Trading was HARD Until I Learned this BASE HIT Strategy

[Music] in today's episode I want to share with you one very specific turning point that I had in my journey to become a consistent confident and profitable Trader this actually happened uh many years ago is in 2017 and prior to that I'd been making money and I had just started my small account Challenge on January 1st of that year but I felt like I was in a cycle the cycle was that I was swinging for home runs and I kept having big strikeouts I would take these really big losses and the result was that My

Equity curve would periodically experience these big dips and whenever I would have these dips I would feel like I needed a home run to get my account back to whole so I would continue swinging for these home runs but it was like I was on this roller coaster where I kept having these big dips so after one particularly bad loss and this was in September of 2017 I decided to take a look at the last 10 months of my trading data and I made a discovery that I want to share with you today from that

Discovery I implemented changes in my strategy that have significantly altered the trajectory of my trading career now as we know 2020 2021 2022 the market was crazy but I was still implementing the same lessons that I learned from this very specific moment in time where I made this discovery so let's go ahead and jump into the data here and I'm going to start walking you through what I learned okay so if we look at the month of September here it's uh probably clear to you that it was a red month I was down $4,400 which

you know at the end of the day is not a crazy amount of money to lose but it's definitely disheartening and it's frustrating cuz look I showed up every single day I'm showing up to trade but I'm not walking away with consistent profit now at this point in the year if we take a step back and we uh I don't know if we'll be able to easily in this calendar view but it was a good year in total I had a great start January February March April was good May was fine and then it did

slow down in June July in August so I had sort of some slow summer months and then coming into September I started with you know well I guess is this in this case it was first um first day of the month with a $4,000 red day so now I'm digging my myself a whole and I'm sure many of you have experienced that then we have a Memorial Day weekend I come back get a trade on Wednesday it's a red trade so now I'm down 8,000 on the month no trades Thursday trying to be disciplined small

trades Friday still red on the week so now two red weeks in a row I come back for the next week the first full week of September and you can see I got nothing to show for it right I'm R again this week not by a lot but I'm feeling frustrated now the Third third week of the month I got into a little bit of a Groove made some progress did really well and then boom in 2 days literally gave back everything I had just made in that last week so this is where on this

day right here I was like all right man take a step back cuz this was one of those days where I was ready to flip my desk I was so frustrated I wanted to throw my laptop out the window I was just like I'm done I was so angry I'm sure many of you can relate to this who are AC Traders the emotions can get big so after I had this like meltdown just so angry I was like okay well take a step back and slow down because you know what I did several years before

that when I had a turning when I had like a big struggle a big kind of blowup loss I went back and I looked at all my metrics and that was when I discovered the momentum strategy that I still trade to this day so I said let's do that same thing let's go back and look at the data so this is what I did I looked at the previous 10 months of data and I made some discoveries so one of the things I noticed when I looked at my top uh my my last 10 months

of data was my I looked at my first my top 25 biggest winners and my top 25 biggest losers so my top uh 25 so top 25 my biggest winners amounted to uh $215,000 and my biggest losers amounted to minus $23,000 so this was over the last 10 months of trading and this actually kind of surprised me and I'll tell you why I had the belief that My Success depended on hitting home runs you know I periodically would have a day where I was up 15,000 or 20,000 or something like that so you know when

I was thinking about my top 25 biggest days I was thinking those would probably be anywhere from 250 like $300,000 so I was a little bit surprised that my top 25 biggest trades were only $25,000 because it means they were averaging less than $10,000 that kind of surprised me and then what surprised me even more was that the losers my top 25 biggest losers were also averaging close to $10,000 just under and I had lost 203,000 so in other words if you took away my top 25 biggest winners and my top biggest losers from the

last 10 months what am I plus and minus like 12 Grand right plus and minus you know $112,000 it's uh it's not a lot of money so I was like wait a second because because here's the thing I knew that over the last 10 months I had made around $300,000 so I was like if the profit didn't come for my top 25 biggest winners and losers then where did it come from okay so so let's set this to the side so what we know is that the top 25 biggest winners and losers amounted to only

12,000 in profit these are trades where I was objectively hitting for or swinging for the fences I was trying to get a big win but sometimes those big swings it's a big strikeout and that's why I had the losses so you know if you think about for instance um one of these one of these trades that maybe I took where we had a stock that was kind of squeezing up the scanner moving higher it pulls back you know just for a moment then it pops up right here and I get in it I'm in it

and then immediately we have one of those kind of jack knife candles right and maybe this is like a 10-second chart and on the one minute it's just like a big you know either topping tail dogee or even a shooting star dogee so it's just like you know I just had enough of those trades where I stepped up to the plate for that big trade and then with 10,000 shares the bottom falls out and I'm down you know almost a shared down 10 grand okay so you know and I so I was looking back uh

on January and for what it's worth January 1st of 2017 was when I funded my account with $583 15 all right so the starting balance here was 58315 and I produced $116,000 of profit which no doubt was a you know an impressive amount of money to make in that that first month some people by the way you know like to see the broker statement to verify that so I'll just show this to you here um this is my actual audit of my trading that began on January 1st of 2017 because this is when I started

my small account challenge so that first month I actually got uh 2746 return even though it wasn't like a crazy amount of money at 16,000 it was still a big percentage return now I've continued trading in this account for the last you know 1 2 3 4 5 6 7 8 years and the account's still growing it's over 10 million now and audited verified gains I'll remind you as always that my results are not typical but my hope for an episode like this is that you're able to learn from my lessons my mistakes I've made

and from some of the turning points I've had in my career and that perhaps some of these could help you in your own trading so so anyways January was 16,000 you know that was solid I did though have you know that one kind of bigger red day going into Fe February a $60,000 green month which was great a couple of big red days and this is sort of the theme is that I'm generally consistent but then periodically I'm hitting losses that are bigger than my average green days how many of you guys experienced that you've

got you know nice decent green days but then when you hit losses there you know three times or four times what you're averaging on those green days so this was kind of the theme through 2017 uh this was a good month in May the the red days were really small but this was an exception not the norm and in fact I didn't make even a lot in in May and this was the beginning of when things kind of slowed down it was slow in June only with 8,000 in profit it was slow in July it

was slow in August and then as we know it was read in September so this was part of what was getting me so angry in September was the fact that things had gotten really slow and then sort of in the midst of them getting really slow I end up you know taking some big losses and I feel like at that time I I just couldn't afford it you know it was like this isn't something that I could really tolerate right now okay so since I knew that my top 25 biggest winners and losers had not

accounted for a very substantial amount of profit over the last 10 months I decided to kind of open up my filters a little bit more and I said well let's let's look at winners that are bigger than $4,000 and then losers that are bigger than 2,000 right so I I'm kind of setting the bar just like a little bit uh wider so you know casting a wider net and what I discovered here was that my winners that were 4,000 and up were $319,000 and this of course included the top 25 so I was like nice

okay that's that's more in line with you know what I was expecting and then and then I look at the losers which were $2,000 and up and I realized that I had lost $ 361,000 000 in this same 10mon period so I was actually down like 40 Grand $42,000 and I was like wait a second this is crazy so so you're telling me that if I look at all my winners of more than 4,000 which I felt like were like a solid winner and I also look at all my Losers of more than 2,000 in

the last 10 months I'm actually losing an average of four grand a month so now I was really perplexed because I'm like well wait a second then where is my profit coming from so well the obvious place to look now is Winners that are between $0 and 4,000 which I would consider not to be a home run but just kind of like a base hit trade so I was like all right well you know I I wasn't expecting to get down this far but all right let's just look at it so now I'm looking at

winners that are 0 to 4,000 and losers that are between 0 and 2,000 all right and this is what I discovered right in here my winners $510,000 in the last 10 months and my losers were only 156,000 which gave me a net profit of 354,000 now remember when I said I was only up about 300,000 in the last 10 months so all of a sudden I'm like wait a second if I focus right in here meaning I'm focusing on winners between you know basically 0 and $4,000 and losers of less than 2,000 I would be

averaging in fact $4,000 more per month even if I never had any more home run trades and this this really did confuse me because I was like I I can't really accept the fact that I could be making more money with smaller share size because this was the thing that I also calculated my average position sizes up here were about 15,000 shares all right right now my average posi positions in this area were more in the range of 6 to 10,000 shares so they were smaller positions so I'm like how am I making more money

with smaller positions that seems counterintuitive to what I would expect you know over the years having thought about this more with a smaller position it's a lot easier emotionally to cut your losses you can just let it go you're like it doesn't matter and with a smaller position it's also easier to move in and out of the market you don't get as much slippage you start trading with 15 20,000 25,000 shares especially on a thinly traded stock you could easily get five eight even 10 cents of slippage and that could be the difference between a

break even trade and a$2 or $3,000 losing trade and then on the losing trades it's a difference between losing only let's say with 5 to 6,000 shares maybe you lose 10 cents you're down 600 bucks you do that same trade with 15,000 shares you're selling when the stock is is dropping you're getting a ton of slippage and you're losing let's say you lose 30 cents all of a sudden you're down 4500 on a trade that with only 6,000 shares would been 600 bucks and I think that that was one of the big discoveries for me

so this was again in 2017 this was before the pandemic and before commission free trading so it was during a period of time when there wasn't as much volume in the market as there is today so moving in and out of Trades at in those days was not as easy as it is now so think there there are some things that are a little bit different but the moral of the story and the big lesson for me was the realization that I actually would be making more money if I trade with smaller share size and

did not try to swing for the fences and so what I ended up doing coming out of this uh sort of slump that I was in here in August and September is I said all right well let's see if I can apply this moving forward so moving forward I decided to reduce my share size so I brought my share size back down I became a lot more conservative and I ended up focusing just on base hits now what ended up happening was over the next uh 30 days I had a nice stretch here that began

as you can see right here on September 27th so this was the turning point right here so these were nice nice small days and then going into October look at this this ended up being a no Red October now to be honest I didn't have a lot of huge green days I had a $5,000 day but the rest of the days were in the range of you know $2 $3,000 I finished up $35,000 here for the month of October and I felt so confident I felt I felt on top of the world my account was

back at alltime highs I was like yes I'm doing this I go into November I keep it up now I'll say as you can tell I had a couple of setbacks one of the things with this setback right here was that I had two Incredible Days and these these days were really interesting because this was actually not the result of swinging for home runs this was actually the result of a of an error in my trading software which was kind of crazy so what what happened there I remember these days because on Wednesday the 15th

I get into this trade and you usually what I do for those of you that are familiar is I'll often press the buy button a couple of times and I had just switched to new software and the software that I was using was changing the position quantity based on um the current number of shares that I had so typically if I'm getting into a position with 3,000 share positions I'm going to buy once and twice maybe three times so I did that I got in 1 2 3 times 9,000 shares so I I went kind

of to the top of my window of share size which is about 10,000 ,000 shares and then I I think I said I was like okay I want to add to this position and go up to like 10,000 shares or something like that and so I pressed the buy button and I think I pressed it twice and so it sent two more orders out for 9,000 shares so now all of a sudden I accidentally sent out for a 27,000 share order and I remember looking at the bid and being like whoa there's someone bidding on

this stock and it was my order I didn't even realize it so I I didn't get a full fill on my order I got a partial fill and then the rest of it was sitting on the bid now the stock ends up going up over a dollar a share and I locked up $33,000 which I think at the time might have been one of my biggest green days that I had ever had and I realized after the fact that I had had this like this was this was nuts like what just happened and so I

thought I figured out the problem and I thought that I fixed it and then literally the next day it happened again and it it's just like honestly it was lucky that it happened on days when the market happened to be hot because if it happened on days when the market was really cold I could have gotten destroyed but the market was hot and so I ended up having two huge green days and then Friday ended up having kind of a a bigger red day and you know I don't recall what happened on this day here

um I guess we could take a look at it and see see where things went wrong H yeah so I went into the green and then dipped down into the red and then was down 5,000 this looks to me like a day where I fell victim to what I would call emotional hijack because my final trade let's see what time of day was this 11:50 so it's later in the morning right I went from green to Red I almost made it back to flat and then back to a little deeper red and I think I

probably I probably took a high-risk Hail Mary trade hoping to get myself back to green and then flush deep into the red I think this is a day of emotional hijack and the fact is when I look back in my trading unfortunately I do still fall victim to emotional hijack even today so now this is 2017 so we go all the way forward to 2024 and you know you'll see these nice long stretches of green days but here in March uh of this year emotional hijack on this day right here it was actually two days

of emotional hijack and you know I finished that that week red 15,000 now one thing I would say about emotional hijack is that you know contrary to you know the focus here which is on this is very much strategy based this is about figuring out essentially the analytics of your trading and modifying your strategy so you're doubling down on what's working and totally dropping what's not working my Discovery was learning that I was making a lot more money on base hits and so I should stop focusing on trying to hit home runs and and just

go all in on base hits but inevitably what would sometimes happen is after a period of you know 2 3 weeks whatever four weeks that are consecutive green weeks I'm doing really well I have that day where you know I step up for a base hit but bad luck I get caught in a news flush or a stock that announces like an offering or whatever it is and with even small size I'm down five grand and immediately it's like a kick in the teeth and I'm angry I'm frustrated and I'm immediately hijacked by those emotions

and now I'm looking for another trade to try to recoup that loss as quickly as I can we can look at this Monday here um the the 11th because this is a perfect example of it I was in the red in the green and then gave it up here and then traded all the way to the end of the day this is total emotional hijack terrible terrible emotional self-control and then on this day I came in swinging really hard and just got totally smoked on a trade where I took way too much risk and I

took too much uh too many shares and the reason I took so many shares on that was because I was trying to recoup the loss from the previous day and so one thing that I've come to learn is that with trading it's very common even after years and years of consistency and success to deviate away from what you know is sort of the rule of your strategy in moments of emotional hijack and emotional pressure where you feel like you've made a mistake and now you need to recoup those losses and maybe today it's okay that

I just take more size because the thing that happens is when you're in this kind of um mindset of focusing on base hits you know just nice consistent Bas hit trading when one of these happens all the confidence and the good feelings you had right here are gone and right here you are feeling sad and you're angry you're disappointed and the fact fastest way to feel better is to be able to press you know contrl Z undo the last trade and go back to right here but unfortunately as we know the market uh doesn't work

that way so the only way is either to have a lucky trade that gets you right back to whole or to accept reality right now that you got knocked down and it's going to take a little while to recover and it's hard to accept that until you accept that you'll keep swinging like this and then that's when you can end up you know going like this and I've seen Traders do that I've seen Traders have an excellent run of weeks months even years and then a loss of confidence stubbornness frustration and now from a place

of emotional hijack they're not trading the market they're trading their p&l and they just start stare stepping down so you know we're I think we're all um going to be victim to this at some point because listen trading is hard and we're only human and we're trying to do something that's very very difficult I have also come to learn that most people in trading fail for one of two reasons the first reason is because they don't have a strategy at all now a lot of the people that came into the market during the pandemic GameStop

era and everything else they had a lot of beginners luck it seemed like everything that they might have bought was going up and they didn't need a lot of strategy same with the Doom bubble but when the bubble burst and when the pandemic you know when all of a sudden interest rates went up because of inflation everything else the market softened and now people are like whoa do I actually know what I'm doing and some people started to lose money if you don't have a strategy a system a set of rules that you're going to

follow every single day in your trading you're not going to be able to do this for decades on end you're not going to have beginners luck that'll last that long so the first reason most beginner Traders fail is because they don't have a system or a strategy now I by the way I will let you download the PDF of my small account strategy you can download it it's free you can practice trading it on your own and if it's helpful for you I'm happy for that if you decide to become a member of warrior trading

that's awesome if you don't that's okay too there's going to be a like pin to the top of the comments and Linked In the description where you can download my small account strategy so you can download a strategy you do not have to be the traders that are in group number one who fail because they have no strategy but then there's group number two the second reason people fail is they have a strategy but they don't have the aptitude and the emotional wherewithal and the discipline to follow the rules of the strategy and I'm telling

you sometimes it feels like I am barely holding it together myself cuz it is such a struggle on some of these days not to flip over my desk and just start slamming that buy button CU I'm angry but being able to have discipline and composure is absolutely what separates traders who make it long term from those who don't and not everyone has that attribute that ability to be calm cool collected I don't think that I naturally have it but I've trained myself into it and so there is hope there is a chance that you can

train it even if that's not how you are naturally so these are really to me the two most important things in trading a strategy set of rules in a system and the discipline to follow it but I want you to remind yourself that yes you're only human and you will have setbacks from time to time and that's the thing you'll be on a good track and then all of a sudden you'll have a little bit of a setback so if we look at my trading here um I mean we could just look at the last

um last year uh we go to we can do the last like 18 months or whatever um let's see so we'll go to recent uh no I want to go to detailed and I just want to show you the equity curve here and just to kind of give you perspective that this is the reality for me at least of what it's like to be a Trader there's ups but there's obviously Downs you can see these dips and when I'm having Downs I get depressed I get bummed out and I start to feel like man the

only way to recoup this loss quickly is to hit a home run but base hit trading is how I have built my career and even during the crazy markets of the pandemic I was still trading just focusing on base hits the only difference there was that everything seemed to be bigger I could take bigger Shar size the base hits were bigger but they were still for the most part base hits so this is the way I trade it's just slow and steady and if we go back to looks like if I do it like this

I could go into 2017 so we'll go to 2017 here and this is what you'll notice so I had this really strong first quarter of the year with a small account and then I went into this period of going kind of you know stagnant I was going sideways and it was because I kept having these bigger red days right if I wasn't having these bigger red days every couple of weeks I would have been you know making progress up here and so this was the turning point right here it was September 27th that was the

point where I said all right Ross you got to focus on base hits reduce share size and I realized it's so much easier to get in and out and to be Cutthroat about cutting your losses when you trade with small size you can be nimble you can lock up these profits and you can do really well now I'll tell you that as I said during the pandemic I did pull away a little bit with my share size and I got more aggressive and that was the right move for that market but even today right now

even though I've made more than $10 million a trading I start each day with a maximum position of 5,000 shares until I have made more than $11,000 I start each day at zero because I'm a day trader and I set my Max loss I don't like to go down more than five grand but to be honest because I start each day with $5,000 position size the only way I can go down 5,000 is either losing a full dollar a share on one trade which is terrible or more likely having like three losers like this where

it's just not working and if that happens then that's fine I'm out of the market but these are still for me reasonably small days that are red and as long as each one of these losses is more in the range of $1,500 I can tolerate three losses that total out to 4,500 but on the flip side on a day when things start working with one or two trades next thing you know I'm up, 1500 1,600 and then as soon as I'm up more than $1,000 I take off that cap I could start taking a slightly

bigger size up towards 10,000 15,000 shares Max generally speaking and then you know I can make my way up towards my daily goal which is 5,000 I like to set my daily goal the same as my Max loss I don't want to lose more in one day than I can make in one day so if I'm averaging only let's say 2500 a day in a current market I'll tighten my Max loss to that same amount and I'll set that as my new Target so these are always this is dynamic I do adjust it based on

market conditions and I adjust it based on the price range stock I'm trading naturally 10,000 shares of GameStop is not the same as 10,000 shares of a 30 Cent stock or something like that so you know you do have to be able to kind of give this some wiggle room but um I I think one of the things that I just want to emphasize for you is that what I've learned in my career is that trading really is a marathon in the truest sense of the word that you fight every day it's a struggle it's

not easy it's not exactly fun but it can be rewarding and those who find success are the ones ultimately who are very disciplined I hope you found this episode helpful if you did I hope you hit that thumbs up I hope you subscribe to the channel Feel Free as always to download my small account strategy PDF and I'll remind you as always trading is risky my results aren't typical so manage your risk take it slow and I'll see you here for the next episode real soon [Music]