My Profits SOARED After Learning This Trading Hack transcript

[Music] in today's episode I'm going to share with you what I think is one of the big secrets to long-term success as a Trader you may know that most beginner Traders lose money I don't think that's a secret in all my years of trading I I'm kind of in a unique position here because I put out all this content here on YouTube so I get to read your comments and really see the whole spectrum of Traders I see a lot of traders who will comment on videos like this and it's very clear that they have no strategy they have no idea what they're doing they're total beginners and then you have Traders who've been doing it for a while they understand technical analysis they know how to read level two they know how to get in and out of stocks they know how to make money but they lose more than they make and a lot of times it comes down to lack of discipline and then there are traders who just chronically over trade and unfortunately a lot of beginners fall into that pattern so what I'm going to share with you is a little secret that a lot of beginner Traders don't understand in fact a lot of experienced Traders don't understand this either and the secret is that in trading less is more so let me walk you through the steps that I would take to reain my trading back in to focus on my highest probability setups thereby increasing my accuracy increasing my profit loss ratio and actually increasing my total profit all while trading less which gives you back more time in your day I'm sure for all of you out there who have been trading for a while you would love it if you could make more money trading with less time right now I'm not saying that this is going to work right away you're not going to watch this video in tomorrow boom you're going to be changed but I hope for you this is going to be a step in the right direction because what I'm going to give you are some skills that you can Implement in your trading today so let's take a step back and talk about why so many Traders struggle with chronic overtrading I think it kind of goes back to the fact that for most beginners we're taught to learn by getting our hands in the dirty by you know by getting hands on and just taking as many trades as possible that's what was great for me and I think that there's some real value in that because to become really good at trading you need experience and you just can't really there's no substitute for gaining experience other than just being right here and actually taking the trades so if you were someone who came into the market and let's just say as a beginner you only took one trade a day that's only one experience per day there's about 200 50 trading days in the year so you're getting 250 individual trade experiences each year Well compare that to someone who comes in and takes 40 50 or even a 100 trades a day they're getting exponentially more experience than you are and they're going to learn a lot from each one of those trades they're going to get a better sense of ah it's interesting you know when I see this certain uh bid on the on the level two I see like a 80,000 share buyer all of a sudden the stock tends to pop up 10 15 cents you start to learn when I see this this happens because a lot of trading and success in trading comes down to pattern recognition ultimately the traders who can predict the future the best will make the most money and we're not trying to predict days weeks or months into the future really as active day Traders we're just trying to predict I don't know maybe the next 15 minutes maybe the next five minutes if you can predict what a stock is going to do five minutes from now even 3 minutes from now you could make a lot of money as a Trader so how do we predict what a is going to do ultimately it's through pattern recognition so let's jump onto the Whiteboard let's say for instance you see this very familiar pattern you see this big green candle and let's say it started with a catalyst right here at 8:00 a.m. eastern Eastern Standard Time which would be pre-market with breaking news all right so this stock has breaking news that has just come out at 8: a.m. let's just say it's a FDA approval all right so they got an FDA approval which means this is a biotech stock we know bio Tech and pharmaceutical stocks can be particularly volatile so it squeezes up it pushes even higher and then we see a moment of pullback now what I know and what many of you who are tuning in also know is that the first pullback on a strong stock that has breaking news usually gets bought up which means it moves higher and so as an active Trader when we see this pattern forming right we only see the beginning of it we see sort of the first candle the second candle this candle we're starting to predict what's going to happen next right we don't know if this is going to happen it might drop but we see this and we've seen this pattern enough times that we're starting to create that kind of pattern recognition and that recollection that okay what's probably going to happen here is the first candle makes a new high and it pushes higher so as a beginner you want to gain a lot of experience and the best way to do that is to trade a ton obviously encourage all of our members at Warrior trading who have access to our simulator just to trade as much as possible there there's nothing wrong with that if you want to start at 4:00 a.m. and you want to trade until 8:00 p.m. that's fine now it's a long day but you will gain a lot of experience okay well then at what point do you re it in because you may note that I don't start trading at 4:00 a.m. and trade all the way to 800 p.m. and some people would say Ross I don't understand why wouldn't you just make more money if you traded longer hours now when I think about profitability I break it down into a few components so we're going to start here I'm going to kind of build out this map of profitability this is your road map to being green road map to profit all right so we'll call it that so to me it starts with accuracy the first and most important thing for a successful Trader is to have high accuracy and most beginner Traders especially when you're in the phase of trading in a simulator you don't have high accuracy you're taking a ton of Trades which is great you're trading just for the sake of trading getting experience studying the level two and starting to learn you know when this happens that happens and everything else so during that phase you may only have 30% accuracy 40% accuracy and that's fine because right now it's not about making a lot of money it's about gaining experience and just sort of like just gaining as much experience as you can it's the fire hose just absorb as much as you can and keep gaining all of that experience so the more you trade the better but then you're going to get to a point where you say I want to test myself I want to see if I started trading with real money how would I do and so what's the first thing that you're going to do if you're going to make that kind of trans transformation step you're going to reduce the amount that you're trading right you're not going to trade for 12 hours a day you're going to say well let me slow down and you may even set up two simulator accounts one is to continue trading a thousand times a day to gain experience and the other is to test yourself like these are the trades I would actually take with real money and let's see if I could be a profitable Trader and so you're going to set a certain quality standard for all of those trades you're going to take right you're not going to trade low quality setups you're not going to trade some that has a high risk of flushing and you're going to get you know hopefully a better sense of the C and D quality setups that you should avoid so when you're trading with this sort of pretend real money account you're dialed in so your first goal is to achieve high accuracy if you can achieve high accuracy you're going to have more winners than losers naturally and what we hope is that this translates to a positive profit to loss ratio where your average winners are bigger than your average losers when you have a positive profit to loss ratio you then have what we would call um consistency so I'm just going to draw a picture of a calendar here consistency with high accuracy High profit loss ratio is when most of the days out of the month are going to be green days so just be like green green green green green green green and then okay maybe you have one red day here and one red day here but for the most part you're trading nicely in the green now you know what that consistency creates that consistency creates selfconfidence now self-confidence is a very sort of little respected component to success in trading a lot of people don't think that this really they wouldn't consider this sort of part of the equation but confidence in yourself is really important and you only get conf confidence as a Trader when you have a track record of consistency if you're a brand new Trader and you have zero track record of consistency any confidence that you have would be ignorant it would just be blissfully ignorant because there's no reason for you to be confident right you hopefully would not be you would be naturally a little bit cautious because you've got zero experience you don't know what you're doing now unfortunately beginners luck for some Traders can give them a false sense of confidence and that can be really dangerous which is why regard regardless of you know how much money you have I always think it's a good idea to practice in a simulator for a period of time and and prove that the strategy that you're trading is more than just beginner's luck that there's a process and a system that you could trade every single day that's repeatable and that you could give to someone else and that they could trade it too right it's there's more than just luck behind it so when you start to develop a track record that creates self-confidence now self-confidence how does that feed into accuracy to be honest self-confidence doesn't really feed into accuracy all that much but what it does factor into is um the quantity of Trades so the next one here and I'll move accuracy over just a little bit is quantity of Trades so as a beginner you may only be taking five tra let's just say five trades a day but as you gain more self-confidence in your system in your strategy you'll start increasing maybe to 10 to 15 to 20 to 25 Etc and so naturally if everything else is the same you increase the quantity of Trades you're going to increase the profit but there's another thing that happens in here you increase your share size so let's see this is um so that's trade I'll just say um trade quantity TQ and this is uh TS trade size and then we'll go down here to we'll move accuracy down here so we're going to do sort of a full circle so these are the three um the three sort of components that will fuel your accuracy profit loss ratio and consistency going up so when you have self-confidence you increase the total number of Trades you take you increase your share size maybe initially you were trading with 100 shares then you go to a th000 then you go to 2,000 then you go to 4,000 you go to 8,000 right you go to 16,000 and all of a sudden your consistency is higher your profit loss ratio is higher accuracy is as long as this actually stays the same and this stays the same and this remains consistent right consist consistently green then your self-confidence trade quantity and trade size will increase total profitability so this can all put you on a positive feedback loop but not so fast I've seen the exact opposite happen where Traders go on a negative feedback loop and start the downward spiral now you may be familiar with this I'm familiar with it because I've had many downward spirals in my career I'm lucky that I got through them and really the only reason that I got through them is because I started Trading early enough in life before I was married before I had kids and I was as at a place where I could afford these losses and I could recover from them now today if I started today it wouldn't be it wouldn't be nearly as easy so those of you guys who are starting early are certainly at an advantage but the thing you can do of course uh regardless is to practice and start in a simulator so the problem um that some Traders fall into is a negative feedback loop where low accuracy introduces a lot of losers cuz if you're only right 50% time half your trades are losses so with all of those losses invariably you'll catch some bigger losses so then you have a a bad profit loss ratio you've got a bad calendar where you've got a lot of red you've got low confidence so you reduce the number of Trades you're taking you reduce your share size but if your accuracy doesn't improve you're just going to continue to spiral downward and unfortunately what some people do is in spite of low confidence they actually increase trade quantity and increase share ex size and the reason they do this is because now that they've dugs a hole they feel the only way to get out is to increase the number of Trades I'm taking and to increase my share size and so then that goes from to an actual fast accelerating downward spiral where things are getting the losses are getting bigger and bigger and bigger so what I want to introduce to you is this concept of less being more and I'm going to show you from my own metrics this is a very interesting uh discovery that I just made here in the last uh week so I've been uh this last well the last 6 months have been very interesting it's been an interesting Market um those of you guys who have been tuning in for a while of course you get to watch me trade every single day if you're a member at where you're trading but uh I I've had this kind of interesting experience where last year for me was a very slow year it was actually a low point for me where I finished the year up um $389,000 and I know that a lot of you guys are going to say you can't call that a slow year it's a great year um but it is a slow year because if we looked at 2022 you would see that in 2022 I was up closer to 800,000 so let's look at 2022 so that was actually a million dollar so 2022 was a million dollar uh and that was in net in gross profit so 1 million in 2022 and then 2023 came in at 389,000 that was down 60% year-over-year right so that for me was a low point to have a year where I made that much less was it still a green year yeah still made money six figures can't complain now we look at 2024 and 2024 back on track here sitting currently at 797 th000 with more than 90 days to go uh in the rest of the year but what's interesting here about this year is that if we look at the overview and we look at my calendar I had a relatively slow beginning of the year January February March April May and then in June I implemented a change in my trading and that change LED to a 47-day hot streak that lasted from July through August and into September and even through September there's only two red days now if we look at August or we look at July you'll see in July I locked up $232,000 in one month more than half of what I made in all of last year I made in one month and then if we add the hund what was it $170,000 that I made in August through the month of July and August in 2 months I made more than I made all of 2023 the market was hot now the strategy that I implemented was based on trying to understand is today going to be a green day or a red day let's tie this back to accuracy because accuracy is such an important point right here so what I ended up doing in June after a particularly bad red day was I ran this report of win days versus loss days and what I realized was that on my losing days this is really embarrassing but I'll you know I put it all out there so you guys can see it but on my losing days my accuracy is 46% I should be ashamed of myself my accuracy is 46% on losing days whereas on winning days my accuracy is 66% now I I suppose it makes sense that on red days I'm going to have lower accuracy but this is 50% lower this is substantially lower well not quite but it's it's substantially lower right so I thought to myself how could I identify that today is going to be a red day as early as possible so instead of going down $5,000 which is my Max loss 5,000 maybe I could stop when I'm down only 2500 is there a way I could identify it's going to be a red day sooner and what I noticed about my trading and this is again pattern recognition what I noticed is that what I tend to do on days as I go red let's jump back onto the Whiteboard on days that I go red the first trade you know what it is the first trade is a loser and so I immediately go red my second trade is usually another loser third trade usually another loser and as I'm losing do you know what I'm doing I'm doing exactly what I said here as part of the downward spiral I'm increasing share size so I'm taking bigger position so quantity of shares goes up right here go going up even more and now once I go red so my p&l looks like this I start the day and I go down down down but actually it's a little bit different I would actually say it looks more like this first trade down second trade with bigger size down more third trade with even bigger size down even more so the losses are getting bigger with each trade because I'm taking larger share size so when I'm taking larger share size I'm going down further and further and then when I get down to this point I'm at a place where I'm essentially grasping at straws I'm willing to trade anything that's moving and then you know what you really end up having to do is go on to another um sort of I'll start from the top so first loss second loss third loss fourth loss and all of a sudden just like that I'm down $5,000 or more and so I realized on these days what's happening is I'm having a mini spiral right now it's all contained within one day which is good it could be worse but sometimes this can actually lead to multiple days of down W momentum where the next day I come in you know let's just say the day ended right here so the next day I come in and what happens first trade once again deep in the red and then second trade deep in the red you just have to get more whiteboard to keep going red so you just go onto this multi-day downward spiral and I I said well what if I could go back to right here at the beginning where could I intervene and do something different to prevent me from having these spiral days and I realized that on these days a occasionally occasionally these days will actually start with a green trade sometimes these days will start with a green trade but then very quickly I go boom right into the red and so I realized that most of these days the majority of these days I never went if I went green I was never green by more than $1,000 and I thought about that and I thought well geez I wonder what if I did something a little different what if I said to myself I'm going to start each day of course at zero right here oops zero I'm going to start each day at 0 and I am not going to increase my share size until I'm up $1,000 so I came up with this system where I would trade with a Max position of 5,000 shares which for me is about one quarter of full size which is around 20,000 shares so starting with a quarter of full size position I I'm going to do 5,000 shares Max size and my first goal is to make 20 cents a share so that means if I get in right right here and my first trade is a 20 cent winner I'm going to be up $11,000 so $1,000 in the green and then from there I'll take the cap off and if my second trade's a winner then boom next thing you know I'm making my way up to the $5,000 daily goal but here's the thing if um I'll just sorry make that a five $5,000 daily goal but if that first trade is a loss then with smaller share size I'm down only a th000 bucks minus 1,000 which is a very small red day for me and I do not increase size until I'm up over a th so then the second trade if I lose on the second one I'm down 2,000 oops 2,000 sorry so then I'm down $2,000 on the second trade and if I lose on the third I'm down $3,000 all right $3,000 in the red and at that point you know what I say three strikes you're out so not that I'm a big baseball player um you guys probably didn't know that I'm not a professional baseball player I just should say that for full disclosure um I'm not even I don't watch sports a whole lot but anyways I spent too much time sitting in front of the computer watching the market but nonetheless I figure if I have three strikes I'm out so if I start the day with three losers in a row that tells me that clearly my accuracy is not on and if I look back at these big red days a lot of these big red days started with three four five losing trades in a row backto back losers except the difference is that I continue to increase incre my share size and then on those days once I was down 5,000 or $8,000 or $10,000 I got emotionally activated I got frustrated angry disappointed and what did I do I took it out of my trading I started increasing the quantity of Trades because I realized well I'm sitting here waiting for a quality setups and I'm not seeing any and I want to make back that 10,000 that I'm read right now cuz I'm read 10,000 I sure feel like a loser so if I could make $10,000 between now and the end of the day I won't feel like a loser anymore I won't have to go to bed feeling like an idiot so then if there's no a quality setups for the rest of the day I guess I'm going to have to trade B quality setups I guess I'm going to have to trade C quality setups but you know what happens when you do that if at an a quality setup I'm trading if I'm really disciplined in trading only a quality setups maybe I'm at 75 maybe 80% accuracy if I trade A and B setups mixed together I'm probably at about 70% which in a hot Market is okay but when I start trading c d f quality setups not that I really grade them at that level but I just start trading really garbage what happens to my accuracy drops 46% that's what we see we see it in the metrics right here so what I realized was that I need to find a way to slow myself down on the days that have the highest probability of being a red day and those are of course days where I start in the red now there are some exceptions there were some days after I implemented this new strategy where I went up you know 5,000 or even 10,000 and then one trade I went all the way back to Flat you know I had a fluke loss and whatever that was it but that didn't happen very often and in fact the fact that I had 47 green days in a row is is evidence of that so then after we came off this really hot summer of trading June July August I was like all right September is going to be on fire I'm so excited for the month of September I'm going to be aggressive I'm going to just continue this momentum we'll see if I can cross over a million dollars on the year right here right now in September so I came into September swinging hot now look I I think I had some basis for being that aggressive in September but I want to show you what happened in the first three weeks so in the first three weeks of September I ended up really spinning my wheels and actually we're going to look at uh the overview here so what ended up happening for these first 3 weeks is I had my first two red days that I had since June and neither of them were small red days 11,800 and 7,500 and you could see how many trades I was taking 51 trades 60 trades 59 trades 105 trades in fact if we look at the details here and we're going to analyze this and and by analyzing it what you're going to get are some action actionable steps you can Implement in your own trading today based on my experiences so if we look at the total number of Trades this is over the course of three weeks how many trades do we have six 628 trades all right so we got 628 trades and we're going to break this down on a per week basis so um we're going to call this the um the this is going to be the spiral period so I was trading 200 trades per week approximately and what was my uh my total profit was $44,000 so look I mean I can't complain it's not like I was losing money but I did have some big losses in there my average winners were $388 okay so average winner here we're going to go on the Whiteboard $388 average um plus winner and then the average losers were U minus 391 average loser all right and the accuracy was a mere 58% not great now the total volume traded let's look at this so through this period I was trading an average of 400 oops 43 38,000 shares per day so 438,000 shares per day so at the rate of let's see 200 trades per week so we're doing about 40 trades a day so trading about a little over 10,000 shares 10K shares per trade okay so these are our metrics right here for a period that I self-identified as being poor performance I was my and my accuracy is what really highlights it accuracy and poor profit loss ratio now just for the sake of comparison let's look at this stretch from June the end of June through August just so you can kind of compare what a better um what what my metrics look like when I'm trading a little bit better all right so from June 17 through August 31st here I did $418,000 which was phenomenal that's excellent right there and I averaged about 66% accuracy 67% that's pretty good profit loss ratio $539 average winner $285 average loser so let's actually write this down all right so the this is going to be um June through August so I was taking an average of well let's see so that was 1500 I had a total of 1,500 trades but how many weeks was this this is maybe we should do just July we'll do just July and August that way it's um two months it's just easier to do the math all right so we'll just do July and August all right so we'll cut off a couple days there all right so anyways doesn't change much here so 404,000 so I took uh let's see 1,400 trades so I was taking 700 trades a month so about approximately 175 trades per week all right average winners $560 average losers 291 so this is the loser this is the winner accuracy 67% average daily volume 377,000 shares uh which means I was taking a few less trades so instead of 40 trades was more like 35 so I was still averaging about 10,000 shares per trade so 10,000 shares per trade right here but what I would say is that during this period here I increased the number of Trades but I significantly decreased accuracy and my profit loss ratio went down as well because the average losers went down and the average winners were smaller so now let's compare that with the next little stretch so now we're going to look at um September final week all right so the final week of September oh and the total profit there was um let's see so so for this we were at 44,000 44,000 that was for a 3-we period this was $48,000 which was really super super solid okay so now let's look which was averaging 15 so let's do it in weekly so it's averaging here uh 15K per week and this was averaging 50k per week wow $50,000 per week okay so 50k per week all right so now let's compare that with the last week of September so for the last week of September we're going to go uh from here to here last full trading week and so what I ended up doing is I told myself and this is what this is what I is what I find so interesting so after finishing the first three weeks of September like this and then I had a red day on Thursday and another red day on Friday towards the end of um the third week so after those two red days in a row I was frustrated I was like you know what gosh darn it this is so irritating why can't I get you know my head on straight here I'm overtrading I feel like I'm just I'm spiraling what is going on I'm increasing my quantity my accuracy is garbage I'm just I feel like I'm flailing you know this isn't a good feeling I don't feel like I'm really dialed in you know when you want to when you're trading you want to be calm cool collected right and that's not how I was feeling I felt kind of like you know when you see a football team uh for instance again not super into sports but you know when you see a football team end of the let's just say like end of the second half they've had a great they they were in the lead and then all of a sudden Things Fall Apart right and then desperation starts to kick in and they get sloppy then they throw an interception and then all of a sudden it's like whoa what's happening that's kind of how I felt like I was trading just grasping at straws getting sloppy just not dialed in so I said all right we're near the end of the month I had a I had big goals for the month of a or for the month of September it's not going to happen so forget about that that's out at this point let's just survive the rest of the month without doing something stupid so I said you know what I think you need to put yourself into Trader rehab Trader rehab uh for me is when I put very tight restrictions on my account to go back to essentially raining myself in to focus on the basics focus on the setups and the stocks that I typically will have the highest performance in because that's kind of like my cure anytime I end up going off track and having a big loss it's always like let's go back to basics go back to the fundamentals and that is always sort of my path through you know a big draw down so I said all right so for Monday morning what are you going to do you're going to come in and I'm going to cap myself to 5,000 shares reducing share size for the whole day just trying to close the day green after a couple of red days I said and you're only going to trade a quality setups I knew and acknowledge that I had been trading some lower quality setups cuz I've been getting a little desperate and I think part part of the problem was sometimes I was starting the day on like a b or c quality setup and I immediately went into the red and then spending the rest of the morning trying to dig myself out of the hole and if I had just been patient and waited for a good quality setup I could have started so much better it would have been better to start later but to start off on the right foot than to get out early but fumble out of the Starting Gate so what I ended up doing was saying I'm going to implement some guard rails for the month and for for those of you guys who have read um my book how to day trade the plain truth in this book I break down a number of different guard rails um that I Implement in my trading let's see well that's guard rail number five but oh I have it tagged here in the back so in the back there's a a list of all the guard rails here if you guys haven't checked out my book you're welcome to grab a copy on Amazon it's 20 bucks um if you want to download a free copy of my book um and you're welcome to I'll put a link I'll pin to the top of the comments it it'll be linked in the description where you can watch um a free class and at the end of that free class I give everyone a copy of my book it's a digital copy so you can download it but you can still read it um I encourage you guys to do that and by the way for those of you guys watching for this episode I will also put a link um just above that link for a twoe trial at Warrior trading so if you want to do a two-e trial and actually watch over my shoulder while I'm trading for two weeks then by all means check it out and see what it's like uh but a good starting point point is to check out the free class and get a copy of the book so I talk about guard rails and so what I decided to do for um for the last week of September was I implemented some guard rails I said 5,000 share Max uh um share size TS trade trade share size until uh green so until green and then I said A Plus quality only and this refers both to stock type and to setup now in the book I actually talk about um stock selection and the type of stocks that um are the right type of stocks to trade so chapter 10 finding the right stocks to trade and we do an introduction to candlesticks but I don't get into the individual setups in the book but I Do cover those in the class so you guys can check that out so by doing this I figured I had a high likelihood that I would have a chance at recovering and finishing the month with a couple of green days but I assumed I wouldn't make that much money and the reason I assumed I wouldn't make that much money was because I was restricting the number of Trades I was going to take I was restricting um the amount of share size I was going to take at least for the first day and so I I thought I'm probably not going to do that well so now let's talk about how I actually performed and this is going to be based on adding those restrictions so less is more so the total number of Trades let's do that first um I took 76 trades per week so I reduced the number of trades by 70% right significantly reducing the number of Trades I was taking my accuracy went up to 81.6% that is awesome so I took 76 trades but they were all a quality trades and I won on 81% of them my average winners were $545 now see here's the thing that's also interesting if you know that's more in in line with the average winners from June and August 560 545 what was happening during this period well some of those B andc quality setups I was winning on but the losses were or the winners were small they just weren't Big Winners because they weren't great setups they weren't a quality stocks but the losers well I took more trades and B quality C quality setups produce bigger losers so my average losers increased by 50% from about 300 to about 400 well 20 30% whatever doesn't matter so my average losers here were $167 in fact they were lower than any period during this hot streak wow that's really solid now what about the total number of Trades and What's the total profit right probably didn't make that much because I didn't get to take very many trades so the total number of shares traded was 187,000 shares per day so about 50% of what I was trading during the hot market and less than half of what was trading during the spiral period but my average well 76 trades a day I was actually averaging about 12,000 shares per trade so I was actually taking larger size now on the first day I did restrict myself to 5,000 shares but then as soon as I had a green day I sized up so for the rest of the week I was trading with 12,000 share positions and the total profit here was $31,000 for the week so in fact I was more profitable during this stretch between June and August and I think that that was the result of during this period of time the market was hotter and I was able to take almost three times as many a quality setups and maybe there were some B quality setups in here too it was mostly A and B so during this stretch trading only a I trade with higher accuracy and a better profit loss ratio but my total profit was a bit limited so now here's what I present to you I would present to you if you're a Trader who has been struggling for some time maybe you're trading with real money as always practice these techniques I'm going to share with you in a simulator I would encourage you and and see if you can test yourself to trade for the next week just a quality setups and a quality stocks now if you don't know what is a quality for you you've got to pull your metrics you've got to look at your metrics you can import them and this software I don't have any affiliate relationship with so if you use this that's fine if you use something else that's fine too I really don't care but you can import your trades so I import my trades you could use thinker swim I mean these are all the different Brokers you can import to or from and you import your trades and then you analyze your data and you look at okay well what time of day do I make money what day of the week do I make money now what you could see here is I make money predominantly in the morning and of course I know that about my trading but during the first three weeks of September I chose to continue to trade a little outside that window now during July and August I had had some good fortune trading in the afternoon but I think it was the because the market was particularly hot and once the colder Market set in here in September that uh hot streak ran out and those big winners in the afternoon were gone so I had to rain myself in but if you don't know what your metrics are here based on time of day based on the price stock and so on and so forth then it's going to be really hard to make decisions of what is a quality so you could tell here for me a quality meant raining in the time of day I was going to trade which I also did I forgot to mention that but I rained in um to only trade from 7:00 a.m. to 10:00 a.m. and uh price I I said under under 20 so just to keep it under 20 which for the most part was sort of a no-brainer but I do sometimes dabble in higher price stocks but these weren't really the bigger contributors to loss so I would encourage you to analyze your metrics and make a commitment to only trade those a quality setups when I had my big Turning Point the one that resulted in me actually becoming consistently profitable which is now was more than a decade ago when I had that Turning Point the discovery that I made was that I actually was a profitable Trader if I stopped having losers and I bet you all would be that way too but no really what I discovered was that I actually would have been over the previous like six months or eight months whatever it was I was looking at I would have been profitable if I had stopped trading some of these very particular setups I was trading including trading past 11: a.m. that was a big Discovery for me more than 10 years ago that when I traded past 11:00 a.m.

I lost money now over the decades plus since there have been times where trading past 11: a.m. has been very profitable and there's other times where it's not been as good but in those early years I recognized that I was making the most money in the first hour of the day from about 9:30 Market open until about 10:30 11 and then that was my hard stop and so I told myself if you only trade even just once a day just one trade a day but it's an a quality setup based on what your metrics are telling you you make money on you will be more profitable than you've been for the last 6 months since over the last 6 months you've been losing money so even if I'm only making $200 a day I'd be turning the corner and after all $50,000 a year is nothing to sneeze at especially when you're living in a rural area which has been the case for me for all these years so that was my turning point so moving forward I said all right there might be some days where I don't see an a quality setup and I need to bring the patience the discipline you know the ability to hold myself back to restrain myself and say I'm not going to trade out of boredom if there's not an AAL set up I simply won't trade and so I followed those rules and the result was that less was more and that's just the incredible thing if you looked at my metrics you would see that from the period before I turned the corner if you just looked at um Let's do let's plot two things so we're going to plot trade quantity and we're going to plot profitability so let's see what's the best way to do this um so trade quantity here so as you increase the number of Trades so yeah so let's do it like this so this is going to be trade quantity and this is going to be profit so if you only take one trade per day there there's going to be a limit to how much you can make at one trade per day now look you could still you could still make money you could still make some profit you know one trade a day you could do $200 a day something like that and and I think that if you can't make money with just one trade a day there's really no reason to scale up but let's just say you go to Five trades a day you go to 10 you go to 15 what I noticed was this sort of diminishing return where at a certain point you go up to 25 you go up to 50 you go up to 100 and well I guess that doesn't really that doesn't quite work um I guess we actually have to do it this way where profit profit is on this scale this is profit and this is um trade quantity so when you start trading 100 trades up here your profit is actually declining that's the way we should do it so I sometimes I get confused when I do these all right so um anyway so this is what I kind of notice is that once you start to get up to this level you decrease now what you could argue is that last week I was trading in sort of this area here where and there's sort of another plot here which is like you know accuracy but I was trading in this area here with really high accuracy but the total quantity of Trades was at 76 right now we I guess we probably find that I I'm topping out you know around 200 so 175 is maybe my Peak so how can I introduce more trades without causing this and I think this is the thing that I find to be really fascinating about trading so now that we've gotten all this and hopefully this all makes sense to you maybe grab that all right so now we're going to look at this um sort of comparison of setup quality so what is an a quality setup and I'll use my darker green so you can see a little bit better so to me an a quality setup A+ quality setup is going to be a stock that meets all five pillars of stock selection so some of you guys know I have the five pillars of stock selection number one we've got to have price number two rate of change number three relative volume number four news number five float those are all expanded on in detail in this book and in my class so you could Che guys can check that out so if I see a stock that meets all four or all five criteria for um stock selection and just really perfectly exemplifies an a quality stock then naturally I'm going to want to be aggressive on I'm going to trade it I'm going to try to make as much as I can so what I find is that when I trade just a quality setups my accuracy is up around 80% and you know we could look at my other instances of this um if we look at let's see um January through January and we're just going to go back to like 2017 here we're going to go way back but the reason we're going to go way back is because um this was my small account challenge that I funded with $583 and15 so during this period right here my accuracy was an impressive 94% 94% now the only reason I mean my accuracy is that high is because during this period I started with $583 and I had zero cushion I could not afford any loss so I literally only traded a plus plus plus quality setups during that stretch I was super super disciplined right now when when but then that the we sort of had the problem there which is that I was only taking well how many trades did I take in that window I had 34 trades so if I've only got 34 trades I'm taking the the issue is that I'm I'm just limiting how much I can make in total because the quantity of Trades is too low right we're down here at 32 or whatever so you know the profit was $99,000 which was great on a $500 account but eventually I want to kind of you know get a little bit higher than that so as you could see here oops sorry about that so well it's always a good reminder to uh say as I'm going over this that my results not typical and that trading is risky uh but what we if we clear this out you'll see that uh I've grown the account got $13 million here of uh of gross profit and accuracy has come down to 68% and this is over the course of like 28,000 trades so I had to I wanted more trades but that required um a sacrifice and accuracy so if I start trading a b quality setup I would say a b quality setup and you know A+ is like B qual but a b quality setup is probably where I'm going to be between I I I would honestly say between 60 and 70% I know there's a little bit of a gap here between the 70 and the 80 and that's probably going to be like A+ and just standard a you know standard a is going to be more of 70 to 80 now the the reality is when I'm trading I'm not grading every setup it's like you know this isn't like maple syrup where I'm like oh this looks like it's a A+ you know like I'm not grading it like that based on like gradient shades of color anything like that it it's a little bit of kind of guesswork like okay this is I I suppose we could say this is a this is a b quality setup so the way I think of it is that uh an a quality setup is a stock A+ is a stock that's absolutely perfect but here's the problem trade quantity TQ how many A+ absolutely perfect setups do we see each day it could be between zero and three you know on a really good day we may not we may not see any but on a really good day we may see three maybe we'll see five like perfect a quality setups because the thing is an a quality setup for me is usually going to be a stock that meets all five criteria of stock selection that is just come out with breaking news and is squeezing up and that first pullback is like a quality that's what I call my micro pullback setup which is what I teach in that free intro class today trading which you guys can check out again not to be a broken record but the links in the comments so that's that setup but the thing is there's really only how many stocks pop up each day with breaking news you know you might not get even three or five so really realistically you might get zero or you might get one or two so typically it's Z I would say 0 to three is going to be the trade quantity but then if you go down to a I would say here you're easily going to see you know five five to 10 a quality setups per day and again this is going to be in a hot Market in a cold Market everything is a little bit more reduced it could be reduced by half where you might not see you might only see two a quality setups a week and a couple a quality you know per per day so then on the B quality setup this is where we're going to see I mean we might see you know 15 to to 50 I mean in a hot Market you might see a lot and then C quality setups this is where we're going down to you know 50 to 60% accuracy you might be able to see you know 100 plus plus of these per day again in a hot Market but let's remember you know that as you're introducing the quantity of trade the accuracy is going down and so then what's going to happen to your profit to loss ratio so if we look at my profit loss ratio here over the long term it's been about one: one so one: one to me is when I'm kind of blending all of these together they kind of come out to 1: one but these down here could easily be one to two where the average losers are twice the average winners this is maybe more like one to one barely honestly this is probably even still a bit negative 1.5 this is probably 1: one and this is where we're like two two: one or higher positive you know maybe we could say this is 2 to one and this is more like 3 to one but um so for the for the month of um oh I guess we deleted that or erased it but for the month of September I was averaging about 3 to1 about 82% 3 to one and then if we looked at the month of August uh August was a pretty solid month for accuracy so let's just check to see what August came out to for profit loss ratio so the month of August profit loss ratio uh 2:1 so nice 2 to1 profit loss ratio was 70% accuracy so 70% accuracy 2 to one okay so that kind of tracks and then B quality 60 to 70% more like 1.5 to1 you know something in here so Blended for me it all comes out to about 1:1 and my blend is about 66% accuracy so if we come over here you know I'm right up about 66% accuracy 66% and one:1 ratio and to be honest I feel like I'm probably I feel like I'm probably hovering right about here because honestly I feel like I would make more money and have a more sustainable long-term better profit loss ratio if I traded less but focused on increasing quality quality so I actually think even today I have room to improve up to here and if I can get up to here then I may also have the confidence to increase my share size a little bit more and then the total net is that I could actually potentially be a more profitable Trader and I think this is the amazing thing about trading is that you could do this for decades and still find opportunity for improvement that's what I think is so fun about trading you know this isn't a job where you know I think of someone who's maybe like a math teacher or something like that or maybe a history teacher because history is history it doesn't it doesn't change right and math is is math it's kind of like the same so if you're teaching like you know math 101 or algebra 101 you're kind of teaching the exact same curriculum like every semester of every year for your entire career I mean I'm sure there's ways you make it interesting and look if you love what you do then by all means I'm not trying to give anyone a hard time here I'm just thinking that what I really love about trading and why it's so engaging for me and so fascinating and why I love teaching it is because it's different it changes and that for me maybe was like attention span but that's something that really connects with me and so when I see people that come into trading who are like you know 65 or you know they've just retired from a career of something else and they're like I want to do something that's like mentally stimulating I've been kind of burned out from just like punching the clock every you know year for 25 years trading is like really a great career career in that aspect over the weekend um I I did I took a a trip to a jewelry shop uh with my wife she wanted to she has a ring from her uh grandmother that she wanted to repurpose you know it's something special and so we went into this uh little jewelry shop and this guy he's an old man he kind of I I hope he doesn't watch this he's not that old but he's he's old he's older than me he's retirement age for most people most people probably would have retired but he hasn't retired and his wife who works in the top she said uh Jewelers don't retire they just lean their head down on their Tool uh their their workbench and then they die I was like but um but I kind of liked that in a way because um he brought us down to his workspace and it was it was amazing it's all these old cabinets all these Hammers and mallets and like all these different things and it's just like I love seeing people's like creative space probably like you guys maybe like seeing this space for me but his was like the opposite of this CU there's nothing technical odd technological was all like oldfashioned tools and anyways what I loved was that he's not working a job where he can't wait till he retires you know that song everybody's working for the weekend I don't like that I want to live for today I want to enjoy what I'm doing today and I do and I think so many Traders enjoy it as well but you get a lot more enjoyment when you're finding success and the thing that's awesome about trading is that you can get these little hints at success you're like oh okay this is is working I get it but then you have a setback but you've tasted the good life you know what it's like when it works so you're like I just need to get back there and I think the path back there the road map to profit is by first focusing on accuracy accuracy is number one let's focus on quality over quantity so I really think that this is the place to start because this is the beginning of that positive feedback loop you focus on high accuracy and let's just say that I continue doing what I'm doing right now focusing on a quality setups and I can bump this from 66 up to 75% accuracy what's that going to do it's going to improve my profit loss ratio we know it does because it always does every time my accuracy goes up my profit loss ratio follows it just seems to be that when you introduce more losers you end up catching the Stray loss that becomes big so accuracy first profit loss ratio improves so now with improved profit loss ratio what comes next then that's where we see the consistency right we've got the calendar with all the green days consistency goes up and then what happens next then we increase trade quantity because we're and again within reason well actually first we should increase trade share size we increase trade share size to maximize the profitability on the current trades that we're taking and then as the market supports it we increase trade size and this is going to be in Hot Market dependent both of these are really Market dependent but you do both of those in a hot market and then boom that number just keeps getting bigger and bigger and bigger and you're starting that positive feedback loop and I'm telling you guys I have been through it I have gone through these incredible periods of trading where all of a sudden I get onto a hot streak and it's like things just open up if we look at um let's see we'll go January 1st 2020 like the beginning of the pandemic through August of 2020 this was one of the most incredible stretches of my trading career I mean it was truly unbelievable because all of a sudden what ended up happening was we got this massive influx of liquidity into the market we had the stimulus we had all all this stuff going on and just look at this all of a sudden I go from just kind of churning chugging along to boom just this unbelievable squeeze where I make you know ended up with $5 million of profit in one year out of nowhere and if we look well I mean just out of curiosity let's see what my accuracy was so accuracy 73% really nice high accuracy profit loss ratio $1,400 winners which are great th those average winners are three times as big as what I'm currently trading and uh average losses were 1,200 so it's a positive profit loss ratio not as good as it could have been average um total trades was um let's see 460,000 shares of volume per day that was over the course of about n months uh total number of Trades was 4200 so 4 so 300 so about 300 trades approximately per 350 per um per month 350 per month so about 100 approximately 100 trades a week so 100 trades a week and then that would be about 20 trades a day so wow only 20 trades a day but really increasing the quantity there well I guess that was through eight now so it was it would all be a little bit higher so probably like 30 trades a day 30 trades a day but larger share size trading 15,000 share average positions but again that comes back down to reducing quantity and focusing on quality so you know that's just rough kind of back of the napkin analysis of that period but this is the stuff that I'm doing all the time I'm analyzing my metrics I'm looking at periods that were really good but I'm also looking at periods that are really bad and I'm asking myself what's the pattern that I can learn because the better I get at recognizing these patterns the better I'll get it leaning in during a hot streak and easing off the throttle when it starts to get cold so look if you guys enjoyed this episode I hope you hit that thumbs up I hope you subscribe to the channel I hope you check out my free class so you can download a copy of how to day trade the plain truth and I look forward to seeing you for the next upload real soon and I'll remind you as always trading is risky my results aren't typical so manage your risk take it slow I'll see you back here for the next upload real soon [Music]