How I Made $1,000,000 in 51 Days of Day Trading (Full Training)

[Music] in today's episode I'm going to teach you how I was able to make over a million dollars day trading in just 51 days And I'm going to break this down into really simple easy to understand steps The first is I'm going to teach you the day trading strategy that I've been implementing every single day Number two I'm going to teach you the secret to how I've been able to maintain such a high level of accuracy and such a high level of consistency In fact I just finished a 76 consecutive green day hot streak Wow

In the last 9 months I've only had seven red days That's not by coincidence It's not by accident It's because I've been implementing a very specific strategy that you're going to learn about today And the third thing that I'm going to teach you in today's episode is how I was able to scale up my strategy from a daily average of 100 to $150 $200 a day all the way up to nearly $20,000 average daily gains For those of you guys returning to the channel I hope you hit that thumbs up You know that we're about

to jump into a deep dive episode For those of you guys who are brand new I hope you hit that subscribe button And let me introduce myself My name is Ross Cameron I'm a full-time trader I funded my first account in 2001 In 2017 I embarked on a small account challenge I funded an account with $583.15 and I set out with a goal of seeing how quickly I could turn it into 100 grand I did that in about 45 days By the end of 2017 the account had grown to over $335,000 By the end of

2018 I was up over $800,000 And in 2019 I crossed over $1 million of profit Today I have grown that account to over $12.5 million of profit And that profit has been independently audited by a third party CPA Now I share all that with you not because I want you to assume that my results are typical but because I want you to know the person that you're going to spend your time learning from is credible qualified and knows what the heck they're talking about So let's go ahead and jump out of the screen share and

dive right in So how was I able to make over a million dollars in just 51 days now first of all let me just say that this just happened I just crossed over a million dollars just last week And this is my progress on the year so far So I started in January with the goal of seeing how quickly I can make a million bucks 51 days Boom Done All right Now what I'm going to walk you through here is of course a strategy that I'm trading every single day And I think what's helpful for

you to know is that this is a strategy that is currently working in today's market but it is the same strategy that I've been trading for more than a decade So I'm trying to present this in a way that's going to be super easy for you to understand So as a beginner trader who's coming to the table saying "All right tell me how this whole thing works." I'm going to describe my strategy in sort of three parts The first is how I approach risk management because we know that day trading is risky So our first

order of business is to reduce that risk as much as possible Like anything else risk is on sort of a spectrum There are strategies that you could trade that are going to be very very high risk and then there's strategies that are going to be significantly lower risk But the lower the risk typically the lower the reward So it's trying to find that sweet spot where you can stomach the risk and get the reward that you're looking for So once you understand risk management then I'm going to dive into stock selection In fact for me

stock selection is a form of risk management because by choosing what I perceive as the strongest stocks each day I'm reducing my risk of unnecessary losses And then number three once you understand how to manage risk and how to choose the right stocks the question is where the heck do I actually buy and sell so I'm going to walk you through my favorite chart patterns candlestick chart patterns which I use for for actually buying and selling for my entry indicator and for my exit indicator Okay So once I've walked you through my trading strategy then

I'm going to share with you my secret for consistency I have uh in the last nine months had just seven red days I'm a very consistent trader I just finished a 76 consecutive green day hot streak which is pretty unprecedented And I did that by implementing a very specific approach for how I start trading each day this is something you definitely want to learn And then number three I'm going to walk you through how I was able to scale up my strategy Now at the end of this episode I'm actually going to provide you guys

with some recommended reading for those of you guys that want to keep learning So you'll see my stack of books here This is all coming soon at the end of today's episode Okay so let's dive in with the first part 51 consecutive green days which produced over a million dollars in profit As you can see right here this is the real equity curve starting on January 1st and crossing that million-doll mark right there in March March uh March 17th March 18th So during this challenge I was able to grow my account very quickly and it

took 936 trades in total All right 936 trades and I maintained accuracy of 71.4% Now there's a couple of things that I think are interesting here Of course the accuracy certainly interesting The total number of trades interesting The average winner a,000 bucks Uh is the average the average gain per trade $1,000 The average winner was $1,800 and the average loser $761 My average winner was 3 minutes long My average loser was 2 minutes long So something that you're going to learn is that a big part of my strategy is actually sitting and waiting for the

right opportunity And then when I see it I strike So I know exactly what I'm looking for each day I have a very specific trading plan that I follow I follow that plan to the tea and I'm able to produce profit So for you guys who are tuning into this episode some of you guys may be to this channel for the first time What I'm going to do is I'm going to put a link I'll pin it to the top comments and I'll put it in the description as well where you can download a set

of PDFs that accompany this class that I'm teaching today These PDFs will walk you through the following Number one I'm going to give you my trading plan you can print it out and you can start implementing it in your own trading But as always I encourage you to practice it in a simulator before putting real money on the line The second thing that I'm going to give you is my stock selection criteria This is the filter set that I use to take from 10,000 stocks and whittling it down each day typically to three to five

that I'd be willing to trade There are very specific criteria that I use to establish whether or not a stock is worthy of trading We're going to talk more about it of course in this class but the PDF you can have as a resource that you can use forever And then the third thing that you're going to get is my actual small account worksheet This is the worksheet of how I grow small accounts I've done this many times and so this is a triedand-rue system of how I grow small accounts So those PDFs are all

available for you guys to download Um the link again pinned at the top of the comments and in the description So this day trading strategy we got to start by talking about risk We know that day trading is risky and therefore risk management is key So this is how I think about risk I don't want to take a trade where I don't stand to gain at least twice what I'm risking So we call that a profit to loss ratio So two to one is the target Now if you average $2 on every winner and you

lose only a dollar what's your break even point in fact it's only 33% Which means if you were right just 33% of the time you'd be break even If you're right 50% of the time you're profitable And so you may wonder how is it that someone could make money trading and be right only 55 or 60% of the time it's going to be based entirely on the relationship between their average winners and their average losers So this chart right here shows you uh in more detail how that relationship works If you make a dollar on

average and you lose a dollar so your profit loss ratio is 1 one 50% is your break even point right that makes sense But as I said if you uh risk a dollar to make $2 your break even point is only 33% Whereas if you risk $2 to make only $1 now your break even point is 67% So when we look back at my metrics there what was my what was my accuracy so my accuracy was 71.4% But what was my profit to loss ratio well the average losers were 700 almost 800 and the average

winners were 1,800 So it's it's more than a 2:1 profit to loss ratio It's close to 3:1 Uh so what that meant was that basically if I was right 25 30% of the time I would have been break even But since I was right 75% of the time I was well into the profitable zone So this chart shows you essentially what your accuracy needs to be to be unprofitable Now unfortunately what happens to a lot of beginner traders is they find themselves trading in this zone right here where they are unprofitable And it's the result

of a combination of a poor profit to loss ratio and poor accuracy So here's the thing that I'll say about both First accuracy gets better with more experience The longer you trade the better you get at identifying good setups and avoiding false breakouts and setups that are likely to incur unnecessary losses In other words your intuition your gut feeling that little voice that says "Ah I don't know if this is going to work." It gets better and more refined the more experience you get So one of the things I often say about trading this is

certainly a career of statistics but it's also a career of survive till you thrive The beginning phases of trading is just about keeping your head above water so you can accumulate all of the knowledge and experience without taking unnecessary losses That's why I always encourage people to practice in a simulator So during those early months and even years potentially although probably not years but early months you're gaining that experience You're gaining a lot of education but you're not losing money in the process Now when it comes to profit to loss ratio what happens for most

beginner traders is that they fall into the habit of having losers that are bigger than their winners And this is what it looked like for me when I was getting started So my average winners on average were well one and my average losers were two So it was a an exact inverted profit loss ratio which means in order to be profitable I needed to be right 66% of the time But guess what my accuracy was more like 50% And so what was happening i was losing money Now the problem here was that invariably with these

losses when I would take a trade if I'd be in a position and it was a winner I was so afraid of that winner disappearing that I would sell instantly The result of selling instantly was that my average winners were really small But if I had a losing position I would hold it and I would just hope and pray that it would turn around And so the result of holding and hoping is that by the time I finally cut the loss it was bigger And so in actual cents per share which is typically how active

traders think about it I was uh making on my winners only about 10 cents per share So I wasn't making a lot on my winners In fact it was often less than that Um but I was losing closer to 20 cents per share on my losing trades And so that gave me this negative profit loss ratio So it doesn't matter whether you're doing this with a 100 shares or you're doing it with 100,000 This is not going to be profitable unless your accuracy is at least 66% And for me it was not So the accuracy

gets better with experience But the profit loss ratio that requires a real concerted effort at cutting losses faster and and ultimately being a bit more picky about the type of stocks you're willing to trade But having the discipline to follow the rules of your system is one of the most challenging parts of trading So I'm going to say something now that you might not like to hear but I'm going to say it anyways There are two leading causes of failure as best as I can tell when it comes to day trading The first is that

a lot of beginner traders come into the market with no strategy They shoot from the hip We saw this during certainly the dot bubble during which time I first got interested in the market We saw it again during the pandemic A lot of people came into the market shooting from the hip buying a little of this a little of that you know sometimes large caps sometimes small cap sometimes trading options sometimes trading GameStop And you know what some of them had some well beginner's luck They made some money but their luck eventually ran out It

was either when they just started taking poor quality trades or when the the strength of the market sort of softened after the.com bubble burst the market softened After the pandemic interest rates were hiked up and the market softened And so during those periods of softening markets that's when your true strategy is going to reveal whether or not you make money whether or not it's luck or you really know what you're doing So if the first group of traders fail because number one they don't have a strategy why did the second group of traders fail now

my hope is that you're not going to be part of the first group Certainly not after today Even if you've already been maybe part of that group in the past you won't be after today because now you're actually learning a strategy one that I trade every single day That doesn't guarantee it's going to work for you but certainly a better starting point than just shooting from the hip So the second group of traders fail They know a strategy but they lack the discipline to follow the rules of the strategy And this is something that is

a big issue Now I'll be honest even a trader like myself that's been doing this for so long Every now and then I fall into that group on a on an individual day where I don't follow the rules of my strategy Maybe I get frustrated I feel FOMO the fear of missing out I feel angry whatever the emotion is usually there's a big emotion and it causes me to override the rules of my strategy But for be beginner traders the fuse can be so short where suddenly you become triggered and next thing you know you're

trading purely out of emotion At the end of the day you'll look back and you'll say "What in the world was I thinking?" And the truth is in that moment your logical brain wasn't doing the thinking It was that you know reptilian fight orflight response in in the amygdala that that was doing all the thinking for you You were completely hijacked Losing money creates that hijack Some people say "Well Ross what's the worst part about day trading is it you know kind of working all by yourself in an office is it sitting at a desk

all day long?" No the worst part is the losing of money That's definitely the worst part of trading And it is hard It's hard to get good at losing But I'll tell you the better you get at losing the more money you'll make and I become a pretty good loser I'm not the best loser There's probably better ones out there but I become pretty darn good at it So day trading is risky and we have to understand that And the way we manage our risk is before we take a trade we ask ourselves how much

am I risking on this trade asking that question by itself is what separates a trader from someone who is simply speculating or dare I say gambling in the market If you're gambling in the market you're only thinking about your profit You're not thinking about your risk So it's very important to ask yourself before I take a trade how much am I risking so if I put $100,000 into a trade that's going to seem like a lot of money And some people would say Ross you're risking a h 100red grand on one trade That's crazy But

I'm not actually risking a h 100red grand Let me show you So right here we're looking at a candlestick chart This is a stock that went up over 700% in a matter of a couple of days It was really incredible But as it squeezed up right here it popped up to this high and it pulled back And let's say just for the sake of argument that this was the spot where I was getting dialed in to buy This would be called buying the dip You have a stock that's been very strong it pulls back we

buy the dip we look for the next move up Now of course there's times to buy the dip and there's times not to buy the dip We'll get into that in a little bit more detail as we go through this class today But whenever I buy a dip my stop is the low of the pullback My stop means that's my max loss That's the place where I'm going to sell and bail out and just accept the trade did not work So the max loss on this position looks like it would have been around $6.50 All

right so let's put that on the whiteboard So 650 is approximately our max loss So what was our entry well my entry down here is usually the first candle to make a new high which looks like it was right around maybe almost $7 a share And my profit target would be a retest of the high a day which was around $8 a share Now that's actually great So 7 650 stop $7 entry $8 is my profit target So that means my profit target is $1 per share and my stop is 50 per share So we've

got a 2:1 profit to loss ratio So if I took this trade with well let's just say I took $100,000 worth Let's just say let's just say I took 15,000 shares of it 15,000 shares It's a little over $100,000 That's a pretty big position So my profit target here would be plus 15,000 and my max loss would be minus $7,500 Now these are big numbers You could take the same trade if you wanted with $150 shares and your profit target would be $150 and your max loss would be $75 You could take it with 15

shares It doesn't really matter It's really it's really up to you how much you're willing to risk And this is something that we're going to talk about as we continue on in this class today is the scalability of trading So the strategy that I trade I will often take 25,000 shares of a starter I might go up to 50,000 shares maybe even 75,000 shares of a stock I mean that's a big position But if I have the account size to do it the the balance in my account the buying power I may take that trade

recognizing that I'm I may be buying $100,000 worth of stock in this instance but I'm not risking $100,000 I'm risking the distance between my entry and my max loss because when I buy $100,000 of the stock I now own something of value and I can turn around and sell it on the market at any time that I want So the question really is how little am I willing to sell it for if it starts going the wrong direction And I'm quick to cut my losses I say "No I better get out Don't want to keep

holding this." So I cut my loss So although I'm putting uh $100,000 into the trade this is sort of um it's the the the capital is um well it it's it's capital that you're using as a tool in a way almost as like a leverage And this is how much I'm actually risking The difference between my entry and my max loss So if I could do it with uh 15,000 shares for instance there's no reason that I can't do it with 15 with a,000 10 I don't know 10,000 shares 5,000 shares 1500 shares 150 shares

You can always scale a strategy down to smaller size and the numbers will get smaller You cannot always scale a strategy up which is kind of interesting And so let me show you kind of what I've discovered in my career So when you're trading you can you will see that you'll make more money as you increase your share size but you will reach a point of diminishing returns where in fact if you try to increase your share size beyond a certain amount you will actually make less money So this is making you know I don't

know it doesn't matter x amount x amount x amount x amount x amount but at a certain point when you increase share size you know to 200,000 shares or 500,000 shares you're going to find that you'll actually make less money and that's because there is a limit to liquidity in the market So the ideal spot to trade is to kind of find this sweet spot right up here where you scale up your strategy pretty much to its peak And then once you've maxed out on your strategy where you're making as much as you can on

that strategy that's when you go ahead and add a second strategy to diversify Now what I'm teaching you today is what I think is one of the best strategies for beginner traders because it's easy to understand It's it's easy to understand the entries It's easy to find the stocks and so it's a simple strategy It doesn't mean it's guaranteed profit by any means It's not You still have to work at it But as far as learning how to trade is concerned I think this is a really good starting point So this is what I would

look at is the three core components to profitability You have number one consistency number two your accuracy in no particular order and number three your profit to loss ratio So we've already talked about accuracy and profit loss ratio You need a minimum profit loss ratio in order to be profitable Just you know practically speaking if your losers are bigger than your winners it's very it's possible to be profitable but it's harder So the the better your profit loss ratio is the easier it is for you to make money So if you could have your profit

loss ratio 2:1 or higher like I have it then that's going to make it a lot easier for you to be successful It takes the pressure off accuracy However if you can ma maintain accuracy above 70% that's even better And then the result of a strong profit loss ratio and high accuracy is what consistency So consistency is the byproduct So a trader will look at their performance and they'll say "I'm losing money I don't know what to do I need to make more money." Well profit is the byproduct of a successful strategy not only successful

strategy but a trader who successfully follows the rules of that strategy So what we really have to focus on is really your accuracy at the very at the very beginning of the day it's focusing on your accuracy and then focusing on your profit to loss ratio So that creates what I call a positive feedback loop So if you're a trader who has struggled in the past in order to press the reset button and to break what is potentially a negative feedback loop of you losing money and getting emotionally fueled and in a downward spiral we

break that negative feedback loop by focusing on highquality stocks So when you focus on trading higher quality stocks that meet all five criteria that I'm going to walk you through in just a moment you're invariably going to reduce your exposure to pump and dumps to lowquality stocks to stocks that are choppy where you're just going to take unnecessary losses So your accuracy improves Now you know what also improves when your accuracy improves your profit loss ratio follows Because as your accuracy goes up you're taking fewer losses which means there's fewer opportunities to make these big

mistakes that are drawing down the profit loss ratio So as accuracy goes up and profit loss ratio improves consistency and profitability those are the byproducts they follow And with consistency we take the leap over here to you now having a strong track record A trader with a strong track record has strong higher self-confidence And when you've got more self-confidence you're going to feel comfortable taking bigger share size increasing the quantity of the trades that you take each day And that in turn creates increased profitability And this is a positive feedback loop And it all goes

back to focusing on high accuracy and therefore high quality stocks Perfect segue into how I manage risk by only trading what I consider to be the right stocks So what are the right stocks based on my metrics And so all of the trades I've taken well actually for nearly the last 10 years I've been aggregating into this software that gives me these reports and tells me exactly where I make the most money So from the million dollars that I made over the last 51 days this is the type of stock I made the most money

on I made the most on stocks that had five times higher volume on the day I traded it than its 50-day average Now let that soak in for a second Five times higher volume on the day I traded it than its 50-day average How does that even happen we'll talk about that in a second Number two I made almost all of the profit on stocks that were up more than 2% in pre-market trading which means before the opening bell was even ringing these stocks were up So why would a stock gap up gapping up means

it's moving up in the after hours or pre-market session before the bell rings Why would a stock be gapping up moving higher on five times above average volume it's because of breaking nibs It's because there is a catalyst That's what brings in the volume That's what drives the price up Now what I've also learned is that I make more money trading stocks between $2 and $20 And the reason is that this price range can offer larger percentage returns where you can grow account Well you can let's just say for for instance we'll jump on the

whiteboard You could buy a thousand shares of a stock at $2 a share So you're putting in $2,000 of cash The stock goes up to $3 a share You're pulling out a,000 bucks of profit All right This is a 50% plus 50% in potentially a matter of hours or even minutes Now we were looking at my average hold time a moment ago or at the beginning of this episode and you saw the average hold time for winners was just 3 minutes long So let me show you just a couple examples from even today So today

I'm sitting up over $14,000 on the day Here's a stock that went from $2.50 to 550 in about 20 minutes That's a huge percentage move OSR This is another stock from earlier today that I traded This one went up from about $180 to $4.50 right here And that did it in about 10 minutes That is an incredible move So these trades can happen very quickly And naturally retail traders which are traders like you and I we don't work at a bank We don't work at a hedge fund We're just trading our own accounts using discretionary

trading strategies which is essentially the opposite of using a high frequency trading algorithm We see a setup we like we manually press the buy button we manually press the sell button We tend to focus on lowerric stocks because retail traders tend to have smaller accounts And so we're looking for th those big percentage returns We want a stock that can go up 40% in a day 50% in a day maybe 100% in one day Heck maybe 300% in one day And we've seen all of that happen many times before This is a stock just the

other day that went from uh well we'll put this on auto This stock went from well down here around $2 a share up to over $20 a share over the course of two days 1,000% return on news Wow So here's the deal You don't make money buying and selling a stock at the same price right you want to buy and sell shares of let's just pull an example Ford Motor Company All right So here's here's Ford Motor Company I'll just pull this um pull this platform up right here so you could just see So this

is Ford All right I'm going to do just do just show you real quick I'm going to buy a position on Ford here using one of my hotkeys So I'm in a thousand shares of Ford All right I'm going to sit here I'm going to sit here I'm going to sit here I'm going to sell it Lose five bucks You don't make money buying and selling a stock that's going sideways Ford is going sideways 55 million shares of volume nearly and it's going sideways People are buying and selling it all day long but it's not

moving So who's buying and selling it well it's probably mutual funds pension funds individual uh investment advisors buying and selling for their clients They're buying and holding for the long haul But day traders what do we have any interest in trading for we can't buy and sell it and make money In order to make money we need a stock that's moving So a stock that goes up a thousand% Here's the deal You only need small pieces of that move to have a really great day You don't need to catch the whole thing and you're never

going to So if you can find little pockets of opportunity in there you spend a lot of time on the sidelines sitting and waiting for your setup to form So when I look at a candlestick chart what I'm seeing are very clear buy and sell signals And that's because I've learned the language of the financial markets candlestick charts These are these are a universal language of the markets And once you learn to read them you will see those same buy and sell signals Now if we jump back into our slide deck here um most retail

traders are going to focus on these lower price stocks because of that big percentage return So what we're starting to piece together here are essentially my five criteria of stock selection So number one trading stocks that are up on five times above average volume Number two trading stocks that are up at least 2% in the pre-market session Number three trading stocks between two and 20 Number four trading stocks with a float of under 10 million shares 10 million shares That means when the company did its initial public offering they sold 10 million shares onto the

open market So from that point forward that's the total level of supply If you wanted to buy all the shares you would you would buy all the shares that are outstanding It's only 10 million shares So how is it that a company like maybe this one here IMTE or maybe this one here MLGO could have 300 million shares of volume but a float of less than a million shares So what ends up happening here is there's such a clamor to buy the stock that people are buying and selling buying and selling buying and selling all

day long All day long and the volume gets higher and higher and higher and essentially there were only 800,000 shares approximately of shares outstanding before today So if everyone that was holding the stock two days ago decided they wanted to sell it up 430% they could have all sold it and there were more than enough people to buy all of those shares and then all of those people when they were up 100% then the next group of people could have bought it So it's just this constant cycling and that happens when you have a stock

typ typically you get that rapid rate of change when there's a huge imbalance between supply and demand So the four characteristics that create demand include let me jump to the next slide Oh well let me show you this first So this is again that example of MLGO 300 million shares of volume up 430% This had billions of dollars of transaction value on this day that you had this big move So these are the four characteristics that create demand The stock already being up at least 2% but 10% and higher is my cut off The stock

having five times relative volume The stock having a news event because it's the news event that brings in the volume the rate of change And most traders prefer stocks between 2 and 20 So essentially when you have a news event on a stock between 2 and 20 and the supply level the number of shares available to trade is less than 10 million that's when things get exciting And it's and I'm telling you guys every single day when I sit down and I pull up my scanners I'm looking at the scan right here and I'm looking

at the stocks here that have the lowest floats Now occasionally you'll have a stock that's a recent IPO or a stock that has warrants where the float will display as zero It's not actually zero but um it's typically very low but it's not actually zero But look at these floats You've got 7 million shares 3 million shares 14 million shares 300,000 shares three four one one and then 30 So all of the large percentage gains in the market that have volume these always have floats that are less than 20 million shares And typically lower is

better because what that means is you're going to have that bigger imbalance between supply and demand So you should now have a pretty good idea of what the right type of stock looks like The right type of stock should meet all five criteria and it should meet each one of them pretty closely Now I actually use a system of stock scanners to search the entire market in real time So I'm searching through every stock that's listed in the market but I'm filtering based on these five criteria And what I get each day is a list

usually of five to 10 stocks that I can get really zoned in on and focused on and that's where I find my trades I'll show you what that software looks like We've already kind of previewed it but I'll I'll show you and walk you through it in a second But first let's talk about the right entries and exits So now that we've identified the type of stock we like I continue to manage my risk by only trading the right chart patterns on the right stocks So it's kind of layering here upon what you already know

This is how we manage risk We just continue to take steps to reduce our risk So one of my favorite patterns is called the bull flag pattern It's a candlestick pattern And what it looks like essentially is this Usually constructed of five to seven individual candles The first one is a green candle So what's typically happening here is just before this candle formed the stock came out with what breaking news So it could be quarterly earnings if it's a pharmaceutical company or a biotech company It could be clinical trial results or FDA FDA approval something

like that So they've got a news catalyst and instantly the stock starts spiking up So as it spikes up goes up 5% 8% 10% boom now it meets my first criteria As it's squeezing up volume is increasing because traders are drawn to something that's moving So now all of a sudden it's got five times above average volume based on what it would typically have at this time of day on a typical day They don't put out great news It's more like you know one a couple times a year So it's having a big event So

now it's meeting a few of the criteria based on up 10% five times relative volume Now the stock has news which is otherwise it wouldn't be moving in the first place As long as the price is between 2 and 20 and the float's under 10 million shares what's going to happen is I'm going to get an audio alert Ding ding ding So my scanners over here are searching the market in real time Now I actually have a number of different strategies on this scanner Some of them have slightly different filters So what these scanners are

doing is they're searching the market in real time based on the instructions that I've given them And this uh software and platform is called Day Trade Dash So these scanners are searching the market and as soon as a stock meets the criteria boom I get the audio alert and then I pull up the chart So when I pull up the chart this is typically what I see The first two or three candles have already formed The stock is squeezing up but rather than just jump in kind of willy-nilly in the middle of a move I

wait for that dip I want to buy the dip right so I let it dip down I let it dip a little bit more And then I'm looking for that first candle to make a new high So the way this pattern works is the psychology behind it is that you have a stock that makes a really big squeeze and then it's natural to expect a little bit of selling some profit taking People who were in just by good luck from before the news sell and take some profit So the price dips down a little bit

and then what typically happens is as long as the stock holds 50% of its initial move it's still in net positive to the buy side It's still what we would call bullish And so this is where a fresh round of traders like myself are going to come in and say I want to buy this dip and I'm going to buy the first candle right here that makes a new high So this red candle if we back this up what was happening here is it was still pulling back And so if the next candle was red

and pulled back further I would never press the buy button So what do I need to see well we're kind of trying to time the waves And so the best way for me to time this dip is to wait not just to buy when it's selling but to wait for it to actually start to curl back up And that'll happen the first the moment that first candle makes a new high That is our entry And so we know that price to the penny We can know that because we can look at the time and the

high of this last candle So if that was let's say for the sake of argument $35 then we know if this next candle breaks 305 the second it breaks 305 and goes to 306 it's made a new high And that is our indicator to be a buyer And maybe I'm willing to pay 306 307 you know pay a couple cents higher and be in the trade And then what's my max loss on the trade it's right down here So let's say for the sake of argument that's $2.95 So now if we jump on the whiteboard

now we're taking a trade where we're in at 306 Our stop is about 295 We'll just say 296 So we're doing 10 cents of risk What's our profit target well if we're going to risk 10 cents it should be what 20 cents at least So now we're looking for a profit target of 326 Now if I look at the chart and I don't think I can get 326 I won't take the trade So how do I know what I can get well here's the interesting thing with trading You can always control how much you're willing

to lose but you can't control how much you make That's based on how the pattern resolves So what I would say is my first target would always be a retest of the high of day So if this was in fact 330 340 or 350 then I would feel very comfortable knowing that this retest would give me the 2:1 profit loss ratio If we were too close to this level then I may be concerned that there's not enough profit potential before we hit resistance which would be most likely at the high of day So that's how

I establish whether or not I think this even has the potential to give me my desired 2:1 profit loss ratio And this is how it's kind of like building a foundation of knowledge First you need to understand risk management to be able to understand whether or not a setup is truly viable because whether or not you should take it is going to be based on your risk-to-reward ratio And of course obviously whether or not it's even going to work is going to be based on the underlying stock How strong is that stock and what I

learned through years of trial and error is that the stocks I was making the most money on consistently met those five criteria that I already shared with you So we're not going to apply this pattern to Ford Motor Company or a stock that's not moving We're not even going to look for it We're only going to be looking for it on a stock that is actively right now squeezing up which therefore is why you have these big green candles So we get the pullback We got the first candle to make a new high So now

we've bought right here at 305 We're in We got our max loss here at 295 Now again it doesn't matter if you're taking 10,000 shares on this which would be a 30 $30,000 position you're taking a 100,000 shares of it which is a $300,000 position or you bought just a 100 shares of it which is a $300 position Doesn't matter It It's up to you So you decide how much you're willing to risk But what's important is that the ratio is two to one and that you're trading this strategy ideally with at least well I

mean as long as you got two to one profit loss ratio even if you're only right 50% of the time you'll be break even So you could be wrong half the time and still make money which is good but you always strive to do a little bit better than that So as long as your accuracy is above 50% you'll be doing well And then if you could do well with 100 shares you could scale up to 150 to 200 500 600 800 1,000 etc So we're in this here Our max loss is the low of

the pullback So with 10,000 shares we're risking a,000 bucks Not the full 30,000 just a,000 And the profit targets high a day And boom there you go Now of course this is a little animation that I made so it's easy to make it look good Let's look at some real examples But you're going to see there it is Right so now all of a sudden that's plain as day right you can see that right there on the chart Now even at the beginning of this episode you might not have recognized that that was a bull

flag and that was a buying opportunity which means just in the last 30 minutes your your ability to read candlestick charts has improved So what we have here is a stock that squeezed up It pulls back and we get that little dip in volume This is normal So you like to see higher volume on the move up lighter volume on the selling And then that first candle right here that makes a new high was where this white arrow goes right there So the moment that that white arrow candle broke the high of this candle here

which is like a little T that was your entry Now we actually call that candle a dragonfly dogee That that specific candlestick shape has a name In fact a lot of these different candlesticks have individual names These individual candlesticks are almost like letters of the alphabet and when they combine they form words The words that I'm reading is buy or sell Those are the most clear but they also communicate sentiment So for those that need a crash course in how to read candlestick charts I'm going to put a link at the end of this episode

that's actually a full training on how to read candlestick charts and how to perform technical analysis the right way which is important because most people are doing it the wrong way But each candlestick based on its shape is communicating a message Naturally a large green candle is communicating strong buying sentiment A red candle is communicating selling sentiment But a candle like this one with this large candle wick right here is showing a battle between buyers and sellers It opened it dipped it went back up it closed So it's a real tugof-war Now we expect to

see a tug-of-war when a stock is going sideways because it's already sort of indecisive But when a stock has just made a rapid move up seeing a tugof-war indicates that maybe the trend is getting exhausted and we're going to reverse and come back down So typically when I see a candle like that I'm going to be a bit cautious about continuing to hold the position And that I'm going to use actually as one of my exit indicators We'll talk more about those in a moment So here's another example All right Okay so we've got this

squeeze up here All of a sudden the volume uh ramps up Then you've got a little decrease here in volume Little lighter volume on the selling First candle to make a new high is right there So that's the moment you're buying The entry here looks like about 420 Max loss just under four So about 20 cents of risk This case you need about 40 cents of profit potential and it goes from 420 all the way up to 5.40 A$120 That's fantastic 5 to1 profit to loss ratio So if you took that setup you'd only need

to be right 20% of the time to break even Easy I mean actually it's even a little bit less than that So it's really solid This is what you love to see So now let's look at the next one All right So here we have this ramp up Two four six seven candles in a row Little pullback little pullback First candle to make a new high right there That's your entry Max loss at the low And look at the volume that comes in as it makes a new high This goes uh entry about 486 Max

loss looks like 480 Pretty close Six cents of risk This thing goes all the way up to 570 That's fantastic It's a it's a 10 to1 profit to loss ratio So again factoring in fees and commissions your break even is so low on this in terms of trading this setup that you could do really well Now the fact is when I say my average profit loss ratio is 2:1 we'll pull this back up here Um well this is a I think this might be 52 days or something like that But in any case sitting here

just over a million dollars Average winner is about 1,700 Average loser 761 So this is how it averages out over the course of nearly a,000 trades So while there may be a few trades that are 5:1 or 10 to one there'll be others that might only be one one or maybe some trades that are even less than that where it didn't realize its full potential But hey it's better to sell it for a tiny winner than end up taking an unnecess potentially unnecessary loss right so here's another example And I've got um this and then

we're going to do a couple of pop quizzes So we've got this nice ramp up the pullback the ramp up the pullback And so this basically is giving you multiple bull flag patterns The stock continues to give these opportunities Dip dip dip dip dip Little momentary pullback That's not a good one and then a bigger one right here that leads to this really nice resolution And meanwhile the stock goes up over a over 100% It peaked at a thousand% the next day So it just continues to build momentum which is exactly what we like to

see So you ready for a pop quiz all right let's get into it So here we go We've got a stock that is squeezed up Is this right here a place where you should be a buyer or should you wait so as I look at this right now this is doing our proper pullback We've got the nice squeeze up 1 2 3 four green candles A pullback candle Another pullback candle So what we know is that we're not going to buy right here just guaranteed We're going to wait for the first candle to make a

new high So if the next candle goes green then we're buying the second it makes a new high If the next candle goes red we're gonna keep waiting But the second we get that first candle to make a new high we're going to buy as long as we're holding the 50% retracement of the move And there you go You get one more red candle and then boom it squeezes So our stop is at the low of the pullback Our profit target is a retest a high a day and our entry is right there in the

middle First candle to make a new high That is a really nice bull flag Here's the next one So we've got a stock that's been squeezing up here A ton of green candles in a row volume has been increasing and now we're getting a little bit of a pullback Where do we buy we're looking for the first candle to make a new high which means we're going to buy right there If that candle the next candle does break the high Now in this case do you notice that bottoming tail that lower candle wick what does

that tell us it tells us that the stock opened it sold off and then it came back up And by the time it closed it closed right there Still closed as a red candle but had this bottoming tail A bottoming tail is bullish because it tells us that although the stock sold off the buyers rallied it back up Now by the way we're on a one minute time frame here which means each one of these candlesticks represents one minute of time You could trade this pattern on a one minute chart you could trade it on

a five-minute chart you could trade it on a 15-inut chart you could trade it on 10-second chart It's really up to you what time frame you want to trade it on As long as the stock meets all five criteria for stock selection if you're seeing this pattern at the beginning of the move when the stock is first moving up on breaking news your first pullbacks are usually the strongest So the first pullbacks on the lower time frames like 10-second one minute usually work well Your first five minute pullback usually works well and your first 15minute

pullback typically works well So the first pullbacks are typically the strongest That's your best opportunity to buy a strong stock So now what do we do there we go We buy That first candle goes green and this squeezes from 360 all the way up to 4 420 up to 460 Then it squeeze up to 490 and even higher I've got another example for you All right So here we go We squeeze up We pull back So we already got the first pullback We missed it All right Bummer Can I take a trade anyways first pullback

and second pullback I'm willing to trade the first and the second By the time we get up to the third I usually try to be a little bit cautious I don't want to overstay my welcome So this was the first pullback That was the second Same exact pattern It continues to ramp up And typically what you want to see across those two pullbacks is volume is increasing So it's higher and higher and higher That tells you that people are getting more and more interested in this stock So now let me walk you through what my

daily routine looks like So each day I sit down and the first thing I'm doing is what checking my scanners Day trade dash So I'm pulling up the scanners I pull them up on my phone early in the morning and then I pull them up So this morning was no different I pull up the scanners right here I saw OSR was our leading gainer at that time with volume and with news That orange flame means it had breaking news So I traded it And how much did I make on OSR $12,22782 Boom My work is

done I traded today for 30 minutes That was it So my daily routine is to sit down and look at my scanners So on this particular day the leading gainer in the entire US stock market was ATNF up 564% 58 million shares of volume Now when I first pulled it up early in the morning it was the leading gainer Now by the way let me just make a side note Some of you guys are watching this you're tuning in from other places in the world Of course leave us leave me a note in the comments

of where you're logging in where you're watching this from So we have a lot of traders that trade the US market internationally And the reason they do it is because the US market is so volatile especially in the small cap market of lowpric stocks and there are so many brokers so many tools like the software here that cater to the US market So although you could trade a local market if you live in a different part of the world you may not have the infrastructure built around it to support active trading and there may not

be enough volume to support active trading So a lot of traders although international actually trade the US market which is an interesting fact So the first order of business is finding the stock squeezing up The second order of business is well we got to make sure it meets all five criteria of stock selection right So price uh well start start at the top So up 10% relative volume five times has a news event is priced between two and 20 has less than 10 million shares available to trade Then we're checking to see what's the catalyst

What's the news event that's driving the stock higher so this is a biotech stock It has news out And just like that we're like "All right we've got a catalyst That's something that I'm willing to trade." And I'm looking now for the first pullback So now I've got to wait patiently for the pattern to form And since my average hold time is only 2 to 3 minutes these trades can be very short I have to be patient and wait I let the stock squeeze up I wait for the pullback I buy the dip right there

first candle to make a new high I could be in and out within two minutes and I can make 5 10 15 $20,000 in as little time as that It's pretty crazy This is a day on ATNF uh where I made 80,000 bucks on that stock Finished the day up $98,754.39 in one morning day trading Now let me remind you as always my results are not typical I've been doing this for a long time So what's the difference between me making a h 100,000 a day and a beginner trader making $100 or $1,000 the biggest

difference is position size So while I might feel comfortable trading with 30,000 shares which is putting a fair amount of money into the trade and taking maybe 10 $15,000 of risk on a trade and with a potential to make 20 or 30,000 or 40 depending on the setup a beginner trader will ramp all of that down to maybe trading with only 300 shares and their target is $300 or something like that So you bring everything back down but you can do that You can scale it down I've scaled it up and there's in fact people

that have scaled it even higher than me which is fine So you kind of find your sweet spot based on your account size your risk tolerance and where you're at in your learning curve in terms of your educated intuition and your experience and your skill set So now part two what's my secret to being so consistent my secret to consistency is in position management So what do I mean by that my position management strategy is a technique that I use to decide how many shares to buy on a particular stock And this is very important

as a discretionary trader Again a trader who's not using a high frequency trading algorithm or computer to decide how many shares to buy or sell in any position I have to manually make that decision And while some people would say Ross if you know that you know you pull up your your metrics here you know that your accuracy is 74 72% whatever it is you know your average winners are $1,700 your average losers are 767,761 Shouldn't you just trade the same exact share size on every single trade across the board well that would be an

interesting conclusion to draw and you would be completely wrong No I should not Here's the deal What if it's very obvious that the market is cold probably I should size down I should reduce reduce my share size right that would be the logical conclusion And what if the market's really hot if the market's really hot wouldn't I be selling myself short by not increasing my share size and being more aggressive i would And this is very important When the market's cold you got to ease off the throttle and slow down And when the market's hot

you want to increase how aggressive you're going to be and how much how much risk you're going to take if you want to fully maximize on your profitability So now let me take a moment and share with you a book This is a book called Quit by Annie Duke So I'm going to put it right here on the screen share so you can see Um the power of knowing when to walk away quit In this book Annie Duke who's a professional poker player talks about trying to solve the question of when is the best time

to walk away in trading Obviously this is a question we have to ask ourselves every day When should I walk away if I walk away too soon I feel like I'm leaving money on the table If I overstay my welcome I'm giving back profit And in fact you're always going to do one or the other Give back profit or leave money on the table Which one are you more comfortable doing i have learned I'm more comfortable leaving money on the table as long as I'm walking away with profit in my pocket Now I don't mind

giving back a little bit of profit but I really don't want to overstay my welcome too much So in this book which I really recommend you guys read and you can listen to it on audiobook if you prefer she tells a story about taxi drivers in New York City And the story goes that taxi drivers in New York City when they lease a car a taxi cab they lease it for 12 hours So they have a full 12-hour shift And she said what they typically do is they drive until they've made their profit target for

the day which covers the 12-h hour lease gas and then gives them actually essentially their paycheck And so she said on a slow day when there's not many people calling for a cab they'll just grind out the full 12 hours and they still might not make enough money to even cover their lease for that 12-h hour shift But on a day when people are clamoring for for rides as soon as they make their goal even if it's in only an hour and a half they turn the car in they're done for the day And she

said "That's why is that why wouldn't you on a day when people are clamoring drive longer wouldn't you make money and then on the other hand what if on the day that it's cold and people aren't well probably when they're cold they're more likely to take a ride but on a day where it's snowing and maybe people aren't even leaving their apartments wouldn't you be uh wouldn't you be better off just quitting early and not grinding out the full 12 hours when you've got nothing to show for it and the answer in fact based on

data was that they would make more money if they did exactly as she suggested I can't remember if it was 10% or 15% more money but it was it was not an insignificant amount And so I thought about that same thing when it comes to trading on a day when the market's cold Now I have my hot market daily goal which is $20,000 per day So on a hot market my goal is 20 grand And you know what in a on a really hot day I could make that in 30 minutes Does it mean I

stopped trading no way I would never have a $98,000 green day My best highest green day I've ever had as of today's date is $475,000 in one day In one morning Wow that's pretty wild Now if I had stopped when I was up 20 grand I never would have got that So by all means if the market's hot I keep trading But on a day where we're not getting a lot of action that $20,000 goal I might not make it even if I stay here all the way to the closing bell And in fact I'd

probably look back and think that wasn't worth it On a day that's hot I could make that money in minutes On a day like today I'm going to sit here all day I'm not going to get anything to show for it I'm probably better off walking away And in the case of trading the longer you sit here the more you expose yourself to the risks of decision fatigue and then trading out of boredom And that's a problem So I find that to be really interesting when it comes to trading And so I had an experience

in my own trading where I had a big loss but I want to tell you about it because that big loss became my own turning point And in fact this has been true at several different times in my career that a big loss has been the catalyst for me kind of you know going back to the drawing boards throwing everything on the table and just asking myself what am I doing that's working what what am what am I doing what am I even doing here you remember that movie Apollo 13 when the astronauts are up

in space and they're down there Houston at headquarters um in Texas and they're like "All right everyone you know we they're running out of oxygen up there We got to figure out how to create a um like a scrubber to purify the air." And so they're like "Put everything that they have in that space shuttle right here on this table." and they they throw out all these things these like hoses and you know a sock and all these different whatever they have and they say we've got this is what we have this is what we

have to solve for and they just start messing stuff around and for me I do the exact same thing with trading and it's always in that moment where it's like things are real where I've just taken a really big loss and I'm like I need to just take a breather take a step back and ask myself evaluate what am I doing right now that's working So my first turning point where I went from being more or less a break even trader to actually becoming consistently profitable was a was because of a discovery I made after

a big loss But I had another turning point and this happened just about a year ago not quite a year ago where I had a couple of big losses and I felt exasperated I felt so frustrated I was like I cannot keep doing this I honestly felt like I was on a roller coaster So what what happened with my P&L is I would have you know a couple of nice big green days and then a big red day and then you know I'd make the money back and then another big red day and I'd make

the money back and and each time I had these drawdowns in the days that followed I'd be angry I'd be frustrated I just h it was so difficult And I said I just I don't want to be on this roller coaster anymore I would trade that for this even if I don't make as much money just to be able to be more consistent And so I I really had to take a step back throw everything on the table and ask myself what am I doing right now that's working so what I decided to do was

I dig I decided to dig into my trading metrics and I discovered something about my red days My accuracy on my red days was at that time only 46% Whereas on my green days my accuracy was closer to 70% So I asked myself is there a way that I could know that today is going to be a red day sooner so I can stop trading so just like the taxi driver driving the car how soon can I know that it's not happening today so I can just call it quits and and say "Look this isn't

the day to push it." And then I guess on the flip side the same question would be how soon can I know today's a day that I can squeeze a lot out because the market's hot because things are moving because people are needing needing the rides So so when do I make that call and so this is what I kind of discovered What I was typically doing on an average day is I was starting the day with big positions So I would step up to the plate first trade right out of the gates I would

swing hard I would swing and if I connected I'd be up 1015,000 in that first trade right so if I'm right I'm starting the day with a big winner and I'm feeling great Now this is me trading with 10,000 shares getting a full dollar or a share out of the market Maybe you're doing something similar but you're trading with a,000 shares So your first trade right out of the gates you're up you know a,000 bucks or whatever it is That's fantastic You feel great But what happens when we're wrong when I'm wrong I take a

big loss on the first trade and then I start revenge trading How many of you have heard of this concept of revenge trading so what happens here is this is the beginning of a negative feedback loop and it starts uh you know typically with a losing trade So you lose money minus dollar sign and that immediately produces what an emotion of sadness I'm going to put a couple of tears here Um so this is a very sad face You've lost and you're sad So feeling sad is not fun Now I'm not speaking out of turn

when I say that I think we can all agree feeling sad's not great So when you feel sad you want to alleviate that emotion right how do you alleviate that emotion when it comes to trading the fastest way would be to make money So we're going to do a little bit plus dollar sign That's the fastest way to feel better is to make back what you lost Then you'll have a big smile on your face So here's the problem In this emotional state a trader is searching for any opportunity to make money which means they're

going to increase the quantity of trades they're taking increase the total position number of shares they're trading and typically decrease the quality standard from being A quality to maybe B or C quality Now I rank a setting or a setup based on how closely it meets all five criteria of stock selection If a stock meets all five criteria it's A quality If it meets four out of the five it's B quality Three out of the five is C quality So if you're start trading C quality setups you can't expect to have 70% accuracy Your accuracy

declines as you reduce your quality threshold Now it's true that in a hot market you can get away with reducing your quality standard a little bit and still making money because the market's so hot But in a cold market which it probably is because you just lost money doing that what's it going to do most likely not produce what you're hoping for here but instead produce more losses which means now you've got more tiers In fact you've got a little puddle of tears forming down here And this fuels increased trading which fuels increased losing which

creates what a downward spiral a negative feedback loop And this is something I've seen happen to so many traders But you know what it's happened to me too Takes one to no one And in this case boy I've been there This is a day I lost almost $40,000 That's not so fun All right Now I've had worse red days than that And uh I I And by the way I do a recap every single day So those of you guys who have not already subscribed to the channel I hope you do hit that subscribe button

hit the thumbs up But I do a recap every single day Whether it's a red day or a green day the biggest red day of my career there's a recap for it You go back and watch it if you want It was February 4th 2021 I lost $275,000 in one day um you know but my biggest green day 475,000 in one day is also a recap So it's all out there for you guys to see I try to show you really uh very transparently what it's like to be a trader The ups but also the

downs So if I take that big trade on the first uh that big position on my first trade and I'm wrong I'm down a lot The problem with being down a lot on the first trade is it triggers that emotional response So now I'm having a big emotional response to the loss Here's the problem I sp I start to spiral and next thing I know I'm I'm deep in the red and I'm thinking "Wow I wish I had walked away sooner I overstayed my welcome What's wrong with me?" So I proposed a change I asked

myself is there a way that I could test the water before I go allin what if I take small size on the first few trades just to get a feel for the market today to get a sense of is it hot is it cold what's going on today and see really if I can build a profit cushion on the day and if I can't I don't size up But if I can then at that point I go big Now this is going to deviate a little bit from the taxi driver story because I don't know

that there's a super effective way for them to quote go big But if I can't build up my cushion not only do I don't will I not size up I'll be more likely to walk away sooner But if I can build a cushion I size up and I trade longer So starting small what does that mean i cap my share size at one quarter of my full position size until I've made one quarter of my daily goal which is typically achieved in one to two good winning trades So whatever your daily goal is if your

daily goal is well $20,000 then 5,000 bucks So once you've made $5,000 if you can make 5,000 on your first couple of trades you're in pretty good shape Now for you your daily goal might not be 20,000 Maybe it's 200 bucks So once you've made your first $50 then you've got a cushion And from that point I then size up to my full-size position but only after having built this cushion If I never cross one quarter of my goal in profit I stay with the one quarter size for the entire day But I don't trade

all day long I I eventually just say "Listen it's not happening." And once I haven't taken a single trade in about 30 minutes I just give up So the taxi driver once they haven't picked up a fair in 30 minutes call it Say I mean I'm I shouldn't I don't really know if that's the exact thing that would work for a taxi driver but in my case if I haven't picked up a trade in 30 minutes then I say "I'm calling it It's not happening." So I will be patient but at a certain point I

just accept that it's not happening for me today Now if I give back my cushion if I make the profit and then give it back I size back down to quarter position or I stop entirely And my max loss by the way on the day is the same as my daily goal But here's the thing Essentially if I sit down and I lose on my first trade I'm losing with only one quarter of full size So essentially I would take well I I could take four pretty significant losses before I'm even at and that would

be if the loss hit a quarter of my daily goal which it probably wouldn't because I probably cut the loss sooner but I realistically could probably get four or five losses in a row before I actually hit my max loss with quarter size So what essentially I'm doing is if I'm losing on those first few trades it's at the rate of one quarter size The losses are small I start the day at zero So I lose a little bit on the first trade a little bit more on the second trade but it's not so much

that I'm emotionally hijacked right i didn't go and lose 10 grand on the first trade and now I'm immediately revenge trading I'm down 2,000 on the first trade I'm down or a,000 on the first trade a,000 on the second trade I'm down $2,000 total So all right It's like okay so what i know I can make that back easily in one good trade Now if I don't get that good trade eventually I give up I say "All right it's not happening It'll be a small red day No big deal." Now uh what I've learned is

that on the days when things go right those first couple trades I make a little bit less than if I've been trading with my full-size position but I size up quickly And on really good days the market gives us a lot of opportunities So this is the result I'm trading at full size on my hot days Typically within my first one to two trades and I'm trading with small size on cold days and I'm walking away sooner So more often than not this is what my days now look like I sort of slowly increase my

profit till I've got my cushion and then I pull away Slowly increasing profit till I've got a cushion Pulling away Slowly increasing profit then pulling away But on days that I go red I go slightly red Not a big deal I slowly recover and then once I've got my cushion I can pull away go slightly red recover Once I've got my cushion I can start to pull away or I might just stop Or on the day where I'm actually red I go red I go a little further red a little further red and I say

"You know what that's it I I think I'm good with that." Now since this change I've only had seven red days in the last nine months of day trading including a 76 consecutive green day hot streak that produced over $1.6 6 million in profit Talk about consistency And I have a theory that I should never have another red day What do you think about that now that is if I can maintain 68 to 70% accuracy and a 2:1 profit to loss ratio Because as long as I can always take 10 more trades each day if

I can always take 10 more trades each day and maintain 70% accuracy with a 2 to1 profit loss ratio I should always be able to finish the day green Well that is true And yet I still have had seven red days in the last nine months So how do the red days happen now well they happen if I run out of aquality setups if there's just not enough Aquality setups There's there's some stocks moving but they're not Aquality I could reduce my quality threshold but that's probably not a good idea Number two if I simply

run out of time in other words the market closes or I come to the end of the time when I make the most money in which case continuing to trade would be exposing myself to unnecessary risk Or number three if I give in to the emotions of FOMO frustration desperation greed and anger and thereby deviate from the rules of my strategy I've had all three of these things happen to me And you would think that gosh someone who's been trading for as long as me why would I ever deviate from the rules that have made

me so much money well we're all human And unfortunately there are moments where we think we know better or we get stubborn we get frustrated and I've had that happen to me and that's what ended my 76-day hot streak Now in truth what ended the hot streak really was just bad luck I had one bad trade but rather than just walk away after that bad trade as I approached the time when I was running out of time in the day I gave in to desperation and I took a few hail Mary trades hoping for a

big recovery and I doubled my loss confirming that it would be the end of the hot streak So I want to go back to this concept of creating that positive feedback loop in your trading So where does that begin how was I able to have only seven red days in nine months that 76 day hot streak it it was certainly a byproduct of being very confident in my trading Where does that all start it starts with high accuracy Trading the highest quality stocks that produces a higher profit loss ratio And then the byproduct of that

is profitability and consistency When you're more consistent you've got a strong track record you're going to be feel feeling more confident When you're feeling more confident you will be more likely to have the conviction to trade with bigger share size Bigger share size is scaling up your strategy means making more money And now you're on that positive feedback loop Now the the 51 days this year where I made over a million dollars Let's take another look at that So I had to take 936 trades to get there 936 trades to make a total of a

million dollars Just over a million dollars Now on those trades my average winners were actually only 11 per share 11 cents per share but I produced uh about well $1,800 of profit So we'll calculate out my share size in just a moment on that But on my losers I lost only 8 cents per share but the losses were only $760 So if you're doing a little bit of math here you're recognizing that wait a second my winners are larger than my losers Not just because of uh making 11 cents on the winners and losing only

eight cents but clearly to make 11 cents and be up $1,800 I've got to be taking like 17,000 shares right this is a big position But if I'm losing uh on the loser 8 cents oops sorry eight cents here and I'm losing uh less than $800 my position is like 9,000 shares So how is it just is it just by chance that all of my winners have 17,000 shares but my losers only have 9,000 How's that work well as part of my strategy I don't size up on any given day until first I've got that

cushion So that means this is not likely to be a red day Remember on red days my accuracy is only 46% It's very low I have a lot more losers So that means on days where I'm losing more I'm trading with smaller size because I never broke that profit cushion That's the first thing Then the second thing is on the days when I'm green when I'm in a trade that's working once I'm up a little bit on that trade I typically double my position which extends the profit of that trade Now it takes risk and

a willingness to take risk to do that But once I've already got my cushion on the day I feel comfortable taking that risk So the secret to being able to have only seven red days in the last nine months is adding to winners not to losers and only increasing share size once I have a profit cushion Adding to winners is a big deal A lot of beginner traders do the exact opposite They add to their losing positions the stock starts dropping and rather than just cut the loss they add to the position to reduce their

cost basis thinking "All right well if it turns around it doesn't have to go all the way back up to where I got in It only has to go halfway back up and I'll get out flat." But then it goes deeper and deeper into the red And you're just adding to your loss Well what I do is I don't add to my losers I cut my losers ruthlessly I let them go but I add to the winners So when I have a winning position and it's working I scale up I double that position So what

ends up what that ends up looking like generally speaking is we've got the bull flag here So we've got the pop we've got the dip right we've got our little pullback our bottoming tail here And I take my starter position right here That's the That's the correct place for a beginner trader Boom That's the entry So I'm taking a starter right there This squeeze is higher And you know what you might be doing right up here you might be saying I'm going to sell I'm going to sell this thing here because you know what look

I've got a winner I'm feeling good about that I want to lock up my 20 cents per share and take that profit There's nothing wrong with doing that I would never discourage you from taking profit when you have it But you know what I might do is I might say gosh this thing is going strong I like it I'm going to go ahead and buy more I buy more and I look for that squeeze even higher Now it takes a little bit of risk to do that because what I do is if I double my

position instead of selling I buy I double my position So I start with 10,000 shares I add another 10,000 Now I've got 20,000 shares My average cost is right here in the middle Right so my max loss which was initially down there well I've got to move it up Now if I add right here and my average is right here typically I set my stop at break even which means what am I sacrificing i'm sacrificing just taking the 20 cents per share off the table and instead risking this position could go back to break even

But on the other hand now I've got a 20,000 share position with a stop at break even which makes me feel like I've got a 20,000 share position and I'm risking nothing Now that's not exactly the case but that psychologically is the way I process it and the way I think about it What I'm really risking is that I didn't take the the 20 cents off the table So that could have been $2,000 of profit that I didn't take So you could consider that risk But if my stop is break even then worst case scenario

is I sell and I'm at zero Well I was at zero before the trade anyways And if this trade ends up working and it goes up here now another 10 cents 15 cents 20 cents and I end up getting 30 cents a share on the full 20,000 share position I'm up $6,000 on that trade Boom So $6,000 is three times more than if I had just taken the base hit at 20 cents All right So now this is where we start to add some fuel to the fire This is where it starts to get exciting

And this is the type of stuff that allows me to squeeze the most that I can out of a hot streak and out of a really hot day in the market So let's talk about how I scaled my strategy from $200 a day to making a million dollar in 51 days Because back in 2017 when I when I started that first small account ch actually it was the second small account challenge but when I started that small account challenge in 2017 with $583.15 it took me 45 days to turn that account into a hundred grand

just 100 grand In 51 days here I made a million bucks So I've proven that I've been able to scale this strategy up Now when I did that first challenge my profit loss ratio was very similar I'll actually show you the metrics of that challenge Let me pull them up Hang on one second So in 2017 took $583 turned it into over $100,000 Took about 45 days to do it During that challenge my accuracy 72% Wait a second That's very similar to what I just did in the last 50 days right so my average uh

winner $1,300 My average loser was $1,200 How many trades did I take i only took 154 trades So I took fewer tra that makes sense So I took fewer trades I was being a bit more disciplined with how many trades I was willing to take And that was the right decision at that time If we look at the calendar here um we'll go back here to 2017 So you could see green green green But I was trading relatively conservatively So $156 day one 220 on day two 213 on day three 219 on day four These

are two trades a day That was what I said I'm only going to take two trades a day while I'm focusing on growing the account So in that first week I made 800 bucks after starting with 583 So the account was now up already over 100% In the second week I was doing two trades a day until here on day eight we had a stock that was really squeezing and I was like I got to be more aggressive I made $1,900 on that day And then right here $930 on this day But if we just

look at these metrics just high level what's the accuracy 72% What's the profit loss ratio $1,300 winner $1,200 loser So about a 1:1 profit loss ratio and just fewer trades in total Okay so now let's jump back up to how I was able to scale up this strategy So we're going to go right back here So a million dollar in 51 days So what was different about this challenge here which was uh began in January So in January I had to take well 936 trades We already looked at that number but the accuracy was basically

the same 71 72% All these years later trading the exact same strategy So we already know the average winners were 11 cents per share $1,800 And we know the average losers were 8 cents a share $761 The average price that I traded was6 $6.56 That was the average price of the stocks I traded So now let's do the math $6.56 times 16,000 shares equals 11 cents a share equals $1,800 All right so 16,000 shares That was the average position size on winners but the average position size on losers only 9,500 shares So again highlighting that

I was more aggressive on my winning trades And it wasn't just because at the very beginning of the trade I knew it was going to be a winner It was because during the trade as it worked in my favor I responded accordingly and added to the position This by the way is one of the things that's so great about being part of a community of traders What whatever community it is Now of course I'm biased because I have a community at Warrior Trading and in that chat room when I'm when I'm actually trading I'm live

broadcasting So you guys can see my position window You can actually see me trading and you can hear my market commentary in real time So you can hear me saying "Guys I like this I'm going to double I'm going to double my position I'm increasing my size or I don't know this isn't really working So you get that real-time market commentary of what's happening So now let's talk about sort of well two things So obviously on the losing trades I rarely add to position but on the winners I typically double my position But let's talk

about the dollar cost of these trades So my average position dollar dollar-wise was $107,000 on my winning trades and my average losing and my average position was about $62,000 on my average uh losing trades So on average I was taking relatively big positions during this challenge which means during the the bulk of the challenge I needed at least $100,000 of buying power as the ch as I grew my account I had more buying power later on So there were some trades that were well into the six figures in terms of taking 200 300 maybe even

$400,000 positions using a lot of buying power So I'll say that I was being pretty aggressive Now I started at the very beginning pretty much like I'm going to be as aggressive as I can I have a goal of trying to make a million dollars as quick as possible Now my reputation's on the line I'm not going to just throw a Hail Mary pass and potentially risk going deep into the red I'm still going to focus on everything in my strategy that I teach every day the five criteria of stock selection the right entries the

right exits but I'm going to trade with max positions on pretty much every trade A beginner trader isn't going to do that And so there's definitely a bit of a disconnect here that's worth commenting on between my performance and the performance of a beginner trader So what I want to kind of do here is slow it all down Let's scale this strategy back down one10enth Let's bring it down to 1,600 share average position on the winners Now you're talking about $10,000 of buying power right $10,000 of buying power Now so when it comes to buying

power if you fund an account with $25,000 times four times leverage you've got $100,000 of buying power you you've got $30,000 which is what most traders have $30,000 And usually the reason is because you want a little cushion off the $25,000 minimum Boom you've got $120,000 of buying power And just like that you'd be able to have taken the average trade Now there'd be some that are a little more expensive some that are a little bit less but that would be the average $120,000 would be enough So certainly if you had $100,000 times four you've

got $400,000 in buying power And after a few big green days you're going to get that pretty quick But with the offshore brokers there's a lot of offshore brokers and I used these during my small account challenge in 2017 I funded the account with $600 Well 583 but we'll just use 600 just to make it easy the math easy So they got gave me six times leverage which means I had $3,600 in buying power So on that first trade I was able to buy a,000 shares of a stock at $3.60 Now that wasn't actually exactly

what I did on the first trade but just as an example And so what was my goal well let's think about what the setup was All right so let's just get rid of this for one second So the setup was what stock popping up breaking news letting it pull back We're waiting for that first candle to make a new high buying right here And I said I need my 20 cents I'm going to buy and I'm going to sell I'm not going to double the position I'm taking the 20 cents off the table That's 200

bucks with a,000 shares Boom Get green Why did I want to do that because what I knew was that when I would come in the next day now my account would have $800 8 time six right oops sorry Eight time six So now we've got more buying power And then on that next day I could buy a,000 shares all the way up to you know a $4 stock or whatever So now boom another 20 cents another $200 On the third day I've got $1,000 in the account Now times six is $6,000 buying power And so

then I'm buying a $6 stock with a,000 shares It goes up 25 cents I'm up 250 bucks The next day is at 1250 times six right so you're doing the math You're seeing how quickly this is this is racking up Now I want to say once again that $6,000 I'm putting into the trade is the vehicle I'm using that and I now own something of value I can choose to sell it at a loss when I don't want to own it anymore In a liquid market I can jump in and I can jump out So

just like um you know this example that we did earlier on Ford Motor Company the market is liquid So if you want to jump in you want to jump out you could do that So here's Ford Motor Company So this one's dropping down here a little bit I'll just go ahead just as an example and I'll just buy 7,500 shares So there's 10,000 shares That's $100,000 in that trade right now All right So I can just jump in just like that And when I want to get out $100,000 back in my account just like that

So did I use $100,000 to take that trade as demonstration yeah But in that moment I owned $100,000 of Ford Motor Company of something of real substance and value And so the question really wasn't that I'm risking $100,000 It was how long am I going to hold this before my max loss is reached and that's the same way I approach trading and day trading of any any stock of any kind really as long as it's not an over the market uh penny stock or something like that So to ramp down this strategy here's the thing

that's kind of interesting You can scale a strategy down and that's not a problem You cannot always scale a strategy up I find that really interesting So if you want to trade with onetenth of my position sizes just as an for instance that would be 1,600 shares and I could have easily done that during the entire challenge instead of producing a million dollars I would have produced 100 grand That was more like what I was doing in 2017 I was trading with smaller size well slightly smaller size and I was trading uh less quantity because

I was being much more picky You could trade with 1/100th of my positions and you're trading with 164 shares and that's fine too as a beginner $18 winners There's nothing wrong with that This is about building proof of concept You you don't get to graduate to this size or all the way up to the size that I'm at until you've been doing it for a while So trading is a career of statistics If a strategy works with 16,000 shares it will work with 1,600 and it'll work with 160 ba for me It doesn't guarantee it's

going to work for you because you have to learn the strategy So you can always scale down a strategy but just because it works with 16,000 shares doesn't mean it'll work with 160,000 shares or 1.6 million shares Do you think you could day trade 1.6 million shares buying and selling Ford Motor Company well Ford Motor Company currently right now has 1 million shares of volume Oh sorry 100 million shares of volume So you probably could on this stock buy that big of a position Um OSH or OSR from today has 83 million shares of volume

I mean you could certainly scale it up higher than 16,000 share positions but there is a little bit of a a ceiling in the market And the ceiling of scaling up is based on liquidity in the market and how quickly you can rapidly buy and sell such large positions And at a certain point you get diminishing returns as an account gets very large So that is to be expected So now I'm going to answer a question I bet a lot of you are asking How should I start this journey of learning how to day trade

so this is how I would do it if I were starting over Okay so as we know trading is a career of statistics No question about it What I would do if I were starting over number one step one is I would learn a proven strategy A strategy that other traders are trading in today's market profitably It's not helpful to learn a strategy that someone was trading in the 1990s successfully I've got a couple books over here I'll share you some recommended reading with you in a second But trading learning an old strategy that worked

in the 80s or the 90s that's not going to be helpful You want to learn a strategy that people are trading in today's market with today's tools today's algorithms and everything else So step one is to learn a strategy that is currently being traded profitably by other people Is it a guarantee it'll work for you no of course not But it sure is a better starting point than either beginning with just basically reinventing the wheel of trying to figure it out totally on your own or taking a strategy that someone used decades ago that might

have worked then but market started change and it might not work today So now step two step one you learn the strategy which is to learn everything you can about the type of stocks to trade where to get in where to get out how to manage risk and this is is easier said than done no question about it Learning a strategy takes time But I'll tell you something One of the reasons that I created Warrior Trading as a blog in 2012 was because I wanted to organize everything that I was learning about trading into one

unified place essentially like kind of a little archive or database of everything related to trading So when I would learn something from some obscure corner of the internet that was about trading I would pull it in and put it on my blog And then over the years I started adding videos I created my YouTube channel here in 2013 and the blog got bigger and bigger and bigger So one of the things that I learned was that a lot of traders over the years have learned learned strategies from different people but typically the common way that

people teach is by showing a lot of trades they've taken and how much money they've made And traders are left kind of scratching their heads with like how did you pick that stock and that was what I struggled with too I would see people that had these trades but I was like "How did you choose that one versus a different one?" I couldn't understand the system So when I taught my first day trading course in 2014 my goal was to fill in all those gaps that I felt other educators were really leaving out and to

walk you through from the very beginning all of the nuanced details of exactly how this strategy that I trade works from stock selection how I choose the stock where I get in where I get out all the details So I say that because it's just important that you know who you're learning from that they're a good teacher they're actually verified profitable and you know that people feel like they can learn from them So now step two is to sim trade that strategy for at least 90 days The the purpose here of trading in a simulator

is that you will make mistakes as a beginner All beginners do So why not make those rookie mistakes in a simulator where you're losing no real money that makes a lot of sense Now there are certain things that you just have to do with real money and kind of experience the hard way And that's why when you transition to real money you'll start with small size So step two is to trade in a simulator for 90 days and prove that you can make money trading this strategy Now if at the end of the 90 days

or even at the end of 30 days you're saying "Well geez I'm not making money at it." Then there's obviously a disconnect You're doing something different If you're doing everything exactly the same then you should be making money So what's the disconnect are your entries not quite right are you holding losers too long and your metrics will tell you exactly what you're doing wrong That's why I've been using um you know this software here which by the way I don't have any affiliate relationship with this platform or with any brokers So if you use them

it's fine If you don't use them it doesn't make any difference to me Um but I've been using this software now for nine over almost 10 years It's got over $15 million of trades in it And as I go back and I you know analyze you know 25 24 23 22 21 20 19 18 17 16 I could see all of my data And if I look at a particular period of time I could go in here and and just for instance I'll just pull up um March of 2024 And let me show you something

that you might find interesting Let me see if you can figure out what I was doing wrong during this month So during this month I didn't have a very good month I I didn't think it was very good Um my accuracy was a little bit lower than average Uh 64% My average winners were only 700 bucks My average losers were 1,100 I only made $20,000 which for me was a pretty bad month And let me show you um a couple of things Um I'll this is the one I really want to show you So look

at the profitability by price So if you were looking at this these metrics and you were going to give me one piece of advice what's something you might say hey Ross how about you stop trading stocks below $2 and above $10 what if you just focus on between two and 20 now you could actually do that You could say "All right well what if I just focus on stocks between two and 20?" You can go into the advanced here So you say "I'm just going to focus on well I'll do between two and 20 just

for this time period." And then you look at the data a different way So now with this data sorted you can start to better analyze Well hm when I do trades between two and 20 what's my accuracy 66% All right that's a little bit better It would have been $39,000 of profit Now I still would have lost on Monday Maybe on Mondays I had or you know a couple Mondays that month I had a really big loss But then let's try applying this lesson that we learned from the metrics And for the month of April

let's try just for the sake of argument only trading stocks that are within this range So I'll just change this Um I don't know if I can delete it So I'll just do like one cent to $1,000 just for now So then for the month of April this is what I did I traded primarily stocks between two and 10 I was like this is my sweet spot This is the adjustment that I need to make And I had $45,000 of profit double the profit that I had the previous month So your metrics will point you

in the right direction and they will highlight your weaknesses where you're struggling and also show you what you're doing well at that you should double down on So after a period of trading the sim and tracking your metrics and trying to hopefully build a track record of profitability once you have that track record of profitability at that point you fund an account with real money Now you have a choice You could fund a cash account with a US broker dealer and you could day trade as much as you want in a cash account but when

you run out of money buying power you have to wait for it to settle overnight Or you could use a margin account with a US broker dealer but they require $25,000 to day trade on margin You could use a margin account with one of the international broker dealers and uh that's fine too There's a number of them that accept US customers and Canadians and things like that They don't enforce the PD rule you you find a broker that's the right fit for you And then step four you take your first 1,000 trades with an average

position of about 160 shares That's how I would do it About 160 shares Now there's a reason I'm choosing the the 16 Then we're going to go 16,000 uh 1,600 and 16,000 right because I'm doing the math of trying to build my way up to my first million But let's just say 160 shares So on day one your first of of a thousand trades you're not taking 160 shares On day one you're taking only 10 shares And then at the end of the first week you go up to 20 shares End of the the next

week you go up to 30 Then you go up to 40 to 50 to 70 to 100 then to 150 then then to 160 So you slowly scale up over the course of weeks until you get up to about 160 And then you continue scaling up from there So as long as you're producing profitability during this stretch that first thousand trades with about 660 shares should produce $10,000 of profit Now it took me about you know 50 days trading days to do a,000 trades So you know it's a couple months A couple months All right

So then step five is to take the second 1,000 trades with higher share size So now you start to increase from here So you go from 160 shares as you're getting close to like 900 trades you start moving it up to 250 shares and then to 500 shares and then to 750 then to a,000 then to 1500 and then to 1,600 So now for the second thousand batch of trades you're up at around 16 thou 1,600 shares Your goal here is about $100,000 of profit Again that's for me would take another 50 you know it

would take another 50 days to produce a th000 trades And based on my metrics that's this is exactly kind of where I would line up And then I go up to step six which is take the third 1,000 trades now with 16,000 shares And this would be my path to working my way back up to about a million dollars This is how I would do it if I were starting over Now obviously this is me with a lot of experience As a beginner trader your learning curve is going to be a bit more extended It's

to be expected It's going to take time for you to build educated intuition But remember something I said at the beginning of this episode Survive till you thrive The longer you can keep your head above water the better off you'll be Because learning how to trade is about gaining educated intuition So every day that you show up you gain experience Now here's the cool thing You don't have to do this by yourself Every single day while I'm trading I'm also live broadcasting to all the members in our community at Warrior Trading So you can listen

over my shoulder You can watch over my shoulder to my market commentary You can see my screen share my position window when I'm buying a stock when I'm selling it You don't have to do this on your own Now those of you guys that do want some recommended reading I've got some books you could check out Now this is going to be a shameful plug for How to Day Trade: The Plain Truth That's a book that I wrote which you probably already know Here's another one by Andy Duke called Thinking in Bets This is a

great book Making Smarter Decisions When You Don't Have All the Facts That sounds very relevant to trading Here we've got the happiness advantage by Shaun Aor a book on trading psychology called Trade Mindfully by Gary Dayton And then you already saw the book Quit by Annie Duke Now those of you guys that want to continue learning I'm going to put a link to my fulllength training on how to read candlestick charts It is a deep dive in learning the language of technical analysis I encourage you to check that out I'll put a link to another

episode here And if you want to learn really from me at Warrior Trading I'll put a link to a two-eek trial You can do a two-eek trial for 20 bucks and get a sense of what it's like to be part of our community I hope you guys enjoyed this episode If you found value I hope you hit the thumbs up I hope you're subscribed to the channel and I'll see you for the next upload real soon [Music]