Step-by-Step Guide to Beginner Day Trading Strategies (Full Training) transcript

in today's episode I'm going to teach you the breaking news strategy that I use to capitalize on the volatility that occurs when a company puts out news this is something that happens pretty much every single day there are literally thousands of stocks in the market but on any given day usually there are a few of them that are putting out headlines that are substantial one of the challenges that we face is that with all of these companies that are publicly traded how do we know which headlines are going to potentially move the market and which ones are well kind of negligible they're not going to have any effect at all so the way I do it is I look for stocks that are beginning to move and once they're beginning to move if they meet a certain set of criteria then I'm going to consider this to be an opportunity that I need to jump on I am going to give you a case study of a trade that I took just today we had a stock that had breaking news at 8:00 a.m. top of the hour news comes out within 12 minutes the stock stock is up over 133% and I'm locking up over $6,000 of profit okay my results are not typical but this trade and all the other trades I've taken in my career are great case studies of the strategy that I'm trading that works in the market today my name is Ross Cameron I'm a full-time day trader and I'm probably best known for turning an account with less than $600 into more than $10 million of verified and independently audited profits although my results are not typical they put me in the unique position to share with you what has worked so well for me in today's market so let's go ahead and jump onto the screen share this is my breaking news strategy and I'm going to walk you through step by step from how I find the stocks how I evaluate whether or not they have the potential to make a move all the way to executing the actual trade and today's trades will be a great case study for us to go over so I'm going to go ahead and uh put this on full screen here and we're going to jump in with step number one one the process of taking a day trade and specifically on a breaking news strategy setup step number one we've got to find a stock that's moving fast right now and that meets my criteria for being worth trading something that's important to understand is that there are thousands and thousands of different strategies out there that you could possibly choose and some of them will have different criteria for the stocks that are that are worthy of trading for me I'm a volatility Trader I Look to trade stocks that are moving very quickly and so at just a very basic level my criteria for considering a stock to be worth trading is to have a stock that's up at least 10% on the day I have found that this is where I make the most money on stocks are up at least 10% on the day and these are also the stocks that once they're up 10% have the highest likelihood of continuing to being up 20 30 40 50% naturally the stocks on any given day that make the biggest move moves the ones that go up 75 80% 100% at one point were up 10% so I kind of consider breaking 10% to be breaking out of that sort of standard deviation once you break 10% then your odds of going to 20 30 40% are so much higher than a stock that's only up let's say 2% on the day so my minimum sort of criteria for considering a stock is that it's got to be up at least 10% on the day now one of the challenges that we do face is that with all of these stocks on any given day that have breaking news what's our approach for finding the setup now if you tried to read every news headline that came out you would go crazy there are companies that literally put out news every single day but they're like really fluffy headlines they don't really have any sub substance to them there's no real value and they certainly do not move the market okay so trying to read every single headline that's not even possible that's not going to work so what do we do instead well what if we had a system where we could find stocks that were starting to move find stocks that were up at least 10% and then from there make a decision of whether or not it even has good news or what the news is and whether or not we want to buy it that's the way to approach this so the first step is to add some filters of of specifically what we're looking for number one we want to see a stock up 10% certainly now for me because I'm often trading in a smaller account I'm going to want the price to be between $2 and $20 that means the stock is Affordable of course I want to see if the stock does have a news Catalyst but I can check for that later I want to see in addition that the stock has high relative volume relative volume is a measure of the volume today versus what's normal so let's say for instance yesterday a stock traded on 150,000 shares of volume pretty light volume and then today has 300,000 shares of volume it would have a relative volume ratio of two it's trading Two Times Higher now if it trades on 1.5 million shares of volume the relative volume will be a ratio of 10 if it trades 15 million shares of volume the volume ratio would be uh let's see 10 100 and if it trades on 150 million shares of volume of course it goes up from there and it's not impossible to see a stock that's trading on 1,000 2,000 3,000 times higher volume than average and you have to ask yourself why would a stock have you know 3,000 times higher volume today than than normal that's because it has a news Catalyst it has news and it could be really great news and that's what's sending the stock to these new highs okay so number one we're looking for the stock to be up 10% number two it's got to be priced between 2 and 20 number three we want to see it's got a news Catalyst and number four we want to see high relative volume now the good news is we can use a stock scanner to search for all of these things this this and this are the easiest to search for initially because sometimes the news headlines take a few minute few minutes to sort of populate through Market data vendors so step number one finding a stock moving fast right now I'm going to use these stock scanners now these are stock scanners that I did develop I have a development team that works for me we built these out and these are available to our Warrior Pro members at Warrior trading but of course if you chose to use a stock scanner available from somewhere else that's fine too so I program in my filters to the stock scanner and now the scanner is doing the work for me it is now searching the entire market for stocks that meet my criteria now what's going to trigger a stock to actually hit my scanner is when it hits a new high if a stock hits a new high of day and is up 10% is priced between 2 and 20 has a high relative volume then it's going to trigger an alert now Additionally the filters that I add to kind of tighten this up a little bit include the rate of change in the last 10 to 15 minutes um the amount of relative volume just to I I filter out some junk when you start with very loose filters then you're going to inevitably get some noise and the tighter you filter your scanners the better the alerts will be however if you filter them too tightly you may miss some actionable setups which you don't want to do so there's definitely a sweet spot there uh this is all I've already programmed all of this and this is how I've been using it for years without changing it so this is a very uh solid set of scanners okay so let's look at this stock qrx it hits my scanner at 804 a.m. it's priced at $4 .75 now what's interesting is that it only had 25,000 shares of volume when it first hit the scanner that's not a lot of volume but the relative volume was already 134 134 times higher than average which tells us this is a stock that usually doesn't have a lot of volume but today it does and it's already up 71% this stock is moving very quickly now there's another column here called float float is the number of shares available to trade this is part of our supply demand and balance so a stock that's going up 10% obviously it's in demand if it's priced between two 2 and 20 it's going to be in demand by retail Traders if it has news that's going to create demand if it has high relative volume that's reflection of demand so these all create Demand on the other side of demand we have oops we have Supply so we've got Supply here and Supply is represented by the number of shares the number of shares is determined and is called the float right here the float it's determined by the company when they do their initial public offering so when the company sell shares onto the market from that point forward that's the number of shares available to trade okay so what happens for a lot of these companies especially uh lower pric companies is they'll IPO for instance at IPO at $10 a share they'll IPO at $10 a share and they'll sell maybe you know three million shares okay so they've raised effectively $30 million in their IPO $30 million and they have a 3 million share IPO 3 million share float that's the float but over time the company well declines in value it's a new company they're not very profitable it's declining in value and eventually it gets down here where it's let's say 80 cents a share uh-oh that's a problem it's a problem because to remain listed on NASDAQ or the New York Stock Exchange these companies have to keep their stock price above a minimum of $1 a share now if they dip below a dollar a share they can remain there for a little while but they will eventually get a letter of non-compliance and the company will either get delisted from those big exchanges down to the OTC market which is where there's a lot of penny stocks or they have to get their stock above a dollar so what these companies will typically do is they will do a what's called a reverse stock split so a traditional stock split is when Apple is $700 a share and they do a 7 to1 split and it goes down to $100 a share which makes the stock more affordable for retail investors which is great now a reverse split does the exact opposite it takes a stock that's at 80 cents and a 10 to1 split will move it well 80 cents let's see 10 to one split it's going to move it back to $8 a share and so the next day you're going to log in and the stock is at $8 a share right here because of the reverse split so reverse split takes effect here now what this does is the price goes up but the market cap can't go up right $8 a share times 3 million shares now you're back at a high high market cap that can't happen overnight so what they do is they divide the number of shares available by the ratio of the split so here this stock NOW goes down to a float of 300,000 shares now over the last two years we've been in a market where we have seen small cap stocks get really beaten up there have been hundreds and hundreds of small cap stocks that have dropped 70 80% over the last couple years and have had to do reverse splits in order to get their stock price to stay above $1 a share this has had the effect of reducing the float more and more and more and more which means the level of supply for a lot of these stocks is Tiny now a lot of these companies are starting to put out some solid headlines and that's because the overall market and the economy has been turning around so when we get one of these headlines it is not unreasonable to see a stock with really strong demand go up 50 100 200% in one day in fact we've recently been seeing moves in the 800 to 1,000% range in a single day this is the power of breaking news and so there's no question that if you have a strategy to capitalize on these types of moves you're going to do better than a Trader who doesn't all right so step one is to find the stock moving and it's not enough just to find the stock moving you also have to be able to qualify that it's a stock worth trading indp is another stock that hit my scanners a little bit earlier but I was very quickly able to rule it out although on the surface you would probably say it looks similar it's a little cheaper Sim SAR volume the floats 6 million shares instead of 960,000 uh but overall it's it's somewhat similar except for the fact that when I did my next step of due diligence I wasn't happy with what I saw step two check the catalyst so step number two I actually have to check what the headline is now one of the problems in this market is that we have a lot of highfrequency trading algorithms what these algorithms do is they attempt to read news headlines that come out and instantaneously execute Market orders so when news comes out on a stock news comes out it's 8 a right here and the first thing that happens instantly you see this big green candle form and this big green candle is formed by high frequency trading algorithms hft they just instantly execute buy order buy order buy order by buy order because the stock met their criteria for being worthy of trading and of course they've automated all that to computer systems incredibly sophisticated computer systems but sometimes when I actually look at the headline I'll realize I don't know this is kind of a fluffy headline I'm not sure if it's significant now in the case of qrx I wasn't sure how significant it was but it it was a it did seem to me to be a valid headline all right so announces FDA clearance to recruit teen subjects into both ongoing um you know whatever this syndrome is clinical studies all right so we've got a catalyst the stock is moving higher that's what's important all right step number three I need to analyze the daily chart so obviously I don't proceed to the next step if step two doesn't check out if I don't like the Catalyst then I'm not going to proceed to step three but if I like the Catalyst the stock is moving up proceed to step three so step three is to analyze the daily chart so qrx is a perfect example of a stock that uh about a year and a half ago was up at $34 a share and has sold off all the way down to $22.77 right here on the chart we see this s which refers to a stock split and we know it wasn't a traditional stock split it was certainly a reverse stock split one of the first things I look at when I'm analyzing a daily chart is whether or not there's nearby areas of resistance and how far away the 200 moving average is the 200 moving average is this purple line and it is very far away so the 200 moving average is at like $15 a share which means this has a lot of room before that first level of chart resistance from a moving average now I also always look to the left so my eyes look left and I'm looking at recent big candles do I see any really big red candles certainly back up here in this area but not more recently I do see this green candle however and I look at the high I look to the left and then I realize that there's no other resistance until the low of this candle on this day the stock closed low and opened substantially lower the next day and continued selling this is a setup where we have on the daily chart what's called a Gap a gap occurs when a stock opens significantly higher or lower than it closed in the previous session today on qrx this is a daily chart that I took pre-market but once uh the market opened and began trading the stock opened here at like $6 a share so we also had a gap on uh today's chart as well now when we have a gap that's an area that really doesn't have any resistance at all so if a stock can start to get into this area with no resistance you can sometimes see a move all the way to the top of the Gap so what I recognized was that this uh stock had room from $12 to 1428 with no resistance and between $5 and 12 well there really wasn't anything super significant in this area that stood out to me so that was good in other words the daily chart checked out and I proceed to step four step four is to analyze the level two so this is where I pull up the actual depth of the market and try to make a decision of whether or not I'm going to take a trade when I pull up the level two what I have right below the level two window is my order entry window these two go uh hand in hand so I'll show you uh what my order entry window looks like here all right so my order entry window looks like this I'll put it up right here looks like this right below my level two window is the order entry window and I have it sized so they're they're pretty much the same all right so they're both like right in this area and all I have to do oops just go back here all I have to do when I pull up a stock I look at the level two and then all I have to do is click the buy button I click the ask price it'll automatically populate right here in the price my share size is automatically populated for 3,000 shares and then I just click the buy button so the process that I go through when I pull up the depth of the market is I look at the spread the thickness or thinness of the market and the order sizes so in this case we see that we have 562 at the bid and 566 at the ask for those that are unfamiliar about how level two works the stock market is an auction at any time there are people that are bidding and there are people that are asking so there are holders there are people involved in the stock that are bidding because they want to buy it at a bid price of 562 and there are people that are holding it and want to sell it at 566 this creates what's known as the spread which in this case is only 4 cents now this is a screenshot that I grabbed a little later in the morning when the volume was already up to 24 uh sorry uh 4 million shares when it was up 100% so when I first pulled the stock up the spreads were a little larger about 15 cents but one of the things I look at is to see is there any really big noticeable buyer or seller you know if I saw just for instance a 300,000 share seller right here you know huge seller 300,000 shares I would be like wow okay at $6 there's a 300,000 share seller that's a really big seller relative to the amount of volume traded on the stock right it's it's almost 10% of the volume in the whole day is in one order sitting on the offer so that's going to create overhead resistance on the flip side if we saw a 300,000 share order on the bid that would create a perception of support so I look at the spread and I look at the thinness and thickness of the market a thick Market will be a stock um and I'll show you a thick Market just as an example this is a thick Market Bank of America this stock is trading with a 1-cent spread and there are you know thousands and thousands of orders on the bid and the offer it moves like a snail it's a very slow moving stock this one's just not one that's going to go anywhere anytime quickly then you have dwac this one's uh truth social special acquisition company this one right now has like a 20 cent spread 30 Cent spread bigger spreads this is a stock that can move very quickly it's up 133% today which is $4 a share so from 40 $39 $38 a share up to 44 and it's a stock that could go up to 48 $50 a share in one day we don't see any really large sellers on the level two we do see a larger spread so it's a bit of a thinner Market that's good that's not a bad thing now there is such a thing certainly as a market that would be uh too thin a stock that has just zero liquidity you wouldn't be able to get in or out um I don't have a a good example of a stock like that off the top of my head um they're not stocks I would usually pay much attention to let's see um yeah I just pulled up a couple but neither of them are really that thin in any case um so this is the next step to check the level two for spread thickness order size and then I can watch the time and sales right here to see if other orders begin coming through when I see an order in green that tells me that okay someone is executing orders right there in real time so if we look back at dwac this is level two that's actually flowing you'll see periodically we've got some orders in green so I perceive those when when they're in green it means the order took place at the ask price and if they're in red the order took place at the bid price at the ask is strong at the bid is weak orders in white go through in between the spreads which is somewhat neutral now neutral can also be considered weak if you've had a stock that's been making a nice move up and now suddenly the price action is looking neutral because that means we're probably going to reverse so red is certainly bad but neutral is also not great when you've had a stock that's been moving strongly what you really want to see is green and lots of it so when I'm first looking at taking a trade I'm checking the level two I'm looking at the time in sales and I want to see that there are a lot of people that are buying stock that really like it okay so once I see that the next step is to look for an entry on the 10c and the one minute chart and I've got to use 2:1 profit loss ratios okay so we're going to pull up the chart here and let's talk about this for a moment in the case of qrx today it initially pops up as you see on these two big green candles and then it has two red candles that pull back so if we draw draw this on the Whiteboard so we can kind of break down the anatomy of it we have two candles that pop up and then we have two candles where we get a pullback so I would speculate that these first two candles were primarily high frequency trading algorithms so hft alos they create that first pop and then there's a little bit of profit taking here that occurs from traders who maybe were in the stock before this happened who have just been holding for a while or it could be people that are either Short Selling or people that or maybe the outgrows themselves are taking profit there could be some people who are retail traders who got in took some profit but you'd have to be very very quick and that's not as likely so what's more likely is that you have the algo Spike and then you have some people that were holding taking a little bit of profit they're like oh wow okay I can get out of this little profit and then the question is do retail Traders come in so when the stock is squeezing up right here how do I know about it as it's making new highs right here it's going to be hitting my high of day momentum scanner that gives me a chance to pull up the stock and begin doing my process of due diligence what's the float what's the price what's the news what's the daily chart look like and what's the intraday chart look like if I like all of that then as it's pulling back I'm already looking at the level two and the only thing that I need to see is green on the tape in order for me to press the buy button right here and then look for that next leg up and that's exactly what happened on the 10-second chart we have the initial pop right here we squeeze up so initial pop we squeeze up we have two candles of pullback and then right here it goes higher so from $4.50 it squeezes up to 550 560 that's over a dollar a share right there in 20 seconds that is an impressive move so that right there I traded right in here and I made money on that first trade I made about $3,000 it's not a home run but it is a solid base hit the setup was simply looking on the level two for the green to come in and then that created that first candle to make a new high as we broke new highs we surged higher and in these moments right here the stock is once again hitting the high day scanner it is our leading percentage Gainer of the in in the entire Market of the day this stock is now becoming obvious now this proceeds to sell off for 2 four 5 6 7 8 nine candles in a row and to be honest I was surprised it sold off so much that I decided to buy this dip at about 396 right underneath $4 because it had sold off over a dollar and a half a share I thought this this point we're probably due for a bounce because I take us this is a something that's very common when you have two 4 6 8 10 KS in a row that are red I start to look for a bounce so this is a uh one of the things that is worth noting here is that when I took this tra trade this was a reversal trade it's a counter Trend trade the short-term Trend here is eight red candles in a row it's selling off so that's a specific setup Within the breaking news strategy so the breaking news strategy calls for actively trading a stock that is moving right now on breaking news but the individual setups I can trade will vary I could do a reversal trade as I did right there or I could do a micro pullback my first trade was a micro pullback buying the first pullback my second trade was a reversal trade so I got in down here at four and I was really impressed when this bounced back up and squeezed all the way up to 7 a share that was a really strong bounce that was super strong okay so I broke the ice with my first trade got my second trade right here and now this is a strong stock so I'm looking for more opportunities so the dip trade at 396 just under the whole dollar and by the way for those of you um that are newer something that you'll notice is that a lot of stocks trade with respect to half dollars and so when this first popped up it popped up to what level $4.50 it then pulled back and it squeezed up to five $5 and then hit 550 and it broke above it but it couldn't hold above it and it came all the way back down and then it sold off you know rather surprisingly to me all the way back down here to about $4 so it's it essentially dropped through 5450 and and then it came to four and this is where as it dipped below this level and then I saw finally some green on the level two seeing the green on the level two was enough for me to say you know what I'll take a starter right here let's see right my stop naturally on this trade is the low of this pullback so I have a very tight stop and let's see what it wants to do and it ends up you know as shockingly going all the way up to $7 a share but what I really want you to understand is that a lot of these stocks tra with respect to half dollars and whole dollars now to be able to really capitalize on this type of trading you'll have to be really good at reading level two reading the tape being able to visualize that flow of volume the flow of trading so what charts give us a stock chart is historical price action this is what's already happened we don't yet know what's going to happen next when we look at this chart this is all what is already happened this is over what is coming next and what we can't see from the chart is the actual orders that are stacked up in real time so on the bid and on the offer any time we have orders stacked up and th that's helping me predict what's going to happen next so when I all of a sudden see we've had this sell off of eight red candles in a row and then I see green on the tape the green on the tape I'm even going to see that order I suppose I would see it the the second it happens I'm going see the order go through that doesn't necessarily correspond to a green candle just yet the candle could still be red the stock could still be selling off but then suddenly you know a 10,000 share green order goes through so if I wait to see the reversal on the Candlestick chart I'm going to be behind I'm going to be missing it so I'm watching the tape the level two and when I see that green starting to come in boom that's when I'm punching it so the better you get it leing level too and ultimately the better you're going to get at trading these types of fast moving stocks so in the case of qrx it sells off it then squeezes all the way back up to seven and then I start looking for the next area of resistance all right number six once I've established a profit cushion on the day and I did on this one first I got myself up 1,000 then 1500 2,000 and 3,000 I'm going to scale up share size to maximize on the opportunity if the stock is strong now when I first start taking a trade on this one when I got in at 450 I had no idea if the stock was going to go to seven or back to four right now obviously I had a suspicion based on my experience in the news that the stock was going to go higher but even when it got to here I didn't I did not expect it would drop to $4 a share so it was the right move for me to sell and take profit up here let pull back and then look for the next trade so the way I'm trading is my first order business is to generate a little bit of profit to create a cushion I trade every single day as a goal of trading for income I would like my goal is $5,000 I would like to hit $5,000 a day that's not going to happen every day but it first begins with building a cushion so once I'm up $1,000 then I feel like okay I've got a little cushion today versus being zero on the day and let's see if I can lean in we've got some momentum and so in the case of qrx I got my cushion got myself up $3,000 over the course of several trades a trade in this area a trade in this area there might have been a little trade in this area and then I'm starting to look for the next setup so I started getting dialed in on $7 seven was the whole dollar here where we have this blue line and we had resistance at seven in this area there was resistance right there and then we popped over seven so I took this trade here for the break of seven unfortunately it did not hold it flushes down and I got out I got out very quickly with a small loss and that's not a problem it sells off it comes back up and I'm looking to get back in if it can break through seven but it doesn't it sells off again comes back up it pulls back again it comes back up I take another trade right here as it breaks through seven as soon as I'm seeing that green on the level two at seven and it looks like it's going to break seven I jump in and it pops right here up to 767 that's 67 cents in one trade 67 cents that's a good trade all right so now I've got a little bit more cushion on it now I'm up about 4,000 it ends up going through this period of sideways consolidation right in here and this was very interesting in here there were a lot of um people selling and they kept selling kept selling kept selling but this did not want to break there was a buyer at $630 that was absorbing shares I couldn't tell how many shares they were buying but they were buying a lot of shares so it sold off here and then on this green candle I said you know what I'm going to take a starter because it's it it's not breaking down it's holding up it pops up for a second and then it comes back down again it sells sells sells sells sells it looks like it's going to break it doesn't I said I'm going to add to the position so now I've got 8,00 shares of this this is at about $6.50 and it rips up right here to seven and at this moment I thought we might go back to 750 up to 8 now it ended up hitting seven and once again breaking and rejecting when it couldn't hold seven I took that off the table and locked up uh in total about $2,000 more profit so I got myself up from $4,000 to $6,000 of profit on that move right there and when it rejected this uh time and actually broke below 6:30 at at that point I said I'm done with the trade the fact is on this stock within 3 minutes it was up 133% and within uh 12 minutes it peaked at 175% on the day so this was a really volatile stock now this was Amplified by the fact that the float was only 960,000 shares when you have a stock that's a float that's that low think about that for a second there's only 960,000 shares for sale that are available not they're not exactly for sale they're available to trade now some of the people holding those shares they're not selling they're not buying and selling so their Shares are you could almost say they're effectively locked up however depending on which broker they trade with their shares may have been lent out so someone else could short against that stock so those Shares are still potentially in rotation and available to trade but nonetheless you've got 900,000 shares as the float and that means if every single one of the people that owned that stock wanted to sell it today when it was up 150% they actually could have because it's had millions of shares of volume as of right now let's see I'll pull up a qrx just to check the volume on it as of right now it has 23 million shares of volume the float's only 960,000 shares that means the entire float all of those shares have traded hands 23 times today that is incredible so anyone that was in earlier from weeks ago they easily could have sold today because there was so much volume and it wouldn't even really affect the stock price that much because there was that much volume so this is what's really good to see when you have a stock that has a low float and volume comes in you can get a really big move and you don't have to worry about an Insider dumping a ton of shares because generally speaking when you've got a low float and you've got that much volume it can be absorbed but there is one potential flaw the potential flaw is if the company has what's called a shelf registration and that's very common with a lot of these small cap stocks a a shelf registration means they've registered to sell more shares on the market it's not an initial public offering it's called a secondary offering so in a secondary offering they could choose to sell another 5 million 10 million 20 million shares if they want to a lot of times these companies will automatically register a shelf that gives them the right to raise up to $100 million so that's a that could be a lot of shares potentially now they'll try to work out deals to sell these shares to institutional investors and usually when they do that type of secondary offering the Institutional Investor well they want something in return what they want in return is to get the stock for maybe 50% of its current trading value so what we will often see with these companies is and this is especially true when the company has had a long history of selling off the chart will look like this you've got the long period of selling off price declining price declining reverse split here and then the stock has news here and it squeezes up here all right it might squeeze up you know 400% you never know you can make a big move it squeezes up but this company as a company still has a problem their balance sheet is garbage they're running out of money they need to raise money and so as the stock squeezes up they already have that shelf registration and they know they're going to hit it and sell more shares now they could sell shares directly on the market they could sell five million shares directly on the market they have the right to do it and so if we see a stock that sells off all day long it's usually not because insiders are selling it's because the company is actually selling so this is a risk and this is why I'm not going to get married to any of these companies I'm not going to hold them and hope they make a big move but I am going to trade them and the reason I like trading these low pric stocks is because they've sold off for so long and they can bounce up 50% 100% 200% 300% you have a big company you know like apple or something like that they can put out news and they can have higher relative volume but how much are they really going to go up in one day 5% Maybe 8% rarely will stocks like that go up 10% in one day and so as a retail Trader that doesn't have a you know huge huge account because I don't keep a big account for day trading I keep my account small and then the day day trading profits I make I put away to invest long term that's lower risk people who try to day trade with 10 million $15 million accounts you can you can make some huge mistakes I don't want to empower myself to ever make that kind of mistake so as part of my risk management I keep my account small but that means I need to trade the type of stocks that have the potential to go up 50 100 200% if I really want to grow my account by the way I began this year with $116,000 in my account and it's already over $250,000 my account has already doubled just in the last six weeks all right last eight weeks okay so I that's my focus to trade those types of stocks but I don't want to get married to them I don't want to hold and hope because they can be at risk of secondary offerings now what we also know is that these companies can be targets for naked Short Selling this is something that was exposed during the Wall Street um Wall Street beds GameStop uh you know Reddit kind of saga that happened in 2021 but the fact that these companies these U hedge funds will short short short short they will try to beat down a lot of these um you know not very strong companies but what they're doing is they're really bullying the stock because they're able to sell shares that don't even exist so it almost it's like printing shares that don't exist so you can sell it and devalue the company it's just it's just duding the value of the company when you just sell sell sell sell sell it shouldn't happen it's not supposed to happen but as the Insiders have said it happens every single day so we do want to be careful now one of my focuses here with trading these types of stocks is to trade it aggressively when it's on the front side of the move how do I know the difference between the front side and the back side step number seven I'll slow down or stop completely once the macd the moving average convergence Divergence indicator has crossed on the one minute chart and that happened right here so when we get that crossover and this was sort of dramatic because we had this um this pop up here and then this rejection but in any case right here was where the macd crossed over so at that point I look at this as being being on the back side of the move now it is possible that the stock could get back up above vwap and start to squeeze higher but by the time that happens the macd is going to cross positive so I want to be trading when the macd is in favor of the trade the signal the average is above the signal line and I want to avoid trading it on the back side of the move it doesn't mean I'll never trade on the back side of the move but I want to do it with more caution so I avoid giving back too much of my profit because what I've often found is that when I start overtrading the back side of the move this is when it's choppy this is when it's difficult you've got a headwind so I'd rather trade when the momentum is on my side when I've got a tailwind and this is when we had for sure the biggest moves so I use the macd on the one minute chart I don't use it on the 10 second I don't even use it on the 5 minute I just use it on the one minute and for me it's been a great indicator of front side of the Move versus back side of the move so the process of taking the trade from step one through step eight step eight is analyze in my results and to update my journal this is super important for those that don't know my story my Turning Point came because I was tracking every single trade into my spreadsheet into a trading journal I got to a point where I hit basically hit rock bottom I had a huge loss and then I had to go back to the drawing board and I was like what am I doing right now because this is insane I keep losing money even on stocks are making big moves I'm losing money what is wrong with me and so I took all of my trades and I started sorting through them and trying to figure out what am I doing right and what am I doing wrong now here's a tip a mistake that I was making was that I was trading probably 12 different strategies at the same time I was trading breaking news and I wasn't doing it well because I was trading it on large cap stocks I was trading breaking news on IBM Apple you know fizer these stocks didn't give the 10% moves so I would just get chopped up probably by The High Frequency trading algorithms and the institutional Trad Traders I was just throwing them my money so breaking news ended up working later once I figured out the right type of stock to apply it to but early on it wasn't working I was trying to trade options I was trying to trade large caps just outright I was trying to do reversals I was trying Short Selling I was trying swing trading I was doing a little bit of everything and the problem with doing that for me was that it muddied up my results so I couldn't actually tell that there was a subset like one single strategy that I was trading that was working profitably well it wasn't until I went through all of my trades and started really categorizing and saying well what setup was this what setup was that that I discovered a pattern that for me was working and then once I took away all the strategies that I was losing money on all I had left was the one that was working and that was enough for me to turn the corner so what I want to do for you guys is there's going to be a link posted at the top of the comments pinned and Linked In the description where you can download my small account strategy PDF this is a PDF that outlines the small account strategy that I use every time I reset my account down to $500 or $1,000 it's the stocks I trade it's the setups I trade it's my process in detail so if you want that I would encourage you to download it one of the things that I would remind you is not to try to reinvent the wheel I'm just one Trader but I'm a Trader with a proven strategy so if you really want to master the strategy that I trade you might as well learn as much as you can about it and don't try to reinvent the wheel don't try to do something different from what is already proven to be working you got to figure out the difference between what I'm doing and what you're doing and then try to bridge that Gap okay so uh so number eight is to step back analyze your results update your journal and then make sure you walk away and do not overstay your welcome I always ask myself was this the most obvious stock today the answer today is yes absolutely the most obvious stock today was a stock that not only fit within my strategy uh it was priced pretty much perfectly between 2 and 20 the volume was fine the float was great the Gap I mean everything about it was good um you know some of these stocks will go up a th% on a very similar set of characteristics others will not and the difference there can be whether or not the company's uh in need of selling shares tapping their shelf registration so on so forth but from a just technical perspective this lined up perfectly and did I trade it well the answer is yes absolutely $613 in 12 minutes yeah I can't complain that was that was some solid trading but could I have done better let's be honest I want to be careful of Simply judging my day based on my result just because I'm green doesn't mean necessarily I traded well today I could have broken all my rules I could have chased it I could have taken way too much size and made money but it would be a it would be lying to myself to say it was good trading but in the case of today I can honestly say that it was I traded it very well but I could have done better I could have traded it with larger share size from the beginning uh my entries and exits were great but had I traded with larger share size I could have made more money now that's true with probably anyone but I could have scaled up and traded with bigger size and made a bit more money um I could also say that there were more opportunities on the backside post macd cross uh which I avoided that was the safe bet but when you have a stock that's moving and is really volatile sometimes you want to try to squeeze as much as you can out of it and I think I could have squeezed a bit more out of it some of those were really nice dips off of ascending support that were on the backside which I avoided but again I I think I did leave a bit of money on the table both in terms of not taking as large of share size as I could have even relative to what I've been trading in the last couple weeks and by cooling off on it a little too too soon so I could have done better um but at the same time I'm green and that's good it's just I think valuable to spend some time reflecting honestly on your trades because look the goal is to continue to get better and better and better and even though I've been doing this full time for more than a decade I still see room for improvement in myself I'm not the best Trader out there there's a ton of people that are better than me so I want to try to always get better the better I get at solving this puzzle every single day of finding the right stock of actually having the confidence to execute on the trade early and with bigger size the more money I'll make so there's a lot of motivation to try to do better the potential is well sky the limit so I'm going to keep trading I'm going to keep focusing on it and I encourage you guys to make sure you download my small account strategy PDF and if you found this episode helpful I hope you hit the thumbs up and I hope you subscribe to the channel for more episodes just like this on day trading strategy and you know what since you watch to the end of this episode right here YouTube thinks you might just love this one right here so make sure you check that out and I'll see you for the next upload real soon all right I'll see you guys soon