% was I ever comfortable taking $2.5 million of risk and the answer is no and so for that reason whatever I could have made is totally irrelevant because if I can't stand the downside risk then you shouldn't have taken the position at all people are so good at hindsight being 2020 that oh I should have put everything I should have mortgaged my house I should have done a payday loan and I should have put it all on you know GameStop calls Yeah well yeah right if you had if you if you could see into the future then of course you would but but nobody can so you have to be thinking risk first when you start getting those you know kind of visions of grandeur of oh I could quadruple my account in four hours this way with buying a I don't know some uh expiration that expires today at 10 cents and it goes to 40 cents it's it's just that's gambling that's a gambling mentality so you don't want to do that now I want to share with you here um some of the mistakes I made so as I was trying to figure out how to approach the market my mistake that I made in 1998 was um during that period of time and I've I've told this story before some of you have heard it perhaps um but I was I was in school and the school that I went to was a monory school and we had a semester that was basically a mock stock market where we were stock Brokers and we were buying and selling stock and we were trying to see me measure our performance now I later found out that this was uh just a carefully uh disguised way of teaching us how to do basic math and get good at math but for me it really stuck and it actually included a trip down to New York City from Vermont to New York city so we could go see Wall Street now as it turned out the day we went it was like a crazy snowstorm and we didn't actually get to go onto the the floor we were supposed to and what didn't happen it a shame anyways doesn't matter at the end of the day it was a meaningful semester for me and so at the end of that semester I decided that I wanted to put all of my money into one stock and it was a penny stock the company was the American ski company they own they owned at the time a number of ski areas in Vermont and probably other places around the country I called my local stock broker's office because in 1998 I was I was a teenager well actually I was I was 13 years old so I was a teenager and I I was very interested I wanted to make this happen but I didn't have my own investment account so I called Edward Jones which was on just on Western Avenue in uh in brador Vermont they had a small little office and I said I'd like to buy $100 of American ski company this is my life life savings now I my first job was a paper boy and I earned $5 a week as a paper boy so and this was just in the 90s this wasn't even like in the 1950s $5 a week so it took it took a while to raise $10000 but nonetheless I had $100 and they said well son there's going to be a problem it cost $50 to buy and $50 to sell that's our commission come back when you've got some more money and so I was sort of defeated I was like oh man but you know what if I had bought that you know what would have happened uh and it's worth it's worth being aware of this because um you know this is this is how you learn so American ski company uh let's see American ski company founded in 1994 was one of the largest operators of Alpine ski notice the key word was so um what happened to the American ski company early 2000s the company sold all the assets and shut down okay so they went to zero the stock is gone all right so that was a that was a learning opportunity even though I didn't actually buy the shares I kept following it to see what would have happened if I had and I saw that it dropped so in 2001 a few few years later while I was in high school I now had $1,000 and I said all right now I'm going to open my own account and my parents said that was fine so I opened my own account with a merit trade I funded it with $1,000 and this time I took a different approach this time I Diversified I invested the full, and I invested in a number of different stocks that I was familiar with I bought caterpillar I bought fizer I bought canondale bicycle which is a little speculative because I like bicycles but nonetheless I bought us steel I bought Exxon Mobile American Electric Power and there were a few others I can't remember them all right now so I I bought these stocks and this was uh in June so school was out for summer and what I did was I sat down I had kind of like my um I had a ledger it was a yellow a yellow kind of legal pad like this and I wrote down all my positions the reason I was getting in what my thesis was you know why I like this stock and I uh proceeded to watch the market every single day I would open my account I would check it I was so excited it was so fun I was like I'm I'm a stock invester by the end of the summer you want to know what happened my account was more or less unchanged the problem was I invested $1,000 into really like S&P 500 type of stocks they didn't change in value so I mean over the course of three months they didn't really change in value couple went up couple went down and I lost a little bit because of fees and commissions I think it was maybe 67 or $73 something like that it wasn't a lot but it it was you know you had to pay a fee every time you bought and sold and so anyways so at the end of the summer I was kind of defeated I sort of felt like w man that didn't really work so well you know I I had this idea and H I guess you need more money than I had and that's true that for that strategy of divid sort of dividend investing or being Diversified across 10 different large cap stocks $1,000 isn't enough those stocks probably I mean if you track them now we can look at those stocks I had the right idea if I had kept that $1,000 in all of those stocks it would be interesting to see how they performed but you know Exxon Mobile from 2001 through today um there's no question about the fact that oh actually I've got to I going have to change my settings to load more but there's no question that these these companies pretty much across the board are up um over this you know 24e period uh except maybe canondale bicycle uh we could see what that one is canondale um bicycle company so canondale bicycle stock price uh so it looks like they got they must have gotten bought out at some point because they're not still it doesn't look like they're still um publicly traded it's been defunct since uh 2013 so that's not a surprise prize that that was a little bit more of a speculative one but nonetheless um the others are are all doing you know quite well but with $1,000 I had kind of the idea that I was going to make more money that summer than I would have made with a regular job I was treating it like a job but I wasn't making money like it was a job because I was buying things that weren't moving okay so then uh as many of you guys know I so that was in 2001 so these are my first two attempts 1998 and 2001 then I graduate high school I go off to college and in the middle of college my father is diagnosed with stage four lung cancer I move home I drop out of college move home and I'm staying at home driving him to chemo and radiation and I did some classes at the community college of Vermont during that time and then and I was working at a gas station uh so I'm working at a gas station pumping gas and I don't have any any money I've got nothing I'm my parents are helping me out I'm living at home I'm helping them out too I guess and I had no money so stock market was the last thing on my mind I was playing video games Grand Theft Auto you know whatever um PlayStation and just hanging out with local friends and you know not thinking about the market at all uh my father passes away and um then I kind of had this period where I was like all right what do I do now I ended up enrolling back in college I finished my four-year degree and I graduate right into the Great Recession so when I graduated um the market was at its lows the economy was at its lows and employers were not hiring when I would I I ended up getting an unpaid internship I tried to apply to work at a hedge fund in New York City because at that time I I was like maybe I'm going to give this another try and the hedge fund said no they were having people with like you know their their like M mbas applying for unpaid intern ship so I had I didn't have that I just had I don't even think I had graduate when I applied for the internship so I ended up getting an unpaid internship and I I worked there for a while and then they made me an employee and I worked there for a while this is that architecture and design studio and it was in in New York and I I kind of enjoyed that for a while but the market was really in a in a difficult position and it was hard to get work and I ended up moving back up to Vermont the job that I was at business was slowing down so I could see the writing on the wall so I moved back up to Vermont and I decided you know and now I've got some money from my father from when he passed away uh so now I've got this money I had watched it decrease in value and I thought navely maybe I could manage it better than the you know investment advisor that was managing it before and so I took the money I took some money out and I started trading with it and I approached it differently this time when I was in high school I had had a friend who had made $166,000 trading a penny stock he bought a penny stock and he sold it for $16 $1,000 of profit and so that was like in my head that that was like potential so now I'm like I've got a little bit of money so what did I start doing I started looking for penny stocks that was like my first thing so I'm not looking at Exon Mobile I'm not looking at Apple or you know us steel or any of those big companies I'm looking for penny stocks but you know what ended up happening right away I get caught up in being in the dump of these penny stocks that are dropping and I lost some money and so I'm like okay this is harder than I thought it would be but but I started seeing on well I guess it was probably Twitter at that time I started seeing there were people out there who were making money so I was like okay there is something in here I just have to figure out sort of a system you know how am I going to choose which stocks to buy and and which stocks I'm not going to buy now I was in a position here where I had a couple things going for me number one I had time I had the time because I was in Vermont and I didn't have another job so I had a lot of time that I could dedicate I was happy to trade my time for potentially making money in the market and number two I had a little bit of money from my father so that gave me a little bit of a cushion in two ways number one it covered my cost of living in Vermont which was pretty minimal at the time because I was s single well I just I was single and then I got married but still our cost of living was very low we didn't have kids or anything like that so you know I was in a position where I felt like I could essentially use that money to buy me some time learning how to trade covering my cost of living so I spent the next two years going through trial and error and step one for the strategy that I now trade today um what I discovered through that two-year period of trial and error was that consistently my biggest winners had a set of common denominators and this was kind of important so like if you look at my metrics right here for the last 90 days you can see the last 90 days I'm at $513,000 in profit in the last 90 days just right there what you would see if we look in detail is that the stocks I'm trading are all very similar they have similar characteristics and I'm going to share those with you to help you understand what my Edge is and this is this is an edge that um I think is exists not just for me but for really all retail Traders because this is a niche this is a little corner of the market where you know Big Wall Street institutional Banks aren't really trying to dominate because there's not enough money for it to be really worthwhile for them there are some um smaller private investment banks that do engage in IPOs and secondary offerings and stuff like that for these lower price companies and there can be some challenges there but for the most part this has been a pocket that's been pretty pretty safe for me now for more than well almost 15 years so more than more than a decade um so so what I ended up realizing during my sort of two-year learning curve my trial and error period was that for me penny P stocks were really difficult penny stocks literally being stocks at 15 20 cents a share they are really difficult because a lot of them are OTC stocks and they're companies that there's like no regulatory filings on them there's no Financial filings they're kind of like shell companies a lot of them that are just used essentially in pump and DS they get pumped up insiders sell shares and they drop back down and usually retail Traders get caught holding the bag and that's what happened to me so I was like okay that's not going to work and then I tried Trading stocks like apple and the S&P 500 but I tried trading options because the options are volatile enough intraday that you can make 10% in one day which was kind of like you know if you can grow your account 10% in one day you only need to do that a few times a year to have a great year so that's kind of what I got focused on but I realized when you're trying to trade apple or the S&P 500 you are trading Against the Wall Street Bankers you're trading against the highfrequency trading algorithms that they've developed to take money right out of our pockets they are so good it's like playing chess against the computer and it's almost impossible to win so I realized there I don't have an edge so I spent these sort of two years trading a little bit of everything I trade options small caps large caps midcaps and I I I didn't find consistency I was struggling and then I had a turning point and my turning point was actually a big red day I had a huge red day but what it did was it for it actually made it so I couldn't trade until I add more money to my account but it forced me to to step back and look at my metric and because I had been so diligent about tracking all of my trades in you know sort of a journal I was able to look at my metrics and I was able to do some digging so I'm going to I'm going to do a um a little example for you I'm going to go back here to the month of March um March was a tough month for me and there were some lessons from March that I applied to April so during March you could see couple big red days there were four red days and didn't really have a ton of profit so I was up $20,000 which for me is a not a lot of profit for one month okay so if you look at all of these metrics probably for most beginner Traders it's kind of hard to see what's going on um but what we have here we've got my average winners which were $742 and my average losers were $100 so what we know right now is that my average losers were bigger than my average winners and that's not great but my accuracy was 64% and that's why I was still able to be profitable even with that negative profit to loss ratio but we look at days and times and we noticed that I was red on Mondays and Tuesdays which kind of interesting pattern and I was green on Wednesday Thursday Friday that's probably something noteworthy to pay attention to in the coming months and we noticed that I was read on trades that I took early between 6:00 a.m. and 7:00 a.m. and I was read on trades I took later in the day so I took this information and the first thing I said was very clearly every day of the week I should tighten in my focus to this area right here from 7:00 a.m. to 12:00 p.m.

M cut off and so for the month of April I said based on this data here I'm going to make a change and that's what basically I had two years of data so I was able to sort all of that data and come to similar conclusions I was like all right I've got two years of trading I don't have anything to show for it but I've got a lot of data what is the data telling me and the data showed me that I actually would be a profitable Trader if I sto doing this I sto doing this and then I switch over to price and volume if I stopped trading stocks over $10 a share I stopped trading stocks under $2 a share and all of a sudden all I'm focusing on is the areas in green and because now I'm getting kind of a clue at what I can focus on I'm getting a sense of confidence I'm like okay wow and here's the thing this is my all the trades I took during that period of time I was trading a lot these higher price stocks but I had nothing to show for it so when I cut all of this out it allowed me to spend more time focusing on these types of stocks so this was the month of March I was up $20,000 I was feeling not great but I came away with some actionable steps I could use for April so now we look at April $45,000 that's much better we look at the profitability I hardly traded anything under two I didn't trade hardly anything over 10 and nothing over 20 so this is where I got really focused in I did really really well here and then we look at days and times I didn't trade well actually looks like I I lost a little bit here but this was within the parameter that I had set for myself between 7:00 a.m. and 12:00 p.m. so I stayed focused pretty much within that parameter but I made the most money in the first two hours and the result was clear so this is I mean this highlights the importance of data for helping create your strategy for helping you find your Edge right that it's possible that you've already been Trading long enough that you've got a lot of data and we could import that data we could analyze it just like I did right here and we can discover wait a second you actually might be a profitable Trader right now if only you stop doing this this this and this now that may not be the case it may be the case that you're a brand new Trader and you haven't don't have that data at all or it may be the case that you've been doing a lot of different things and you really don't have a strategy or anything in there that's like a systemized approach of how you trade where you get in where you get out in which case all right it's time to adopt a strategy that is currently being traded by other people so here's what I'm going to do I'm going to put a link it's going to be pinned at the top of the comments and Linked In the description where you can download my trading plan it is a set of rules a system a strategy that you can follow now I always want to encourage you to trade it in a simulator and prove that you can follow the strategy that's profitable for me with profitability for yourself in a simulator before putting real money on the line just because it works for me Isn't a guarantee it'll work for you and I'll tell you why I have the discipline to follow the rules of my my strategy I'm going to give you the strategy but if you don't follow the rules to the T then your results will certainly vary and and re realistically results will always vary and I always say that my results in trading are not typical because I have a lot of experience I have a lot of educated intuition and all of that manifests to where I'm at today but as a beginner what you want to do is you want to prove in a simulator that you can generate some consistency before putting real money on the line so so right here um I so I end up spending uh two years sort of going through trial and error and this is what I ended up discovering and I'm going to kind of narrow this down into three simple steps the first step for me is that I've learned that I consistently make the most money and we can delete this time period and we're going to go this is $13 million of gross profit and so what I know is that I consistently make the most money trading in the morning that's just that's that's the truth so now when we start to think about the strategy that I'm trading this is sort of telling you exactly what time I'm trading right so I'm doing the best in the morning and then I learned I do the best on certain price stocks I do the best on stocks that are up a certain amount on the day they have to be up a certain amount in order for me to for them to be worth trading so now that I understand the type of stocks I make the most money on what I set out to do each morning is to find the stocks that share the common denominators of having the potential to become my big winner for the day so I can already tell early in the morning if a stock has essentially meets the criteria meets the profile and if it does then I'm going to trade it and if it doesn't then I'm not going to touch it at all and this is all as per the trading plan you guys can download so step one is to find the stocks that are moving and of course I'm using stock scanners to find these now this platform that you see in the background on that slide you see right here this is called day trade Dash this is software that I've been developing uh with a development team that I hired in 2017 so we've been building this out for the last seven years and uh we continue each month each week really to add uh new features and to grow it and my goal when I started building this was that I was I was leading this community at Warrior trading uh this community of active day Traders and as the community was growing and the business was growing I wanted to create the ultimate dashboard that all active Traders would use that would just be like the no-brainer it just has everything in one place it's got the best scanners it's got the best charts it's got the news fee it's got chat rooms it's got broadcasting it's just everything in one place and so that's what I've been building out for all of these years so I use the same software uh that that my students use at Warrior trading so number one I'm looking at the scanners for the leading percentage gainers because what I know is that when a stock is up 160% on news while some would say it's going to be up way too much I would say that's a great momentum opportunity this is a stock experiencing a really strong Trend and if I can find a place to buy with minimal risk this is going to be my highest likelihood of capturing a 10% intraday return a stock that's up 160% can easily go to 175 180 200 220 250 260 280 300 it's so much more likely in fact that a stock that's already up 100% goes up another 10% versus a stock that's not up at all going up 10% so if a Stock's not up at all what would make it go up 10% it needs to have news but if a stock is already up 150% it's already got news it only needs to continue to be interesting and then it's going to be up 160 17 200% so this is my focus to look at the number one leading percentage gainers each day so step one is to find those stocks and I do that using the scanners step two is to perform my due diligence which is a combination of fundamental and technical analysis I check the news headlines I try to understand why the stock is moving up and then I look at the charts I try to evaluate these Candlestick patterns and decide is there a place here where I can buy with minimal risk now we look at Intel we go back to this sort of case study of Intel and one of the problems here with the Intel trade oh Inc you've got a stock where um the Candlestick chart was um diverging from the opinion that this person had their opinion was you know they had a thesis of all the reasons it's it's going to go back up and the price is cheap right now but the price was cheap for a reason the market was pricing it at that low level the market knew more in this case and the market was right so you never want to ignore the technicals the technicals are going to tell you whether or not this is worth trading so for instance on um just my the last trade I took um I was up about $9,000 over the last two days trading uh this stock whlr which ended up going from about 80 cents a share or 90 or about a dollar a share all the way up here climbing up pulling back and then pushing all the way up to $15 which was really incredible and this had a news catalyst so this is the type of stock that I mean I'm not saying you should put $700,000 into a stock like this is a small cap stock but at the end of the day you would have been he would have been a lot better off if he'd been focusing on these types of stocks he actually what I think probably should have done is put all of that money into the S&P 500 cuz that's something that he could depend on being there in 10 years the S&P 500 is going to rebalance it's going to pull some stocks out put some new stocks in new companies in but that would have been and if you lose 30% of the S&P 500 you know that historically it's going to recover when you lose 30% on a single stock there's no it might not recover let's look at DocuSign let's look at a stock that you know hit an absolute incredible Peak during the pandemic do you think it's ever going to go back to those levels it's currently $59 a share after hitting high of 320 it's probably it might never go back to that level unless we have another pandemic but even then it it probably won't Zoom ZM uh another stock um same thing it say $67 a share pre pandemic pandemic post pandemic right so you know this stock is not going to go back to those levels so if you're a bag holder on it it's like well you know and and I don't know that that's going to happen with Intel Intel um you know I don't know but but you got to trade the technicals that's right in front of you that's the moral of the story so I focus on trading those technicals so my technical analysis is looking at the Candlestick charts checking the position of my indicators and then looking for an entry where I think I can manage my risk and step three is where I'm actually taking that trade that's where I'm actually buying and selling now I take the approach and if we look at my metrics here you could see my average hold time is pretty short one of the reasons I have a short hold time is because inherently I I was always uh I've always been kind of a nervous investor I've been nervous and and just like oh I don't want to lose I don't want to lose and so what I found is that it's easier to predict what a stock is going to do in the next five minutes than in the next five hours or the next five days or the next five weeks the next five months or the next five years the shorter the time frame especially when you you're dealing with a stock that has breaking news right now the easier it is to predict what it's going to do and the traders who can accurately predict what a stock is going to do will be the ones who make the most money so these big Wall Street Executives they have an uncanny ability to predict what a stock is going to do months in the future but it feels that a lot of them have an unfair Advantage an edge that you and I will never have as retail Traders if we see a stock that has breaking news at 8: a.m. that they've got $160 million infusion of capital from Nvidia or that Nvidia is taking a stake in the company all of a sudden this small company now has a good chance of being the number one leading percentage gainer in the market today for small cap stocks and it could easily go up 50% 75% 100% or higher so anytime that stock squeezes up and then pulls back those pullbacks can be a buying opportunity to ride that wave of momentum the next leg up and that's what I do every single day I'm a volatility Trader I'm focusing on trading stocks that have breaking news because news comes out in the morning I trade in the morning so I discovered all of this through trial and error but this has become my Edge and this is the Ed that I share with retail Traders because this is an edge not just for me individually but for retail Traders at large we look at retail traders who did really well during the pandemic and they were trading this exact strategy that I trade every single day they were trading momentum on stocks that had news now of course during the pandemic we had some stocks that made absolutely incredible moves I mean they would go up 500 or a th% in one day probably like the do bubble where you just had incredible volatility and that was pretty amazing to be part of that right now the volatility is a bit more um a bit more subdued compared to that but it doesn't change the fact that when we step back and you know look at where I'm at in the last 90 days in the last 90 days I've got $500,000 of profit now I'll say my results aren't typical but this is telling me that the market is heating up and there's definitely opportunities to be had for retail traders who have a strategy a system and a set of rules that they're following developing your Edge is what this is all about now you may find that you learn the strategy that I trade and you may find that well you know I don't have the time commitment to be able to trade every single day so you're going to have to find a strategy that fits better within your risk profile or your time commitment or whatever the case may be one of the real challenges in trading is learning new strategies because there's only so many people out there like me who are sharing their strategy and are proven profitable if you're ever curious you can come over to Warrior trade.com you can check out uh my broker my broker statements that are on the website if I go down to the footer here you'll see let's see uh earning statements 2024 right there so these are all my broker statements you can see them down here these are for each month and then if we go back up you can also check my audit and this is uh all those broker statements being audited this audit is updated at the end of each year so this verifies my starting balance in January 2017 of $583 15 well they rounded it but anyways $583 so um that was a two let's see a $335,000 year in 2017 so 17 18 19 20 21 22 23 Etc all right so with that um I have the link in the description for you guys to do um a two-e trial for those you guys who are interested in trading side by side with me for the next two weeks and I have the link in the description for you guys to download my trading plan so I hope you guys check them out thank you for tuning in for this episode I hope you hit the thumbs up or subscribe the channel for more episodes about trading strategy just like this and hey I want to remind you as always that trading is risky my results aren't typical so manage your risk take it slow and I'll see you guys back here for the next upload real soon