How I turned $514.22 to $4,000 in 7 Days | Small Account Challenge Ep 9 transcript

I have some good news and I have some bad news the bad news first I blew up my small account and this is not a good situation I'm not happy about it but as you guys know I've turned an account with less than $600 into more than 10 million and verified and independently audited trading profits and I like periodically doing small account challenges because they are a challenge and for me I find that fun and I know you guys like watching it but we know that they're risky and in this episode during this challenge I blew up the account okay but here is the Silver Lining and this is the good news I now have the very real opportunity to share with you how I'm going to rebuild how I'm going to bounce back because I know many of you have been in this exact same position now it doesn't matter if you're trading Forex cryptocurrency you're trading futures or you're trading stock many of you have been in a situation where you have a relatively small account and you blow it up or you you knock the account in half and you now are faced with two really big tasks one how to recover emotionally from that big loss and then two how to rebuild the account given that you now have a fraction of the buying power you previously had so now the growth is going to be smaller in this class we're going to do a couple things number one I'm going to share with you how I blew up my account so you can avoid hopefully making a similar mistake number two I'm going to share with you the strategy I'll be following to help myself regain my composure emotionally so I can focus on rebuilding this account these are steps that you can Implement in your own trading as well and number three I'm going to share with you my tiny small account strategy that I will be following over the next several days as I rebuild the account and what you're going to get to watch is me grow the account from a cushion of just about $14 above the minimum deposit threshold that this broker requires to over $44,000 that is going to happen in today's episode so let's go ahead and Jump Right In so I now have $542 left in the account the broker that I set up this account with has a minimum deposit of 500 bucks which means I have $14.22 over the minimum I made a terrible mistake and how did this even happen so for those of you who have been tuning in to this small account challenge you'll know that when I began the challenge I started with an old laptop with three broken keys and an external monitor that was broken and I did that to kind of simulate what it's like as a beginner working with sort of a hodgepodge of of older equipment and I said every time we cross over 10,000 thumbs up 10,000 new subscribers you guys are going to help me unlock new inventory just to make it kind of fun so thank you by the way for those of you who have already hit the thumbs up and subscribed in this episode here nonetheless over the last uh week we crossed over 10,000 thumbs up and I unlocked a new computer so I was like sweet I'm going to put the the new computer here I'm going to get set up this is going to be great big Improvement it's a new computer and what happened was I installed the trading platform on my computer right here as you can see and when I uh when I loaded the layout what I didn't realized was that it didn't load my hot keys with it so hot keys are something that active Traders use to get in and out of Trades just by pressing buttons so all we have to do it's incredibly streamlined we can type in a stock whatever the stock is um we type in the stock and we can just press shift one and it's going to enter the order right here automatically for the most uh shares that we could afford to buy so that's what I ended up doing I saw a stock pop up I press shift one but my order executed and sent to the market it didn't preload it the way it is right here it just sent an order straight to the market and I was like a deer in the headlights I was like what happened happened that's not how my hotkey was set up though well that is how the hotkey was set up because it didn't copy over my hotkey settings so under my hotkey settings right here if I go down or we could sort these these are all the different keys that I use this hot key right here is to buy with 95% of my buying power and the key is set to load right now however what it was set for was load and send it's that big of a difference between instead of saying load it said load and send it's just it's such a small little thing but I pressed that button I sent an order out to the market using 95% of my buying power for a stock that I didn't want to buy at that moment I pressed the button just to see how many shares I could afford to buy I do that all the time it's a way for me to assess you know can I buy enough shares that it's even really worth trading so when I pull up Reddit I could see well I could only buy 48 shares yeah no that's probably not worth it whereas I pull up a cheaper stock and I say oh yeah okay that's that I could buy a lot of shares of this this is something that is worth trading now for me that factors into my strategy so if I know right away I can only buy 50 or 100 shares or something it's not going to be worth it for me to try to take that trade because I'm focusing on relatively small base hits that's part of my strategy try to lock up 10 15 20 cents per share so with 1,000 shares that's 150 200 bucks you know with 10,000 shares it's $1,000 to $2,000 which is a lot but but more risk than I'm willing to take right now with small size of like a 100 shares it just $15 $20 it's not enough to move the needle for me especially when you factor in the the reality that the broker that I'm using still charges a commission for every trade I take okay so what ended up happening was I press that button and I was just sort of looking at a stock and considering is this something I should even trade and all of a sudden I'm in and it just happened to be dropping and then I all of a sudden it's dropping more and more and more and I'm I have to sell I have to panic sell I for a second I wasn't even sure if I should just hold it and see it through I was like whoa I'm in a huge position here uh I wasn't planning on that but if I sell now I'm already going to take a huge loss so let me give it a second and then it just kept going lower okay so look that that was I I would say it's a technical error it's almost the equivalent of losing money because you're in a trade and then internet goes out and by the time it comes back up the position has changed these things happen and it happened to me okay so well let's face reality I've now taken a big loss and I've got to recover so this is something that I am very familiar with because this is part of trading being a Trader requires you to be incredibly resilient you've got to be able to get back on the horse after getting knocked down and that's what will ultimately Define you as a Trader some traders in the face of this kind of moment will give up they'll be like oh God I'm never trading again that was too painful I can't go through this again and others will say okay yeah did that suck it did was that fun no I would like to not do that again but having said that the only path through the only path forward is through because I love trading I want to make this happen I see the potential in this career and I can you know I can sort of exclude the anomalies from the way I think about trading yeah things like that will happen but they're rare it's few and far between so I'm just to stay focused on following the rules of my strategy so now what I want to do is I want to share with you the strategy that you're going to watch me trade over the next 7 days which will all be chronicled in this episode right here I'm going to break it down for you so you can implement this strategy in your own trading what I encourage you to do is download the PDF that has the checklist and the breakdown in written form of the strategy that I'm going to be using and sharing with you now so it's pinned to the top of the comments and in the description so make sure you check that out okay so how do I recover I've just taken a huge loss this is an example of a period um where I had you know a green week another green week and then all of a sudden I have a week where I'm read 5 days in a row 1 2 3 4 5 days in a row and that's with my big account so you know what th this happens most likely the market got cold and I didn't really ease off the throttle fast enough I dug myself a hole of $22,000 but as you could see I recovered relatively quickly had a couple more small green days before things started to pick back up and improve actually recovered it all within one week and then by the end of that next week I was making new progress so I want to give you my game plan plan following a spiral event a spiral event is you know like basically either what just happened where you have a freak accident and you have a huge loss or what's worse a spiral event could be where you become emotionally hijack and you take trade after trade after trade after trade and you just lose lose lose gamblers would say this is going on tilt this is where you are just emotionally compromised and you're trading anyways and at that point you really are are kind of just gambling because you're trading from emotion fear the fear of having a loss cuz here's something that happens in our brain uh we feel like on a day that we're red we're already red so I'm going to feel terrible no matter what so what's the difference between being read a thousand and being read 10,000 both are R right and that's a very primitive emotional type of logic that's not really set in reality because in reality there's a huge difference between being read a th000 and being read $1,000 a $9,000 difference but from an emotional perspective when we're thinking and and acting on our emotions being read either way you feel like a loser whether you're read 20 bucks or you're read 200 or you're read 2,000 or 20,000 if you're read you're a loser and that's how a lot of us feel because this is competitive and it is sort of like a game and each day you either win or you lose and when you lose some emotions can come out so a spiral could be a day where you know you start with one loss and then you got second loss and then a third and then another and you just dug the whole deeper and deeper and what usually happens to Traders when they're experiencing that type of spiral is the losses are getting increasingly um big so usually it'll be it'll be something a little bit more like um the first loss might be like 300 second loss is like 600 third loss is like 900 and then the fourth loss you know you're you're now read5 $6,000 and that's what we call that kind of spiraling the loss is just getting bigger and bigger and the emotions are getting bigger and bigger okay so following a spiral event or following an event where for whatever reason you just had a huge loss you lost internet you got caught in a stock that had bad news you pressed the wrong hotkey as was the case with me you had a mishap and now the loss is so big that you pretty much are guaranteed to feel an emotional response once that emotion starts to kick in it's going to affect your thought process and it's going to affect you for days so this is the game plan following a spiral number one I have to acknowledge that I am in a heightened emotional state and I have to apply restrictions to my trading account so I do not allow myself to continue the spiral right after you've had one day of spiraling you can't you don't want to continue to day two day three day four day five and just have the loss get exponentially bigger so by by acknowledging I'm in a heightened emotional state what that essentially means is I put awareness around the fact that I'm stressed I'm feeling a stress response because of trading not going so well right now number two applying the restriction on my trading count is a uh is a technique I use to stop the bleeding I do not want to keep having the loss get bigger and bigger and bigger so I need to stop the bleeding and the easiest way to do that is to apply a restriction to my account and the restrictions in the form of a Max position size so what I'll typically do is I'll say well you know for the next um for the next 5 days I'm going to set a Max share size on my account of just for instance I might use 5,000 shares knowing that my Max size typically is closer to 30,000 I'm reducing my my size considerably to the point where even if I do have a few more losses at the rate of 5,000 shares a trade the losses are going to be negligible compared to trading with this size so the emotional response will also be smaller I have to bring everything down a little bit now obviously what I would like to have happen is I would like to you know have after the draw down however big it is I'd like to have you know well of course you'd like to Just Bounce right back like that but if you try to do that you're increasing the likelihood that you're going to go like that so you have to accept that that's not going to happen you're not going to recover all this overnight instead you need to activate uh your patience contrl P patience I wish it was a button you could press on the keyboard and You' have it but you need to activate patience and be patient with the fact that it's going to be a little while before you get back to here uh patience is something that requires a lot of discipline to be able to sit with being patient with the draw down being patient with the loss okay I've had a loss it's a big one it's going to take some time to recover that requires a high level of patience and a high level of acceptance I'm not going to feel like a winner until I'm back to alltime Highs but this is just the way it is I have to tolerate it so during this period This is where I'm trading with share size restrictions so I've got my share size restricted I'm also restricting the amount of times I'm trading each day and I'm going to slowly rebuild my account now my rule of thumb is that once I've made back about 50% of my loss and this is when I start taking uh the restrictions off so I can start to make a little bit more progress now at this point even if I do have a little bit of a setback I'm well off of my lows so the setback hopefully won't bring me all the way back down to here that's what you want to avoid there's something called stair stepping down which is when you you make progress like this you're stair stepping up and then you're having the stair stepping down and you don't want to do that as a Trader yes you're going to have some losses like this but you want to pretty much cap it right there and start the process of being very cautious and making your way back up so when we're trading with small share size yes it does limit your upside potential but what's more important is that you're maxing you're capping your downside loss you don't want to keep drawing down so you start building a little bit of progress and then again once you've made back 50% you start to increase your share size increase the number of Trades and you grow from there so all of that is easier said than done all right so number one I acknowledge I'm in a heightened emotional state number two I apply restrictions on my trading account number three I begin the practice of mindfulness and meditation to reconnect with discipline so one of the things that I love doing well I don't love doing it but I'll do it when I'm in the situation of meing it is I'll do guided meditation so I'll do it on my on my phone and I'll set aside a little bit of time each day usually in the evening to do a guide in meditation and I'll do it before I begin trading each morning and you could do a guide meditation on some some of the different emotions that you feel around the loss so if you feel anger you could do a guide meditation on dealing with anger anger management if you're feeling sad you could do one on sad if sness if you're feeling anxious anxious if you're feeling fomo you could do one on fomo you so you could or on patience or on discipline you could do guided meditations based on different things and I find them to be really helpful now it's kind of silly in a way that just listening to you know this kind of guide meditation could have a significant effect on your thinking but what it gives me is perspective because what I find is that in these moments where I take you know a really big loss um you know whatever happens I take a huge loss I I feel like I'm in a state of sort of tunnel vision where I'm so upset about today everything is focused on today and I feel angry I feel frustrated you know I've got all those feelings I feel it it's like that buzzing feeling it's just a real sense of of of anger and frustration but so focused on the fact that I'm read today you know that today was a bad day and when I step back it's very hard to do in the moment because the emotion takes you over to just feeling I'm so angry about what just happened I can't believe that just happened I'm so stupid this is unbelievable you know whatever you say being able to step back is very hard in that moment but I find it to be really helpful so stepping back and saying okay yes it's true that I just had this loss right here this is the tunnel vision right here but what is also true so sometimes that's the question I'll ask what is also true what's also true is that I grew the account from back here okay that's also true I had a really nice run of progress what's also true well in the case uh for those of you who have been practicing in a simulator later you might have four or 5 months of progress and I'm sure you had some blips here a little draw down and then a recovery you know whatever you'll have it won't be perfectly straight it'll be a little deviated but this is the track record that you look back on and so when you have this loss right here instead of being focused only on this like this is the only thing that's ever happened in your life when it comes to trading you step back and say well this is what's happened here realistically I only gave back a week of progress maybe two weeks is it does it make it more fun no but it gives you context it gives you perspective and in fact when we look at this over the last 90 days well geez I'm still net positive over 90 you know you look at this over the last year well gosh you know I'm I'm definitely doing the right thing you know okay so there are this was a mistake and it's not I don't do this to try to uh let myself off the hook for making a mistake I still made a mistake and I need to hold my self accountable if that's if that's the case now to be honest with this mistake that I just had I I'm I don't really feel that I need to beat myself up about it too much it just happened it things happen so with this one it's fine but there are other times where I'll make a mistake and I'll really feel like um I had a very clear opportunity to make a better decision and I made the wrong decision now we're all human right so of course we're trading against some computer algorithms which gives them an advantage but we're human and we will make these mistakes so we have to let ourselves off the hook for that okay so focusing on the mindfulness of meditation reconnect with discipline is important and then when I sit down each morning right so and I'm going to show you in my next trade I'm going to sit down I'm going to focus on building a cushion with small size I'm going to get green and get out I've got to start rebuilding track record I've got to start rebuilding confidence and my first goal is to try to produce one week of stable trading results to rebuild the confidence once I've um recouped about half of the draw down I Can Begin removing my restrictions so this is my general um the general strategy that I follow for recovering from a spiral but now we have to talk a little bit about the strategy and before we do that let's go ahead and jump in to the first trade that I've taken uh in this now very tiny account okay tgl just hit the scanners it has breaking news and I jumped in with the most shares I could afford which was 72 I bought 72 shares at $6 it's now at 636 on the offer 629 on the offer 618 636 640 660 668 666 on the offer 650 on the bid I'm up 35 683 686 on the bid can't really complain too much about that the Stock's now up 32% so this is a stock that had news that came out right at 8:00 a.m. that created a 20% squeeze in the stock now I locked up $50.40 a share as you can see as I was sitting down my account balance the equity just $542 which gave me about $3,300 of buying power using leverage which is not available on every stock uh and with that I was only able to afford 70 shares of tgl I bought 70 shares and I locked up $50 okay the process of rebuilding has begun with the first trade now I'll mention that on that first trade I took 72 shares because that was the most I could afford it's not what I would have liked but I thought the stock had potential and it's because of the way it fit within my strategy the thing is you have to be able to make a very quick decision and I actually punched the buy button on that I mean it was almost instantaneous if it had come up and said I could afford uh 500 shares then I I would have taken that trade now tgl the stock that I traded on uh day one on that first trade was moving according to my strategy okay so step one of the strategy is to find a stock that is moving and I do that by using this scanner right here which is searching for the biggest percentage gainers in the market and this is showing at this moment that 225% was the biggest percentage Gainer it was this stock right here nbtx priced at $6.60 with 39 million shares of volume and a float of 34 million shares we'll talk about float a little bit more in just a second uh it has a relative volume of 7,300 42 so this is a stock that I would definitely want to look at and see what's going on with it we look at the chart and we can see whoa okay this thing went from two all the way up to seven it pulled back and then it climbed all the way back up here to eight this has a lot of range so most likely what was driving this move was a catalyst there was some type of catalyst particularly news so in the case of um tgl when tgl first hit my scanner I was evaluating the stock based on these five criteria number one I wanted to see how high the relative volume is relative volume is the measure of today's volume relative to average volume that the stock experiences so if the stock typically experiences 100,000 shares of volume over a 30-day average and today it has 500,000 shares of volume it's got five times relative volume I set five as my minimum criteria now if we look back at this scan here just for a moment you'll see no doubt nbtx was way way way over now five is like you know super low but you'll see that this one's 4.19 this is 4.24 a couple of these are just over five and then this one's 433 this one's 11 and 12 and then this one's 7,000 this is the big stock that I wanted to be focused on on this particular day because this is just so special what's going on with it so high relative volume means you've got lots of volume relative to what's normal that typically is because there's some type of catalyst and these are stocks that make big moves number two the stock has to already be up 10% on the day it's possible you could have a stock that has high relative volume but is actually selling off because they've got bad news and I wouldn't be interested in trading that so I only want to be trading stocks that are up and I set a minimum threshold of 10% on the day number three there should be a news event moving the stock higher that's the Catalyst that's the reason the stock is going up so I'll talk more about that in just a moment number four most Traders prefer stocks between $1 and $20 because they're affordable most Traders with small accounts well we want to trade what we can afford so back to the Whiteboard here with my uh $500 account give or take and my $3,000 of buying power if a the stock comes up let's just say at you know $6 a share I could buy 500 shares of it as long as this the stock is offering leverage which most of them do but not always uh and just like that let's just say I get in at six it squeezes up to you know 620 I'm up times 500 I'm up um $100 on that trade that's $100 of profit for me okay and that means my account is now up like 20% on the day right these are big moves this is what I'm going to need I'm going to need to find stocks where I can get 20 cents uh you know a share and where I can do that using all of my available buying power in the case um of the first trade on tgl I bought 500 I bought 7 72 shares because that was all I could afford and even though I made well $50 out of it that's going to be less common to get that kind of big move so I have to be able to focus on stocks where I can AFF to buy as many shares as I can because my focus is on the number of cents per share that I can make number five most of the stocks I'm trading are going to have a float number of shares available to trade of less than 10 million shares this is going to make the stock more volatile it's going to uh amplify how much it can move and to give you kind of a um a better understanding of how this works let's say for instance we have a stock that's U priced at $8 a share and it has a float of let's just say 5 million shares so there's 5 million shares available to trade the stock squeezes up let's just say 50% on 5 million shares of volume okay so it's these are the metrics of the stock let's say for instance another stock came up with 8 million a price at $8 with a 1 million share flow I would wager that this stock could make that same move with just 1 million shares of volume because of the supply demand ratio because the number of shares available in the float is the supply so this is Supply and the number of shares traded here is the demand now what we know is that stocks that have lower floats will have a bigger extreme in the ratio between supplying Demand on days when we're having a really big move so when we look back at um nbtx this had um 39 million shares of volume and a 34 million share float if this had a float of 3.5 million shares it wouldn't shock me if this had gone up like 2,000% in one day and we have seen stocks do exactly that we have seen 2,000 3,000 4,000% moves in a single day and whenever it happens it's because there was a massive IM balance between supply and demand so finding the right stocks to trade is going to be critical when you have a small account you have zero cushion you can't afford to take risk so higher price stocks I'm going have to be very careful on it stocks with higher floats have to be very careful on it stocks need to really fit within my parameters in order for me to be interested in trading them so let's take a look now at trade number two here for day one okay so on trade number two SGD is on the scanners it's up 50 4% on 1 million shares of volume priced at about a dollar a share a little on the cheaper side not my favorite price range but I can afford to buy more shares of this I punch the order and get filled $490 shares at $16 we now see a1111 $124 for a moment and I lock it up I take the profit off the table unfortunately I got filled on the cell side at only $114 it see you saw maybe how it dropped just for a moment there before popping back up uh and I just had the bad luck of getting filled just sort of where it dropped that could have been well a little bit closer potentially to $100 of profit but nonetheless $392 I'll take it is it a huge winner no but now the account's up $89.60 here on day two with $514 122 of equity so I'm making some progress and that's what's important step two is trying to figure out what the catalyst is that's driving the stock higher so once I find a stock on my scanner I might like it from a technical perspective I like the percentage change I like the price I like the volume I like the float I like the relative daily volume all of that stuff looks great and I might even look at the chart and I'm like the chart looks pretty good too but I still like to understand what the catalyst is what the news is that's driving the stock so I use this news window right here which is part of the day trade Das platform which you're seeing this is a platform that I've built out I have a development team that built this out for me it's available for members at Warrior trading exclusively and so I search right here in The Newsroom to see what the news is I try to understand what's the headline that's driving the stock higher now there's different types of news catalysts that we see on pretty much a daily basis we see earnings we see clinical trial results FDA approvals uh new contracts there are companies putting out headlines every day I mean there are some companies literally that put out a headline every single day they are desperate to stay relevant and these are generally ignored nobody really cares about them maybe initially they did and then they kind of start ignoring them so I don't search for and try to read every news headline that's coming out that would be impossible it wouldn't even make sense to try to do it instead I focus on the stocks that are already moving once a stock is moving then I try to figure out why it's moving that's my my workflow that's always been the process you literally couldn't do it the other way it would be insane it so finding the needle in the hay stack it's you use tool so you use you know I don't know like a magnet boom you got the needle just like that so with the scanners I'm searching for the stocks that are moving and then I see what's the Catalyst why is it moving and then from there I'm taking the trade so um however there are multiplying factors in headlines so we'll sometimes have a headline that includes hot keyword of a current Trend maybe AI or Co um this is very common or we'll have a stock that'll fit within a hot sector right now pharmaceutical stocks are very high but sometimes we get very high sometimes we'll get um Chinese stocks or AI stocks that are that are sort of trending another multiplying factor is if the stock is a recent IPO a recent special acquisition company or it's had a recent reverse split I find that these are all companies that uh these are sort of stock types a recent IPO recent special acquisition company or recent reverse split where in the past we've seen some huge moves so because it's happened in the past I pay really close attention to that moving forward so once I pull up a stock and I see it has news then I'm looking at the chart and that's where we start talking about entries so now let's look at the third trade from day one on my third trade trade this stock pops up on my scanner ddii and I can see it right down here on the scan it's up 41% on the day right here it's got very light volume but it also has a very low float so when I saw it popping up I thought to myself this looks a lot like a stock I recently saw that went from $8 all the way up to $24 a share and did it in like 10 minutes it was an incredible move it was light volume and it started just creeping higher and higher and higher so on this one I punched my order for 150 shares at the time when I did that I actually was getting filled between the spread which surprised me the offer was $489 and then it jumped up to over $16 but I punched it I got filled at $489 it goes up to 16 it hits a high of just about almost 17 and then all of a sudden I'm at 1656 I put my order on the offer and I filled on the ask selling 150 shares it's not a huge position but in the this case I got $250. of profit which means day one here now my account is up $360 this is a really great recovery but let's get into a little bit more detail talking about entries because I think in order to take the best trades in order to trade the strongest setups the strongest stocks you need to know where to buy and where to sell so let's jump back in and get into the chart of entries and exits so traditionally when we start talking about entries and exits we start talking more about risk management however I would argue that proper stock selection is probably the best thing you can do to mitigate your risk because if you're trading the best quality setups if you're trading stocks have a really strong Catalyst these are stocks you're going to keep going higher and the individual entries well they're not going to matter as much if you're trading the worst stock in the world an entry it's not going to make up for that you're still going to lose money so we want to find the right stocks and that's going to be our best uh method of managing risk having said that it is important to understand the relationship between your average winners and your average losers and so we're going to talk about that as a form of risk management I like to think of trading as whenever I'm looking at a trade it has to have the potential to be able to double whatever risk I'm taking so if if I'm going to risk let's just say $100 on a trade I want the potential to make $200 that's called a 2:1 profit to loss ratio so whatever the profit is the risk should be half or whatever the risk is the profit should be double either way it's the same ratio of two to one profit to loss and the fact is if you actually traded with a perfect 2 to1 profit loss ratio your break even point is only 33% that is setting the bar so low it makes it much easier and much more likely that you'll be a profitable Trader however many beginner Traders and I was no exception when I was getting started actually trade with an inverse profit loss ratio where average winners are smaller than our average losers so for me my average losers were about 25 cents a share and my average winners were only about 12 cents a share well it doesn't take a rocket scientist to realize that you're not going to be profitable with that kind of inverted profit to loss ratio unless you're right like 80% of the time in fact what the statistics tell us is that you would have to be right well 67% of the time just to break even and that would be before any fees and commissions as I mentioned the small account that I'm using charges fees and commission so that is going to set your break even point just a little bit higher okay so that means when I'm looking at a chart when I pull up a chart and I see a chart forming I see a pattern forming I'm going to be thinking about all right the stock let's just say is moving up and let's just imagine these are proper full siize candles we get a little bit of a pullback and maybe I'm thinking about getting in about here this is going to be my Max loss the low of the last pullback and my profit Target would be a retest of the high now in this particular case well this looks like it's only about you know if this is 10 cents this is about 10 cents which means this is about a one:1 ratio a 1:1 ratio well that's not bad but if that's the most this stands to give us I don't know if it's really worth it because the fact is if that's the best case scenario we don't usually realize best case scenario Traders are eternally optimistic we always think something has to potentially to do more than it does so whatever our potential is the realistic outcome is probably half that now in this particular case we might say well this could actually probably you know get back a little higher or maybe we could set our stop a little bit tighter but we want to be able to manage our risk based on uh risk of one profit potential of two so 2: one profit to loss ratio okay so that's our profit loss ratio now when it comes to the exact entry I'm of course using Candlestick charts and the chart patterns that I'm going to be most interested in will be the following number one entries around half dollars and whole dollars we often see that stocks behave with a a real um degree of respect to half dollar whole dollars so we'll just say this is five this is going to be approximately 550 this is going to be six up here and then the next one will be 650 it would be very common if we were watching a stock hitting the scanners to see it first squeeze up here to about this level pull back just for a moment you know maybe a little red candle right here Little Couple red candles and then punch through the reason this happens at whole dollars and half dollars is because a lot of Traders will play sell orders you know a sell order right at this level they're thinking oh well you know I'm in the stock and once it goes up to $5 or $6 I'll just sell at six so people just sort of tend to put their orders at half dollars and whole dollars so that means as we approach those levels we find that in these areas there's a lot of orders that are stacked up so if we actually looked at all of the orders on the order book we would see that around these areas lots of orders and then it kind of thins out and then it comes back up and then thins out and comes back up and then thins out and comes back up and so for that reason it's very common to see stocks move very quickly as they approach the next level and then again pull back momentarily before making another move higher now if it can break through this area the next resistance isn't going to be until the next half dollar and whole dollar so this is a chart pattern but if you saw this chart pattern and you weren't thinking about half dollars and whole dollars it would be okay because you would still be looking at the same entry You' be looking at these little pullbacks here I always like to buy a pullback where I can get in right around down here with a stop at the low so that's my stop yes my profit Target is the high I would like it to be better than a 2:1 ratio but I always know the potential of this is that it continues higher so my next profit Target Target is going to be the next half dollar or whole dollar so then we get another pullback which gives another entry opportunity stop is at the low profit Target squeeze through this half dollar whole dollar up to the next one so in this case that's our risk and this is our profit potential this level here up to the next half dollar or whole dollar and then we get another pullback so by better understanding that these stocks trade with this degree of respect around half dollars and whole dollars you'll be better equipped to trade this pattern you'll recognize that okay as soon as this stock gets over this level it may pull back and retest it not uncommon as long as it can hold this firm as support then this previous level which was resistance initially overhead resistance has now become support the stock is holding it I'm going to keep holding my position for the move higher so entries around half dollars and whole dollars are often going to correspond with moments of uh consolidation where the stock will come up to that level it'll consolidate for a few minutes and then it'll break through and it is as the stock is breaking through that I'm typically going to be buying so entries around half dollars and whole dollars is a big uh entry setup for me and micro pullbacks this is also a really popular entry uh setup so with a micro pullback the context is a little bit different we're seeing a stock that um typically has just made a really fast move and has suddenly squeezed up typically it's on breaking news the stock has suddenly squeezed up you know 15 20 30% so a micro pullback is going to look more like this the stock just immediately squeezes up like that it's a huge green candle it blows through several uh levels of resistance and then just for a moment it pulls back only for a second before surging higher now this right here represents the micro pullback the way I visualize the micro pullback is when I'm actually watching the level two I'll see the stock squeeze up as I'm watching the order flow I'll see it pause for a moment and in that moment a red candle prints and then as more volume comes in I'm buying for that next leg up so before I show you the next entry let's look at um the trades from day two so on day two we have a stock here that um ends up giving us a pretty nice move all right so let's get dialed in this is almost a perfect example of a micro pullback so APR is the stock that we're looking at and this stock is right now up 61% it's squeezing up it's got breaking news that came out at 8:30 the bottom of the hour now the stock is showing 1216 on the offer I press shift one to see how many shares I can afford to buy and I see that I can afford to buy 399 shares which is not a huge position but it's a $12 stock it's a bit more expensive and so I figure okay this is this is worth it now if we look at the chart right here what you'll see is that the stock popped up to a high of about 1220 and is pulling back just for a moment so let's watch this level it's dipping down to 1183 I put the order at 1225 it's a marketable limit order so it is a limit order this right now is a micro pullback I see green on the tape right there and I punched the order I'm in at $12 see all the green on the tape so now what I'm looking is for this stock to squeeze through 1225 holy smokes there's $13 on the offer did you see that did you see that that is a perfect micro pullback now I've had micro pullbacks like that where the stock has gone up $5 a share the idea here is that you're buying a stock that is super strong it has breaking news the news has just come out and Traders they don't want to wait very long to jump in this stock that's moving now in this case I absolutely did the right thing by locking up some of that profit because this stock while it could have gone to 145 $16 a share is now back at about 1150 one of the risks with trading breaking news is that in these moments the stock can be very volatile nonetheless I just locked up 321 uh sorry $329 24 cents and the account is has now doubled in two days when I came in here on day two I had $ 85920 right because I had the 300 plus uh from the previous day but fees and commissions came off of that so I had about $859 of equity and now I've got um $329 of profit this is a great day for day two and that's the only trade that I took one trade on a micro pullback on breaking news and that was it okay so on this next trade I once again do a micro pullback setup this stock pops up it hits my scanner it pauses just for a moment and I jump in let's jump onto the chart and check it out okay so GX has hit my scan and I'm going to jump in here as you can see right at the half doll it had popped up it had pulled back and I got in at $648 cents using that hotkey of shift one the most shares I could buy was 1,23 shares so I jumped in with that full position and I am shocked by how quickly this is moving so I take some profit off the table there as it squeezes from 648 up to 7 and look at how it has resistance at 750 and look at how it has support at the half dollar or the whole dollar of $7 so now it's breaking over 750 747 it's kind of struggling right around that half dollar whole dollar 725 on the bid 745 on the offer and then look at this 765 770 next Target 8 right next logical Target here is $8 it goes basically right to eight there's $8 next Target 850 see how it goes right to 850 and this moves fast now $8 is support 850 is the new Target okay so when it shows 797 on the bid I get a little nervous like uh is this going to hold this level but so then it drops to 750 the next level of support nonetheless this is a really impressive move this stock out of nowhere has hit the scanners and is up 44% it just is skyrocketing once again bottom of the hour 8: a.m. sorry 8:30 in this case the stock hits the scans and starts squeezing up so news at the bottom of the hour our current right now is around 830 and there it is 8:30 next Target 850 and then 9 all right so we've got 853 835 862 now the bid is 860 so it's holding over 850 but again you can see it's sort of struggling in this area sort of rejecting creating on the chart a little bit of what's called a topping tail a topping tail is when the stock squeezes up and then sellers push it back down so it has that upper candle wick which is indicating that there's a little bit of a struggle I would say right here it is struggling a little bit but it's still holding up relatively well it stocks up 65% so there's 8 79 on the offer 880 $885 some green on the tape $899 now 950 is next Target all right if we can hold over nine we've got a hold over nine now I'm still scaling out of position I'm still holding 32 shares I'm not holding a huge position but I'm still holding a little bit to see how much I can squeeze out of it there's 830 on the sorry $930 933 934 921 right now it's holding over 9ine and when it comes back down to 9 it has support and it holds that level now this stock ends up grinding even higher it's really impressive in fact I left probably you could say a lot of money on the table in this area although I could have gotten back in there wasn't an obvious enough micro pullback for me to feel like I could manage my risk adding back to the position so I had my first trade down there at 650 which was a very logical micro pullback and then you know you I could have taken a trade there around 775 but the way it was jumping between 7 and 775 was a little risky and now it's coming up to 9 so as I'm looking at these candles I'm like holy smokes this thing has just gone from like 550 all the way up to 9 it's up 71% maybe we are a little extended and so I take my profit off the table selling the rest there at $914 locking up 8969 here on day three now as the day went on on day three I took a few more trades on GX a Not only was I focusing on the micro pullbacks I started getting dialed in on these proper pullback patterns so this is the traditional bull flag Candlestick chart pattern this occurs when a stock makes a nice squeeze up and then pulls back usually for two or three red candles before pushing higher this can occur on the one minute chart the F minute chart it can even occur on the daily chart and I was primarily trading this on the combination of the one minute and the 5 minute as I continued trading the stock as it went higher it went to to 9 to 10 to 11 to 12 to 13 and I ended up locking up about $1,200 of profit in total on day three so again a really big day of growth in the small account which was really impressive coming in to day four the account has now grown from $542 to over $2,000 in equity now remember because of the broker that I'm using I have leverage so this leverage works like this just as a reminder I've now got two $2,000 oops $2,000 of equity * 6 equals up to $112,000 of buying power now it's not going to be available on every single stock but on the stocks it's available on I can really start to grow the account very quickly so coming in here I see a stock on day four that jumps up to the top of our scan the stock is APM it's uh just past 8:30 a.m. eastern standard time and we don't have very many gappers on this particular day but suddenly APM is our leading gapper in an instant I press shift one and I press enter I'm in with 2,182 shares using just about the full 95% of my available buying power just about $12,000 a little more than so I'm using all of my buying power on this I'm in it at six and my unrealized p&l is negative because I've got 25 cent spread I pull up the chart but what I like about this is that the stock is a recent momentum stock it's a stock that just a few days ago just about a week and a half ago went from less than $2 a share to over $18 in one day so this is now pulling back and I'm looking at this as a a potential that we've got a bounce here off the low for a move higher it breaks through six it goes up to where $650 half and in this case I took it off the table putting my whole order on the offer at 675 it goes goes up to seven and it does push a little higher the reason that I took the profit off the table on this was because I had a moment of fear I got in the trade on a micro pullback right so if we draw this out on the Whiteboard what happened all right the stock had squeezed up here to just about $6 and then it was holding so I pressed the buy button right here I'm in at six but we've got 575 on the bid all right so now I'm in right here and I'm like o I'm seeing the down you know nearly $800 on my p&l and I'm feeling a little scared granted I've had some really good progress in this account but I'm starting to think you know this might have been a mistake when I feel that moment of this might have been a mistake I usually switch my focus from this being a big winner to starting to reduce my risk I realize that I'm in a little too heavy and so as it breaks through six logic the next spot that it's going to go to is up to where the half dollar of 650 so it goes to 650 it even pushes through up to 675 and close to seven up here next whole dollar and I'm thinking all right let's take it off the table I sell I take my profit here at about 675 right there for about 75 cents a share on a 2,000 share position $1,600 of profit here on day four okay this is really impressive so now the account's going from 2,200 something like that up to 3,000 plus 3,500 3,600 okay this is what I needed a couple of really good days like this at the beginning of the challenge because now again what are we going to see we're going to I'm going to open the account tomorrow on day five and I'm going to see you know approximately well let's actually pull it up I now have $3,928 in this account that's again after the fees and commissions came out for day four okay so now I'm about to take my first loss aisp it's up only 2.7% now one of the things I mentioned earlier in my stock selection component of the strategy is that it's got to be up 10% so why am I trading this well it's a little bit of a continuation setup to be honest it's not great I jump in because I think it's going to go higher but as you can see it kind of stalls out so I'm in with 1,000 shares at $2 sorry um $102 so I'm using over $10,000 of my buying power on this but it's kind of stalling out here if you see this pre-market chart you could see that it hit a high of 11 and so that was what I was thinking it might be able to continue up to that level and you know what what I said about this stock is that it's a recent IPO it's probably going to go higher but it's going to be on lighter volume this ended up actually going up to 11 12 and $13 later in the day but it was on light volume it didn't have breaking news that was going to send it and this was a little bit of a mistake to take this trade it didn't have news it wasn't up more than 10% and so I put a profit Target order out there at 10:30 thinking well maybe it'll pop up sometimes they'll they will they'll pop up just for a second you'll get out and you're like oh that's great uh but I end up canceling the order and bailing and selling on the bid on this trade I end up losing about $250 which certainly not the end of the world uh after the growth I've seen over the last uh 4 days but it is nonetheless the first red day of this small account challenge I I think one of the things that I would say is that if this had been day one I wouldn't have taken this trade it's a little too expensive at $10 it doesn't have news it's not up 10% but once I started to build up a little bit of a cushion I started reducing my quality threshold just a little bit so I could increase the quantity of Trades by doing that I exposed myself as you can see here to my first loss so down $248 on this trade not the end of the world but that's a red trade so now let's look at day six so on day six I broke the ice of my first trade buying 1,000 shares of STI a stock up 94% with 20 million shares of volume I was looking for a squeeze back to the pre-market high of approximately 350 but but as you could see this trade did not really play nicely I got in a little too high thinking it was going to keep extending higher but then it flushed back down fortunately it's got a pretty nice range so I guess a little bit forgiving in that regard able to get out as it comes back up as you'll see in a moment but not really certainly the winner I was hoping for so here we go back up to 3738 and I'm actually going to be able to take let's see five 00 shares I put the order at 49 I think I was hoping that this would just grind higher but I ended up giving up on it there losing $294 okay not a big loss not much of a big deal but two red trades in a row the trade from day uh five and then this first trade on day six so I end up Switching gears and taking another trade on aisp locking up $240 of profit as it pushes a little higher this was again continuing higher on the daily chart so I thought all right let's give it a stab locked up $240 not a huge trade but again making some progress and I'm in the green now on my final trade of the day WD squeezing up 55 65 68% and I jumped in as it was pushing higher I was looking for the squeeze over $5 it ends up tapping out right around 5 504 507 and I take the profit off the table locking up here on uh day six $376 53 which now puts the account up over $4,000 for a 600 plus% return in less than 7 Days of trading this is really solid if you want to learn more about the strategy that I'm trading every single day make sure you download my small account strategy PDF it'll be pinned in the top of the comments it'll be pinned in the description so you can check it out you can download it and you can start practicing this strategy on your own now I'm trading every single day I live broadcast while I'm trading so all of our members my students at Warrior trading they can watch over my shoulder as I'm navigating the markets here's the deal you guys don't have to do it on your own so learn my strategy study up and if you want to take the leap and become a member of warrior trading we'd love to have you join and as always I hope you hit the thumbs up on this video I hope you subscribe to the channel and I'll see you for the next upload real soon