How Read PRICE ACTION on Candlestick Charts (with ZERO experience) transcript

in today's episode I'm going to teach a lesson on price action strategies and I'm going to use my trades from today as an example of what terrible price action looks like because today was not a great day for me but this is important because I want you to be able to understand the difference between a day where we've got really clean price action and a day where we have terrible price action so I'll be able to show you some of the trades that I took earlier in the week where the price action was much better so what is a price action strategy what does this refer to price action refers to the way the price is moving up or down so when we have good price action this is when we're seeing really nice big moves we're seeing clean breakouts we're seeing traditional patterns that we're familiar with such as oh let's just say a nice bull flag forming like this we get a very nice clean orderly pullback like this and then we squeeze higher as it breaks out this is nice clean price action when we start to get into I would say poor price action that's when we would see you know this candle squeezes up and then Rejects and ends up closing as a big shooting star rejection we would call that a false breakout and the reason is because initially the price broke and it squeezed up and we had a green candle and so people bought here thinking it was going to go higher and then immediately it rejects now price action Traders typically rely on Candlestick charts these are Candlestick charts this is what I'm using in my trading this is just a quick sketch of a Candlestick chart so when we're looking at the chart what we generally want to see are nice clean clear patterns now as you know the market and the financial Market specifically stocks Futures Forex we rely on these Candlestick charts because they're Universal everyone seems to use these charts and so the patterns that form become easily recognizable and we develop this pattern recognition that oh here we go we're getting our traditional bull flag again so if we have something just for instance that um pops up at you know let's just say we've got a news headline at like 8:00 a.m. right here and all of a sudden boom this thing starts to squeeze up it goes from 3 to 350 um up to 4 450 ETA up to five whatever let's say it tops out of five we get this little pullback what we're expecting from clean price action is a nice squeeze back up on the first pullback and then we look for the second pullback right here and then we look for another move higher but what we had today well that was quite the opposite so let me show you this chart to help you better understand a a really good example of terrible price action the chart that we're looking at uh this is a stock and it's got a float of 4 million shares now by the way some of you guys tuning in you may trade Forex Futures Commodities and that's fine because price action strategies apply uh to all of these uh financial instruments you can apply it to anything anything that has a Candlestick chart that is okay so ini initially uh on this chart we got this move as you can see back here that started at like 700 a.m. and so typically you would think all right look at this you know we got a squeeze here uh first we got a little like sort of like pop and drop and then sort of rally back up to 425 up to 450 up to 550 right and then it starts to pull back now something that's really important to note about this move volume looks good light volume red candles high volume green candles as it moves up and light volume red candles so everything checks out here but there's one thing that does not check out the one thing that doesn't check out on this was that there was no Catalyst there was no news there wasn't a reason for it to be moving higher so you look at this and you think well that's weird why did it move higher I can't really tell you I don't really know the answer to that in fact today we have uh 16 million shares of volume and we really don't know why it went up however when we look at this chart what we know is that this is a recent special acquisition company AA is a a special special purpose acquisition company these are uh companies that are created with the sole oop sorry with the sole intention of merging with a privately held company so let's say my software company day trade Dash uh was approached by a spa and they said oh we want to buy you and we're going to merge we're going to merge the spa with your private company and then we're going to make you a publicly traded company and we're going to change the ticker so when you invest in a spack all investors Buy in at $10 a share and then if they raise $50 million or $100 million that's how much money is in this special acquisition company and that's the money that's used to go so let's say it's 110 million whatever that's the money that's used to go buy and you know find find a private company to bring to the public market and the people who create these spcs make a ton of money on these merg so anyways this is a company that was a special purpose acquisition they merged with TVGN and then once they did the merger the price dropped from $10 all the way down to like four bucks now it did Squeeze back up on this day right here which was pretty impressive and then it came quite a bit lower so to be honest it's possible that this pop what could it have been caused by well that first pop could have been caused by some short sellers covering a position maybe they been holding for a while and they covered it probably not because it' be sort of weird to do that at 7: a.m. pre-market but it's possible it could have been caused by a long bias Trader who said I'm going to buy this stock because I like it it could have been caused by an Insider who said hey I'm going to add more shares because the price is so low that's certainly possible now if an Insider bought shares we will see a filing with the SEC but they have I think they have like up to 5 days or something like that to do the filing so we may not see it for couple of days and look if that Insider bought 50,000 shares that could be enough to create that initial pop and then once you have the initial pop then from there well now people are watching it because it's hitting the scanners but the fact that this didn't have a proper news Catalyst I think was a problem so we get this initial move higher we sell off and we actually sell off quite a bit so from a technical perspective this broke below the volume weighted average price that's indicator of poor price action a positive and a good chart would not break all the way below volume weighted average price it would pull back but it wouldn't pull back that much so it pulls back below the volume weight average price it is below the average price of the stock for the whole day it tries to get above it here it fails it tries here and it does it breaks 450 it goes up to 475 up to 5 and then notice these two candles on high volume this was sort of the confirmation that this was it's going to be a really difficult stock to trade and I actually took my first trade on this um buying at $5 and it pops up here to a high of 529 it drops back down it pops back up to 529 and ended up stopping out more or less break even I I lost 63 cents on that first trade okay so that's a break even trade doesn't matter um but it it was clearly not strong now it ends up going sideways for a little bit right here and when it starts to come back up again I was like okay well you know what I'm going to take a stab at this for the break of this pivot right here so I got back in as it broke through 30 what happens it rejects it doesn't hold it drops back down so on that trade I ended up losing 250 bucks I go into the red it comes back up again I try to get back in for the break through this flat top and look what happens once again it pops and it rejects so at this point we have a chart that is not giving clean price action now it's true that the macd on this was sort of you know flat against the trade unfortunately I didn't lose a lot my total um profit on the day is $639 and I lost 680 on TVGN so the loss is small and today I didn't get even close to my daily goal 5,000 but it's a Green Day nonetheless I'll talk a little bit more about that in a second so we had this these two rejection candles here which are sometimes called a tweezer um they sort of look like Chopsticks see how they're kind of these you know well I don't have to explain what those look like you know so um anyways looks like tweezers or Chopsticks and typically um you know you don't want to get poked uh in the eye with chopsticks or with tweezers uh but if you buy the top of this kind of move um right here you're probably going to get poked it's going to hurt and that's what ended up happening to me because it already has shown this weakness so this is not a good a good thing to see uh I I did give it another stab cuz I thought well let's just see it's definitely rallying back up volume is coming back in in and my target is a retest of the pre-market Highs but boy it could not do it here it just sold off and it went lower and lower and lower as we got a little closer to the open we tried to kind of come back up again I'll show you the chart here and again another rejection and a drop back down so this is a great example of terrible price action the patterns did not resolve all right so you know if we're going to sort of quantify what you know what poor price action entails um so no resolution no resolution on the patterns we'll just abbreviate that um topping Tails which in this case we got a tweezer top um huge sellers so big sellers on the level two and we see it on the level two in parenthesis um we also saw um these nasty flushes nasty flushes uh SL flush SL drops we saw quite a few of those unable to hold vwb right so it's like just this is just bad bad bad bad bad now this is this is poor now if we said what is a good what is good price action look like well it's really just the inverse you've got um great resolution great resolution you don't have topping Tails no topping tails you don't have huge sellers no you know huge sellers right I don't have to write the whole thing no nasty flushes and drops so it's it's literally all of this but you don't have it sometimes it helps to sort of inverse because if you realize well these are all the things that make it bad then just the inverse is what in this case would make it uh positive and that is that is the case here so so TVGN without a doubt was terrible I mean the price action on this was just awful and the day went on it just got more difficult and it just sold off and I'm glad that I stopped trading it so one of the strategies that I'm implementing in my own trading is each day I I I focus to give you a little context on trading for income when I first started trading I didn't have any other source of income so I was 100% dependent on producing profit every single day as a Trader I had a goal of making $50,000 a year as a Trader so that meant $1,000 a week roughly $200 a month now some of you uh might be thinking that's that's kind of a low goal I don't know I think you should set it a little higher than that but hey you know uh give me a break I set it at 200 a day I was happy with that okay and I was also pretty young I was in my 20s so my goal was 200 per day and I knew that I need to be very consistent with that because the profit that I was making from Trading was going towards paying my bills so I was living off of my trading income what that meant was that I couldn't afford to take a lot of risk I had to be very conservative and there were times where I saw other people who were able to afford to take risk taking some high-risk trades and getting paid for it and you know getting rewarded but I also saw certainly my fair share of people who took high-risk trades and got wiped out and got destroyed and their account was gone and now their livelihood would be gone well if that were me because this was what I was depending on so I knew for myself I had to keep my head down I had to be like the turtle not worry about people racing past me racing past me just focus on me hitting my consistent 00200 a day goal and some days I would hit 300 I'd hit 400 some days would be better some days it' be worse and I had to be really good at being able to recognize is today a day with clean price action or is today a day that's choppy because when it's choppy sometimes the safest thing to do is just to kind of hunker down and seek Shelter From The Storm and not try to put your hand out there and get you know get slapped when it's hot on the other hand that's when it's time to take a little bit more risk within reason and be a little more aggressive and so for me you know my spectrum of you know taking risk like going from like hot to cold in terms of how much share size I'm going to take all of this is probably a lot smaller than someone who is comfortable taking more risk than me and you know that's fine because we all adjust our trading strategies to our risk tolerance so for me today I sat down on my first trade on TVGN and I went red so I'm starting the day and now now by the way I've scaled my goal all the way up to $5,000 okay so my daily goal is now 5,000 I've moved it up a little bit uh which is great I've been doing this for more than a decade so the daily goal has gotten bigger uh but I'm still very focused on being consistent and on my first trade I went red uh $250 something like that and then I actually think I was green for a second uh like by 100 and then I was back to Red um about $500 all right I took another trade and that was the trade that I took on let's see vvpr where I made $26 so I was still down 300 on the day I still wasn't making much progress and then I took my first trade on tcbp which I'll show you in a minute and I lost um 400 on that so I was down 700 on the day and at this point I started the day with a maximum position of 5,000 and one share because I said I don't want to take big size until I first given myself a cushion of profit and the profit level that I was targeting was $11,000 once I've got $1,000 of profit then at that point I'm going to take this cap off and I'm going to start trading aggressively but until I can get first that cushion I'm not going to be aggressive and so I traded with small size 2,000 to 5,000 share positions started this whole way down to- 700 00 and it's a good thing because if I had traded with full size with this type of price action I could have easily lost 2500 3500 or even $5,000 this did not warrant trading with big size now when we finally had tcbp pop up tcbp to be honest was not very clean price action either it put in a nice move but it wasn't super clean so when tcbp first popped up right here I actually bought it at um 183 for the break of Two And it flushed down here and stopped me out for a $500 loss or $400 loss and that was the point where I was down 700 on the day that was my lowest point and I took that trade with 5,000 shares when it came back up I got back in with 2500 shares because I had was getting close I was just was like I'm not feeling it you know I'm struggling today so I got back in 2500 it ends up going higher I take a little bit of profit out I take a little bit more profit out a little bit more profit out and then look at this do you remember that candle that we talked about before you get that nice move up the pullback and then rejection that is a rejection candle right there that's nasty and you know what this one I took this trade right here I was getting in I was looking for the move to the high and it reject and I got out immediately so I didn't lose on this trade but this was sort of the the caution flag at this point I was like this is going to be me with a sad face all right so I was like no this is not good gosh darn it you know we didn't have clean price action on TVGN and now here's tcbp showing this similar chop choppy to start the move it it quickly pulls away and this one did have news but anyways then you get this rejection candle on high volume red now the macd crosses over and we go into this period of chop chop chop chop so now there's no trades on it I can't do anything with it now at the open honestly I was surprised I did not expect it to squeeze up here at the open given the price action pre-market this choppy price action this rejection at vwap I just didn't think it was going to happen but it did it squeezed up the next thing you know it's hitting a high of um 292 but it Consolidated in this area for quite a while in fact I was a little concerned that we were going to have one of those jack knife candles but if you watched my episode on avoiding false breakouts what you would notice was that I commented on how important it is to look at the macd the macd was in favor of this trade and so my final trade on it I got in here at 290 and I sold as it squeezed up to 317 and that you know put me up and again I only took that trade with 3,000 shares but that put me up $600 on the day so and and then it it kind of pulls back it's not able to hold up so this was unfortunately just a day where we did not have really clean price action you know this move it's okay but it it wasn't great a bunch of topping tail candles a bunch of bottoming tail candles it was popping it was dropping it was very thickly traded it felt like playing tug-of-war now if we look at vvpr just for instance vvpr um I did get a trade on it today but um and and that by the way was uh right here as we came up to seven i' had been watching it for this break of this consolidation here so I took a little trade in that area anyways only $200 of profit small trade but if we look at yesterday on vvpr yesterday vvpr uh had news that came out right at 8 a.m. it squeezes up pull back pop higher pull back pop up higher pull back pull back nice move higher you know it was a little choppy but it was pretty clean now the reason this was a little choppy yesterday was because the first day of price action was the previous day so day one is typically the cleanest and this right here was one of our cleanest moves that we've had all week this went from $150 up to 550 it pops up it pulls back it rallies higher I got in there for the break of three it squeezes up to a high here we got a micro pullback and then it pushes higher again those of you guys that haven't already downloaded my micro pullback strategy PDF I'm going to pin it to the top of the comments it'll be in the description so you can download that and that's going to give you a guide of really how I'm getting in and out when I'm seeing this pattern forming because this is my favorite pattern to trade so as a price action Trader I like focusing on micro pullbacks when something is moving very quickly and then once we get into these periods of consolidation it gets so much more difficult for me the cleanest trades always tend to be at the beginning of the move and then you know this second leg higher is okay it it definitely pulled away on some high volume but that first leg was was the fastest and that's almost always the case this was the fastest move and it was on relatively volume they move quickly when they first start when the news first comes out so this was an example of you know what I would consider to be pretty clean price action I mean you know it we had we had a nice move we had news that supported the move the macd was open which was in favor of the trade we only had one red candle and it was on lighter volume we didn't have any nasty rejections but we ended up getting one later and that was right here so see that candle right there so look what was happening in this area now in this area we got this move higher and then a big rejection and then it comes back up another rejection back up rejection up rejection rejection rejection and it finally breaks and does an even more dramatic rejection the macd at that point was against the trade the volume was showing high volume on red candles and this unfortunately was just it was too weak now the fact is we don't know why there was so much sell in on those candles we don't know if there were insiders taking profit we don't know if the company was selling more shares onto the open market and you know a direct offering was part of a secondary offering we don't know if it was a market maker you know a big hedge fund shorting we really don't know but what is clear is that there was way more selling volume than there was buying volume and when that happens the price action becomes choppy and so this had nice price action at the beginning of the move it continue a little higher and then it started to get choppy and what I noticed here also was that um it was getting somewhat crowded and when we talk about a stock being crowded what we're really referring to is that there's so many people trading it that you're seeing a lot of big orders flowing through and and it's a mix of buying and selling like it's it starts to become a tug of wars some people are like I think it's going to go higher and others are like it's going to go lower and when that starts happening all of those orders sort of compress the range it gets Tighter and Tighter and Tighter until it just sort of stops moving and then people give up and they kind of stop trading now when they give up it's kind of like an arm wrestle it's like a you know tug of war it's a battle and then when you give up it's either to the long side and it pulls away or it's to the short side and it breaks down but what's more often is that it's to the short side and it breaks down and the reason that happens is because the very nature of tug of-war indicates that the momentum and trend has stopped especially after a really nice move higher we had a really nice move higher and then the momentum just sort of died it was gone right all of a sudden we're just going sideways so buyers are no longer interested in buying this and shorts are starting to think well this is up quite a lot with a stop at the highs this might work for a reversal back down now I guess it might have stopped them out before it dropped which is sort of adding insult to injury but but nonetheless it did pull back as the day went on at least until sort of in the afternoon so I would say this was a pretty good example of clean price action where we got nice clean resolution we had some good patterns they resolved the way I would expect them to and and I was happy with that but yeah once we got further in the day the price action changed and that can happen you can have a day where the price action is really clean at the beginning of the day you have nice resolution you have clean patterns everything that we've already discussed and then it shifts you know for whatever reason the stock becomes crowded it's too many people kind of fighting for the same little sliver of profit and it's just it stops being clean and if the news catalyst is really really strong that will be enough to keep people buying and to force shorts to cover but if the news Catalyst isn't strong or just the sentiment in the market isn't strong we're not going to see that and we're going to end up most likely becoming choppy and and then rolling over as the day goes on So This was vvpr um let's see CX was another one that we had uh this week this one uh let's see if we have some good candles so let's see this price action yesterday was not particularly clean to me it's sort of very whippy it comes all the way below vwap it comes back up back below vwap back up back below vwap that a lot of lot of topping Tails that's not clean didn't like that there on um on that day if we go back a little bit further though this one's been in play for a couple of days another word to the wise is sometimes when you have something that's in play for several days uh as the days goes on as the days you know continue on of momentum it starts to get choppier and choppier uh this one even at the beginning of the move was a little tricky and the reason it was a little tricky was because um it kind of started by making this quick move on breaking news so it squeezes up okay so that's nice micro pull back here at about 330 then it pushes higher 350 360 kind of stalls out dips down two light volume red candles that's fine it pushes higher and then this candle here shooting star on high volume red first warning sign it grinds higher on light volume and then boom second warning sign another high volume red candle coming to the open we pull back all the way to vwap we pop up we drop down and I really think that shorts felt they were in control on this one with those high volume rejections pre-market and pretty high volume selling at the open it wasn't looking good uh and this is something that can be very frustrating is when a stock just starts grinding now are these candles super clean they're not you know we get a little grind higher and then a selloff right high volume red candle and then it kind of grinds a little higher and then dumps again right so this is not clean price action but it's also not dying it kind of keeps going just like a little higher and this can be really hard to trade both to the long side and the short side people who short kind of keep adding but they're just not getting the resolution they're looking for people who buy keep buying and they're not getting the resolution they're looking for either and you just start to be like what is going on with this thing but next thing you know it's at six 605 618 uhoh 660 okay now it's moving away a little bit but this is as the day goes on and then look at this rejection candle right another big rejection candle right there so it feels like once you've had a couple of those rejection candles there's a high likelihood they'll keep happening again in my episode where I talked about how to avoid false breakouts I said they are more often to happen when the macd is crossed over against the trade so just using macd right here can help you avoid getting caught in false breakouts like this false breakouts like some of these ones back here well this one was a little bit bit funny this one right here uh this one right here this one um would you wouldn't have missed that one was a little bit different but the really dramatic ones are when you have got that period of consolidation and it breaks out and does that those are just awful that was another nasty rejection there that's not clean price action that's the type of stuff that's going to get you caught it's going to get you in trouble and you're going to lose money so for me today as I started Trading I had my Max at 5,000 shares and unfortunately on my first um you know whoops back to the Whiteboard on my first couple trades I ended up um you know going down jumped back up for a second went back down went up for a second went back lower and I was like I am definitely moving in the wrong direction now I could be doing this with 20,000 shares you know or I could be doing it with small size 5,000 and is much better I do it with 5,000 once I got myself up to 600 I started thinking okay maybe I'm starting to move in the right direction if I can get myself up a th000 then at that point I'm going to take off my cap I'm going to trade aggressively and that's how I usually make my way up to the $5,000 daily goal but what ended up happening today was I got up to 600 and then I started just looking around at the price action and I was like I don't see anything to trade you know the leading gainers are choppy we have some stocks that are popping up but they're not obvious I think I'm I think I'm playing with fire here I think this is going to going to be a day where I'm better off just walking away with small profits and this is this is a conscientious choice to be more conservative and say you know what a small green day is good I'm going to lock that up because hey if we look back on the week how have I finished this week you know Monday Tuesday Wednesday yesterday was 4,300 Tuesday was 3,200 I think Monday was 4,000 something like that so we're already at like 11 12,000 on the week this is a good week right 12,000 a week 15,000 a week you're talking about 50 $60,000 a month that's $600 $700,000 a year now is it all a little short of my $5,000 daily goal it it is these last few days but look I'm not going to be too picky about that this is a little aspirational it's what I'd like to hit each day but I'm totally fine with locking up you know 3 4,000 and calling it a day if that's when the market starts to cool off so when it comes to my position sizing I'm starting each day with small size cap of 5,000 shares until I break $11,000 of profit and if I never break a th000 I will not increase my size now this is something new it's not something I used to do it's something I've just started doing in an attempt to mitigate my draw down because what I have found is in the last oh gosh I don't know the last month or so I've had a number of days where I came in on that first trade with 155,000 shares and I went red you know1 or $15,000 and now I'm so deep in in the red I'm emotional and once you get emotionally triggered you get emotionally fueled things can start to unravel really quickly and that's what happened to me several days last month I had four days where the cumulative loss of those four days was nearly $40,000 that that really hurt my month it was not good and I said I can't let that happen I I really don't want to let that happen ever again but certainly not for a long time so I said let's in let's let's put this let's test out this new strategy Max share size of 5,000 until I hit my first th000 of profit once I cross that level take off the cap trade aggressively right Market's on my side and then once I give back you know approximately 15 to 20% of my profit walk away there before I give back more alternatively if things just start to get slow price action starts to get choppy walk away there if I have three losses one two three in a row three strikes you're out walk away there so I have couple different rules that I follow for when to walk away and I also am recognizing that my window begins at about 7:00 a.m. and ends at about 11: a.m. so if I'm right here at 11:00 a.m. well to be honest if the market was really really strong I might that'll be a day where I'll continue trading but most days the window closes around 11:00 a.m. so coming into 10:30 what I should probably do is put the cap back on my account at you know 5,000 shares so if I take a couple more trades I can make a little bit more but I'm not going to risk you know doing one of those right before my windows closing so this is u a strategy that I'm implementing right now with the goal of producing more consistency and it means that on days like today I have to be very cognizant of the quality of the market is this a day where we've got great price action where I am in the zone or is it a day where we're seeing a lot of chop because today we didn't have good resolution ution we had a bunch of topping taals we had huge sellers we had nasty flushes and drops we were unable to hold the vwap and that was just on the specific stocks I was trading now if we talk sort of big picture we didn't have today an obvious gapper that everyone is excited about the leading gappers in the market the leading percentage gainers uh they were only so so people weren't really enthusiastic about them this is something that's interesting on a day where you have sort of five stocks that are moving up let's just say for instance you've got five stocks that are moving up you've got all the Traders out there and now their attention is dispersed you know some people are on this stock here because it's you know under it's it's like a 50 Cent P per share 50 Cent stock something like that so some people like cheap stocks then there's could be some other people who are like oh I really like you know the Donald Trump stock djt that one's volatile then they'll because that one's in play on that day then someone else is like oh I really like um Nvidia right in Nvidia whatever it is um and then someone else is like oh well we've got a couple of small cap stocks you know between five and 10 but then some of them are easy to borrow right so now you've got shorts so this creates divided attention when you have divided attention each of these are going to get you know one fifth of the volume one fifth of the attention one fifth of the eyes that you would get if you had a day where you had one really obvious stock you have one really obvious stock like we had um vvpr just for instance earlier on the week everyone is focusing on this it's the leading percentage Gainer it's got a news Catalyst it's obvious and this is when we're going to see the cleanest patterns this is where we're going to see really super high relative volume really high relative volume now let's use let's actually check that just for a moment today so um the relative volume on on tcbp is 247 that's not bad it's a little low compared to what we've seen on other days the relative volume on TVGN is very high in fact this might be the highest volume Day tvn's Ever Had um so tcbp you can see volume's a little lower than this day back here if we're looking at the daily chart volume is a little lighter it's not nothing but it's a little lighter TVGN because it's a recent IPO probably very very high volume volum candle yes very high volume relative to what it's had in the past however without a true Catalyst I think too many people were happy to sell into this move maybe even insiders at the company I don't know we're not sure but um so relative volume I think the the issue here was that we didn't have a clear news Catalyst and then some of these others that are on the scan you know Al it's a 31 million share float it's got 27 million shares of volume so it's much more thickly traded this is going to be ch cier the imbalance between supply and demand is not as significant you've got supply of 31 demand of 27 million it's equal right so it's moving higher but it's not a strong imbalance now tcbp has a strong imbalance it's up 81% but again unfortunately on this one for whatever reason it just got really choppy got really crowded and the thing that we that we don't know you know you can have all the technical characteristics of a stock you can have the price the percentage change the float the relative volume but those alone aren't what create the big moves those are important but there's something else it's what's the quality of the Catalyst what's the historical chart look like what's the historical price action looked like for the stock that you're looking at and what's the condition of that company is that a company that needs to raise money because then they may sell shares on the market is that a company has a lot of insiders who are able to freely sell shares into a big move because they might right so those are the Dynamics that are different from company to company and you know in a really hot Market you could see a company that doesn't even have the best characteristics or the best Dynamics and still it makes a big move uh and in a cold Market you can have a stock that everything looks great but you have a lot of people who have a short bias the Longs are more conservative and as a result you just see more selling selling selling in selling and when that's the case there's nothing you could do about it so one of the things I said to myself today as I was sitting down I said look you know let's think about rather than think about where I'm at on the day because on the day today I was down you know minus 250 at one point and part of me was like oh that's annoying and I said no it's not annoying look you're up 12,000 on the week and you're down 250 right now off of that Top This is a perfectly respectable spot to walk away and to call it you do not need to overtrade you do not need to make this a Green Day there is such a thing as a successful red day a successful red day is a small red day that's well within your risk tolerance that doesn't exceed where you know your max loss you don't go Revenge trading you don't go crazy you just have a small loss and that's totally okay in fact the better you get at having small losses like that ultimately the more successful you'll be in your career because it's days like today where you know you're down 250 and then you're like shoot I really want to be green today and then next thing you know you're down 700 and then you're down a th000 and then you're down 5,000 all of a sudden it starts to get bigger and bigger and one day you've given back everything you've made on the whole week and you did it on a day when the price action was terrible so being able to capitalize on price action requires a very honest assessment of the condition of the market today and if the market is not hot the best thing you could do is just step back slow down and be patient and that's exactly what I did today now I I'm I'm saying all this I'm trying to really emphasize it because it's something that I'm working on in my own trading I have a tendency to be really aggressive and that's what allowed me to make millions and millions of dollars of profit when the market was super hot during 2020 2021 2022 Etc during that sort of window but that's not the market we're in right now and I have to remind myself that I still have the goal of producing consistency every single day just like when I got started and so kind of going back to my roots a little bit with that instead of coming out of the gates swinging hard I'm trying to be a little bit more conservative on those first couple trades I'm trying to kind of test the water and see how does the price action feel is it clean are we getting nice breakouts or the second I'm getting in am I buying from a hidden seller someone asked me today you know H how do you identify a hidden seller and I said well the way you identify a hidden seller is when you see a lot of green on the tape and the price doesn't break so right there you're seeing green and the price isn't breaking now you can also see in this case you've got a huge stack of sellers this is now very thickly traded this is indicative of a very crowded stock 74 million shares of volume and you know because of free commissions I think this has changed how some stocks behave because with free commissions you have people that buy sell Buy sell buy sell inside every candle they're like you know just hyper Super Active Traders trading maybe a thousand times a day and just trying to scalp like half a penny half a penny half a penny and you know you do that enough times it can add up and I think all of that has sort of filled in a lot of liquidity which is good if you want to get in out of a huge position and hold it for a long time but it's also brought the ranges in and kind of slowed everything down and made everything a lot more congested and that may be one of the reasons that I find I'm having the most success at the very beginning of a move regardless of what time the move occurs um the move could occur later in the day but just the beginning of that move that first leg seems to be the cleanest and then I think as more Traders start seeing what's going on that this stock is up a lot they start filling in with all of their orders and and what also probably happens is there's a certain degree of high frequency trading algorithms that join on as well once you cross certain volume thresholds and now it just starts to become a tug-of-war so one of the things that that means is that there's a window each day for me of when I make the most but there's also kind of a window on each stock of when I make the most and what I want to try to do is be aggressive in that window on that stock so break the ice if I can get myself in the green I'm up more than a th on the day scale up real quick so I can capitalize on that move now I don't want to go into that first trade with huge size because I don't always know for sure if it's going to hold or if it's going to you know flush and reject on me and show poor price action so if the price action is good I want to lean in be aggressive and trade as much as I can in that first leg of the move kind of before the macd crosses over before it starts to get congested and there are times where we'll have something uh let's see gxi or gcts you know I could show you a bunch of different charts but you know some of these moves like on this day here here this ended up going from the previous day's low of $250 all the way up to nearly $20 a share it it rolled over eventually but it still went up you know over a th% that's huge then we had uh gcts this one I mean these are some serious moves this went from less than $10 a share to over $50 a share and that was all basically the front side of the move before it rolled over so vvpr that chart I was showing you uh before that one went from you know whatever it was $2 to to $5 that was good but it wasn't anything outrageous it wasn't anything I'll you know remember for for weeks and weeks to come or or years to come it was no GameStop you know it was a nice move but it wasn't anything crazy so the thing is these are the base hits you lock up the base hits you lock it up you get disciplined you don't over say you're welcome and then every now and then you're going to see something like a gcts or a GameStop and those are the ones that just add icing to the cake but here's the mistake a lot of Traders make a lot of Traders will overtrade setups once the price action becomes poor once they start to become choppy and they're going sideways they're still overtrading them and what do they do they're giving back profit they might be up you know whatever it is and then they have one big loss and then they're trying mentally to get back to here and so they take a little more risk to try to swing back up and take another big loss and now they're down here and they're like well shoot to make back this much in one trade I'm going to need to take a lot of risk right so I take a lot of risk it goes the wrong way and next thing you know they're down here with another big loss and I have seen that happen a million times and i' I've done it myself it happens when you're too emotional at the top and this is the crazy thing is by this point for some people the very fact of having given back that much you're going to be past the point of no return emotionally you're going to be fully just Tunnel Vision on recouping this loss right now and when that happens that's when you spiral because now you've allowed emotions to take over so one of the things that I've been doing that I found really helpful is I'm journaling um each day so I've got my journal up here oh maybe it's a little hard to see anyways I've got my journal up on this monitor here and I'm journaling um the days and noting sort of um my p&l my biggest retracement intraday did I have high emotions did I lose emotional composure I'm trying to put together as many days as possible without losing emotional composure and I'm talking uh noting my best trade my worst trade and then taking notes on the day because I want to develop the highest level of awareness possible to how I'm feeling each day to my emotions and to the condition of the overall Market the better I can get at that the better I'll be at easing off the throttle when things get cold and then leaning back on when things start to heat up and ultimately my own p&l is somewhat of a reflection of how certainly I'm doing in the market as long as I'm trading calm cool and collected if I'm trading emotionally then I'm trading erratically I'm recklessly even and my p&l will not necessarily be a good reflection I could be read on a day that there was a lot of opportunities because I mismanaged risk got emotional and made mistakes but as long as I'm calm cool and collected my p&l is going to be a good reflection of the quality of the market for my strategy so when the price action is strong that's when I'm going to lean in I'm going to be aggressive and I'm going to try to add icing to the cake so what a lot of Traders do they overtrade during these choppy periods they dig themselves a ho so you know they end up H you know maybe having a little bit of profit and then going red and then losing a little bit more and then dipping down more and more and then we finally have you know that GameStop or we finally have something like gcts that from $10 to 5050 in one day and you know maybe they trade it really well but all it's doing is bailing them out from all these losses you know they're still they're just back getting back to flat so what I want to see you guys doing is focusing on your small base hits so maybe you have some days where you're you know sideways you know maybe you have small losses you're like this is going to be a successful red day there's not much happening today and then you and then you're sort of sideways like this and then we have you know that nice trade on gcts and then you go back into trading sideways right so it doesn't have to be like you know a perfect straight up Equity curve it could be a little choppy but what I want to see is that generally you're making progress you're not having big draw Downs you're keeping your losses super super small the smaller you're able to keep your losses the more emotionally composed you're going to be and the fact is the smaller your losses the easier they are to recover from when you have a red like today if today had been a red day and I'm down 300 bucks $700 I can recover that so so easily in one trade like it's so easy when the Market's hot when the price action is strong so learn to recognize the difference between good price action and bad price action take your own p&l starting each day with a small sort of small share size once you get yourself up to a quarter of your daily goal and the Market's hot lean in aggressive if you never get to even a quarter of your daily goal with small size today it's not going to happen try again doesn't matter you can't force it right if the Market's not if the opportunities aren't there they're not there your best bet is to wait until tomorrow and if you're having a hard time being patient and having the discipline to sit here and not trade get up and walk away from the computer and don't come back until tomorrow do whatever you have to do discipline is key so I hope you guys found this episode helpful I hope you hit the thumbs up I hope you subscribe to the channel if you want download my micro pullback strategy PDF it will be pinned at the top of the comments and in the description so you can download it print it out and you can utilize that and start implementing it in your own trading but remind you as always trading is risky my results aren't typical so manage your risk take it slow and I'll see you back here for my next upload real soon