Beginners Guide to Day Trading (with ZERO experience) $1,000 Small Account Challenge

You want to learn how to day trade and I'm probably best known for turning an

account

with $583 15 into over $10 million in verified and audited

trading

profits, although those results are not typical, they put me in a unique position to be able to break writing that first day of

small

account

trading

and share with you the lessons, rules, skills and strategies you need to know to trade your first day in a

small

account with consistency and profitability. My goal for this episode is for you to leave with lessons that you can implement in your own trading Today, as you know, I am in the middle of a new small account

challenge

and in our last episode, because we crossed over 10,000 new subscribers in this series, I said I would reboot. the account went back to $1,000, which means today we are back to the first day of trading with $11,000.

As I teach this class today, I imagine that you are a close friend, someone I have known for a long time and who has come to me. to my honest opinion you are saying Ross I am interested in learning about trading obviously you are a trader so tell me if I have what it takes to be profitable so I will talk to you frankly and honestly. I will put it all on the table, you may not like everything, but it will be the truth. For those of you who like to watch these episodes or listen to them while doing other things, this will be a great episode to tune into while driving while walking around the house, so make sure to save it, download it if you want so you can tune in while you're on the go, So let's talk about what day trading really is.

This intraday trading is simply the act of capitalizing on intraday volatility, which means we need the stock to move now. You can trade raw materials daily. You can trade currency pairs. I trade stocks daily and the reason I day trade stocks is because of their volatility for me. It is much more predictable and although I will use leverage in some cases, I do not use it to the same extent as traders who trade futures or Forex do, so for the most part I feel that my risk is much more contained when trading Actions. So, in order to make money I need a stock to move.

I won't make profits if the markets are completely flat now some people think oh man Ross the markets are down today you must be in the red and that's not the case the markets can be up they can be down the Markets may actually be sideways, but individual stocks may still be making big moves. One of the things you'll know if you look at my metrics is that 90% of my profits come from stocks that are going up. more than 10% and 90% of my profits come from stocks that today have 500 times the volume of their 50-day average, so if I presented those two facts to you, what would you interpret?

What does that mean? Why would a stock go up 10%? % today, why would a stock have 500x relative volume today? Chances are the stock has some kind of news on it so I as a day trader am a volatility trader and finding volatility usually means looking for stocks that have breaking news and that's what I do every day , I sit back and look for stocks that are moving. If we jump to the whiteboard, most stocks in the market trade within a standard deviation up or down of around 4 to 5%, rarely going up more than 4% in a day, and rarely going down more than 4%. % in a day, so a stock that is breaking out of this standard deviation and going up even just 10%, is actually an anomaly, it is quite rare among thousands and thousands and thousands.

Of the stocks that are in this range of minus 4 to plus 4 each day, there may only be 5 to 10 stocks that are up more than 10%, which means it's actually very easy for me to find stocks in the who may be interested in negotiating all of them. What I have to do is scan the market for stocks that are up more than 10%, it's really that simple, and then from there I sort that list by the top winners. I like to focus on the biggest percentage winners. Now some people might say, Ross, no. I know about that, why would you trade something that's already up 100% 200%?

Didn't you miss the movement? Here's the deal. I can never predict when a stock will go up 100-200%. I'm not the type of trader who buys and just holds and holds and waits and hopes that I'm lucky enough to be in a position when that happens, so what I have to do is wait for a stock to start. to make that move and what I have discovered is that when a stock goes up 40 50 100% even 200% 300% those are the stocks that have the highest probability of continuing to go up, so one of my Motts as a day trader Momentum is buying high selling higher momentum means I'm buying something that's moving I'm not trying to predict when something is going to start moving I never buy a stock that isn't moving yet I wait for something to start moving and then jump in Stop that momentum, I now use technical analysis and chart patterns, as you see on the screen, to essentially help me understand the lowest risk place where I can buy these strong stocks so I can get in and be ready for the next leg up or else it does.

It doesn't work, so now I can stop with a minimal amount of risk. If you look back at the board, I've also noticed that stocks that are likely to go up 10%, 20%, 50% or more actually all share some common characteristics. In my

experience

, the best stocks to day trade will have a massive imbalance between supply and demand and that is what creates the big moves, so let's first talk about what creates demand. Well, demand is certainly created by news, but that's not the only thing that creates demand. Because? Did Tesla rise so much between 2020 and 2022? Yes, the demand was very, very high, but it wasn't like there was back-to-back news, what was happening was people were excited, people were excited.

I love Tesla, so you need that degree of people in love with the stock, people who like the stock, people who think the stock has the potential to go up and so there's usually a theme or a story about the best stocks each day, usually what I What I find is that the best stocks for day trading are usually the ones that lead the number one or two winning percentage in the entire market. What I find is that because many brokers make money when their clients trade, especially with commission free brokers, they get paid. The wholesalers every time you trade, they want to encourage you to trade, they want you to trade a lot, so they make it easy for you. a lot of getting kind of fomo and seeing stocks making big moves and they want in, they don't. lose money, but they also want you to trade actively, so they will show you the things that are moving and encourage you to actively trade them, so what I have found is generally when I look at my scan each day, are the positions one, two and three, these are the stocks that will have the most potential, these are the ones that will have the most eyes on them and usually number one will go up 50%, sometimes even 100%. % or more Sometimes in a hot market, each of these top three will go up 50-100%, so big profit percentages attract attention and that gets people excited thinking, wow, that's it up 100%, this could be the stock that goes up another 100 200 300 400% after all we have seen stocks go from as low as 1 or 2 dollars per share to 30 40 50 even $100 per share in a day.

Operators are always looking for the next one that has that potential. Well, as an active trader. I'm certainly looking for a stock that has news. I'm looking for a stock that is moving fast and is a top percentage gainer, but why can some news stocks go up 100% while other news stocks possibly objectively? the best news doesn't go up as much, this comes down to supply which is part of the supply and demand equation. Supply is the number of shares available for trading, so when a company makes an initial public offering, it sells a certain number of shares to the market.

In the open market, the company has issued a certain number of shares and that percentage of them are publicly available for trading and that becomes the bid level when a stock or a company has a very low level of shares that they have offered and traders all of a sudden I see this news and I get excited and I start buying stocks higher, there just isn't much supply relative to demand and the price starts going up faster and faster and faster and faster and as you know there are a mechanism in the market where you can bet against a company called short sellers.

Traders sell stocks that are holding a negative position and as the stock rises, they lose and are forced to cover their positions, that is what happened during the GameStop saga during the GameStop short. squeeze some big traders with big hedge funds, huge accounts were short and destroyed, so there's another element there where, when you have these small cap stocks, all of a sudden, all of a sudden, basically, out of nowhere, the stock Yesterday they had

zero

volume, today they have 500. $5, the most you could make is if the stock goes to

zero

, so if it goes to $10 11 12 13 14 or 15 you are losing much more than you could have gained which will naturally force you to cover your position for a loss this short covering amplifies volatility I profit from volatility this is exactly What I'm looking for okay so we want to see a stock that has news we want to see a stock that is certainly up at least 10% but regardless is the main percentage gainer of the day and usually that means it will go up 20 30. 40 50% maybe even higher we want to see that the stock already has five times the relative volume or 500 times the average, which indicates that element of quick surprise, that element of surprise is what you can create, then the big short squeeze is fine and we also need to make sure that the total number of shares available for trading is less than ideally 20 20 million shares when you have a stock that has, say, 5 million shares available for trading and that day 50 million shares of volume are traded, which is very common. is that all the shares available for trading essentially changed hands 10 times on that day, meaning that anyone who wanted to sell the shares for a 100% profit or whatever, had the opportunity to sell and if they did , They didn't sell, they want to continue holding anyone who wanted to short certainly had the opportunity to do so and now people are forced to cover and there is a really rapid increase in price.

This is where things get really exciting, so my five characteristics for a stock. be worth trading number one I want to see ideally it has to go up at least 10% number two it should have five times the relative volume number three it should have news number four I prefer the stock to be between $2 and $20 the lower the price in certain So, it's better because it's easier for them to become leading winners, a $2 stock is more likely to go up 100% than a $20 stock to go up 100%, so generally the sweet spot for me has In my

experience

, stocks have been between $5 and $10, that place is where we see big percentage gains, but where most brokers also allow you to trade with leverage.

At the beginning of this episode I talked about the use of leverage, especially among forex and futures traders. Traders and how it can be very risky. This is true. Trading with leverage means that you are literally trading with borrowed money. Basically, they are using their account as collateral, so my 000 account is collateral and the broker is allowing me to borrow their money to borrow. even larger positions, of course, this is risky, this is evident; However, it is also worth noting that as day traders the way we think about risk is a little different than someone who holds positions for days, weeks or even months, our trades are often very, very short. . as little as 5 minutes or even as little as a minute or less, so for very short periods of time I have found that I can offset that yes, I am taking risk by using leverage, however, I am reducing my exposure. holding the stock only for a very short period of time now if we jump on the board I'll show you how it works with the broker I'm using now for the small account

challenge

I'veconfigured.

I funded my account with $1,000 $1,000 and they offer six times leverage which means I can trade with up to $6,000 in purchasing power which means if I see a stock priced at $6 per share I could buy 1,000 shares and if the stock goes up, let's say 10 cents a share, I'm locking in $100 of profit if it goes down 10 cents a share, I'm losing $100, so in this case yes, I'm investing $6,000, but I'm risking 6,000 and I would argue. that I'm not risking $6,000 because I'm not willing to hold a stock at zero, that's not something I would ever do, so let's talk a little more about how I can trade even a small account without blowing it up.

You will not find success as an active trader if you do not have the discipline to manage your risk. Risk management comes first: understanding market risks and then making decisions that align with your risk profile. So when I think about risk management, I'm essentially thinking about the difference between my entry price and my maximum loss, so if my entry price is $6 and my maximum loss is $5.90, I'm risking only 10 cents per share, that's my risk now to justify taking 10 cents. a part of the risk, how much profit do I really need to make? In my opinion, I should win at least twice what I'm risking, so if I'm going to risk a dollar, I should have the potential to win a dollar so you can see here risking a dollar to win $2 would mean you would only need to be right. 33% of the time to break even.

Most traders will naturally strive to be right at least 50% of the time because psychologically there is something really difficult about being wrong more often. which you are right about, so we strive for at least 50% accuracy and that means we can get away with an average winner and an average loser closest to the same, which means I would risk 10 cents to make 10 cents and whenever I can I write more than 50% of the time that's fine, having said it's always better to aim a little higher and when I look at a trade I really wonder if this gives me the realistic potential to double everything I I am risking profits and If so, I am very interested in making that trade now.

I want to give you a recommended reading. This is a book called Thinking in Bets. It's by Annie Duke, she's the author and she's an incredibly successful professional poker player. and then he wrote this book and what I really like is that he talks about something called result, he talks about analyzing your trades well, poker hands, but you can apply it to trading by analyzing your trades based simply on the result and this is a mistake that Many beginner traders fall for this, so if you have a bad trade then you just say it's a bad trade because I lost money.

If you have a good trade it is because you made money, but naturally it is possible to break all your rules and still do it. Make money and naturally you might follow your rules and make a loss. This can be very inconsistent and can make it very difficult for Traders to learn and incredibly difficult to maintain discipline when you get consistent and inconsistent results from time to time. What I really recommend is that instead of analyzing trades as good or bad based on the outcome, you look back at the initial decision to take the trade, what was the logic behind taking a trade?

With everything we've talked about so far is stock picking. If you picked the right stocks to start with, if you didn't pick the right stocks to start with, regardless of whether you made or lost money, it probably wasn't a good choice. The decision to take that trade is fine, so we have to focus on the decision and I think this is really helpful if you take notes while you trade because it's very easy for us to, you know, look back and beat ourselves up, but in the future. Right now, if we say well, I took this trade because the stock had news, the float was correct, it met all my characteristics for being the right type of stock to trade and it presented a chart pattern that I like, so it was a valid trade .

It was a good decision and if the result is that you lost, that's okay because what you will learn is that over time as long as you consistently implement your strategy and are trading a strategy like mine that has proven to be profitable over the years. time. In the long run, the statistics will be in your favor, something I think is really important for every beginner's self-confidence. The trader has high precision and the way to achieve high precision is by making really good decisions, in the heat of the moment, without making them. Impulsive decisions. Do not make decisions to hold losers for too long or double down on losing positions.

You have to be really focused on making good decisions. If you consistently make good decisions about both where you enter and where you exit, you will find consistency. goes on, so when I talk to a beginner trader, I'm looking at three core components of profitability: the first is your accuracy, how often are you right, what is your accuracy out of 100 trades, how many of them were winners and for beginner traders. I want to see this above 50%. I'd like to see it between 65% and 70%, which is the level I've been hovering around for over a decade of trading, so 65% to 70% is a really good sweet spot, now it's something that some traders will struggle with is the fact that they will have really high accuracy, but it is misleading, because when they lose, they lose a lot and because they hold their losers until they become winners, so yes, closed trades have a high precision, but your unrealized losses can be huge and that creates a negative relationship between wins and losses: your average winners versus your average losers, so if your average winners are $100 but your average losers are 10,000, it doesn't matter if you have reason 99% of the time you could still manage to be a losing trader, so profit loss ratio and accuracy are like two sides of the same coin that go hand in hand and you really can't separate one from the other when trading metrics are looked at, so while it is possible to have really high accuracy it would usually come at the cost of your profit and loss ratio.

Look, it's okay to lose. I am a loser all the time and I would like to say that I am a very good loser because I cut my losses quickly when a stock is not doing what I like. I mention it in the example of today's first trade of trading $1,000. You know, that was an operation that didn't really work. I gave it enough time to work but at some point I said I know what time to exit is and it's $36 I wanted to make on that trade, no it's not but it's a lot better than holding and waiting as it goes. it goes into the red and it gets deeper and deeper for traders who have been trading for a while and who are trying to improve their trading and just tune into episodes like this just to try to get a little bit better.

One of the things I encourage you to focus on is accuracy, especially if you've been on a losing streak. and you've been losing money, focus on precision number one, make better decisions, what will almost invariably happen is that those huge outlier losses will disappear because now you've set yourself up by taking stronger setups, picking better stocks, picking better patterns, so a Once your accuracy then improves, your profit and loss ratio usually follows and then what comes after is your consistency over the last 5 to six weeks, so every time I talk to a new trader, I think hard about the last 5 to six weeks.

Has it been green, have you been making money or have you been losing? If you have a long trend of losing money week after week after week, obviously there is something that is not working, it may not just be that your strategy is working, but that your implementation of the strategy is not working. This is one of the challenges for me. as an educator. I can put everything on the table and I do in my Warrior Pro classes for our students, but I can't force you to follow the rules you yourself have to bring that level of discipline to the table for people who get results, it can be surprising. , but not everyone can be a disciplined trader, this is why trading is so difficult, which is why we have these three core components of profitability, consistency and profits. loss ratio and accuracy, and I always feel that the best place to start is accuracy, profit and loss ratio and consistency will ultimately follow the way I can trade even using leverage is by being responsible and having the discipline to cut my losses quickly now on this trade here we are back on nexi it's up 29% we're breaking out I placed a buy order at $19 this is called a whole half dollar breakout and on this trade my timing is we better go up to 1940 1940 in the offer 1940 in the offer 1942 1940 1947 I take a little off the table here just to lock in the profit, it's almost 50 cents a share and I actually put a new order in 1950 to add back, but I reduced the share size to 150 shares.

I am willing to participate again. I want to give it a chance. I see the stock has potential and I want to try to ride the momentum, but I also don't want to let it fall below my entry. the bid right now shows 1920 the bid shows 1937 so I have locked in almost $90 of profit on that trade and sold the rest locking in about $100. Now I have a profit of $133.33 on the first day, what is important to know is that my capital is still shown is $1000 but my purchasing power now shows $6795 which means I can now buy a little more shares even intraday on the next trade this yellow arrow on the chart this actually shows the micro pullback where I entered the stock is going up and I jumped out and now I'm placing a new order and I just added back to $19.40.

Now I'm looking for this to break half of the 1950 wrist, we're up about 31%. On the day the stock sold off but is recovering, you can see that on the 5 minute chart, as soon as this gets over 1950, I want to be able to make a little bit of profit. I placed my order at $19.67 so when it breaks. That way, I could withdraw the profits and stay full. I ended up leaving a little money on the table by selling perhaps too early, but this was a great strategy to lock in profits, especially early in the challenge and that means here.

I have three trades on the first day 8782, that's an 18% profit on the first day, so when it comes to using leverage, let's jump on the whiteboard to talk a little bit about how this works, so if I have the account with $1,000 in cash, We have $1,000, we have six times leverage, which means we have $6,000 in purchasing power. Okay, so if I buy 1,000 shares of a $6 stock, I'm using the full 6,000 in purchasing power. goes up, let's say this goes up 10%, the price goes up to $6.60. I would go up $600, so the stock goes up 10% and my profit is that, of course, multiplied by 6, which means my account could go up 60% in one day, but this is a sword that cuts both ways if falls to say $5 $540 cents and I lose 60 cents my account is down 60% in one day so this is where risk management would be a loss of $600 this is where risk management is absolutely critical and ultimately The problem for many beginner traders is that they have not yet learned how to manage their risk, so your losers are greater than your winners, you lose more often than you win and this comes down to two really key elements, number one . you are not trading the right stocks you are getting caught in the habit of trading low quality stocks stocks that do not meet at least my five critical criteria for being what I would consider best maybe the float is not right maybe you are getting stuck in trading these large cap stocks like Tesla every day or you're trading S&P contracts uh you're trading options contracts or e-minis you're getting into something that's very hectic where you're essentially trading against a computer system and If you have ever tried to play chess against the computer, you will know that the computer will win every time there are participants in the market, these high frequency trading algorithms, these big hedge funds, are designed simply to take money out of your pocket, so that you need to find those safe corners of the market where you can consistently capture profits and not give them back, so if the first element is stock selection, the second, naturally, is risk management and the third is choosing solid entries that we have .

I haven't talked about that yet, but let's get into the details: each of the three operations you saw me perform here onFirst day they were micro pullbacks, so what happens during a micro pullback? During a micro pullback, we have a stock that is moving up very quickly. normally it should, if I'm even considering trading it, if I'm even looking at the chart, it should meet the five criteria of being the right stock to trade, so let's assume it's the right stock to trade and it's going up very quickly let's jump to the whiteboard and let's help visualize this, okay, so we're moving very, very quickly, so what's going on?

Well, you get to a certain point where, as it goes up, buyers start to feel like they're going, I can't keep pressing buy. button, it's gone up too much, let's say it went from $2 here to $3 a share, it went up 50% and let's say it did it in about 10 minutes, okay, if it went up that fast at a certain point, people are like already I couldn't buy this and you know what's happening too, people who were down to $2 or maybe even a little less are saying, you know, this could be a place for me to make a little profit, so this is This usually happens when you squeeze here, as the stock rises, you reach a point where the trend runs out and suddenly the short-term equilibrium shifts, the buyers step back, the sellers, profit takers or short sellers come in and you get this. momentary correction, there is a small pullback now, at this moment, we don't know if the stock will go back down completely or if it is just correcting for a brief moment and that will go back up in another leg higher now. this is a small line chart, the way I trade is of course using candlestick charts, so we have these candlestick charts like this, they are called long body candlesticks and what very often is close From the top, we get a doge, a doge is called an indecision candle and This is because it opens and closes at more or less the same price, which shows that there is a battle at this level.

We will typically see this after a large upside extension. This is an indicator of a possible reversal, but it is not. I guarantee it, but what confirms it is when the next candle turns red, so we get a couple of pullback candles. What we typically want to see in a chart pattern is that on the move up here we had high volume, so the stock was rising to a high level. volume and as it retraces the volume is light, if this is the case this indicates that we are only getting a short term correction and we are not likely to see the stock go back down to the previous price it arrived at .

From what I'm looking at right now here, I'm usually looking at the actual depth of the market, which shows the bids that are the buyers. and the question what are the bids and this in this example from before was showing like $18.89 for $19 and I knew that 1 19 was the previous high, so all I needed to see was other people stepping up to the plate and hitting the buy button. and all of a sudden it breaks out and I'm like, okay, here we go, this is taking the next wave up and I want to get in on that momentum higher, so ultimately buying these pullbacks requires understanding the psychology of the way stocks move. don't just go up, they make these waves higher, they tighten up and then there's a little bit of profit taking and then when you have that profit taking, the people who lost the first move see it as an opportunity to buy something that is it's still relatively early in its move, it's only on the first pullback, so this is a good place to get in and rather than just buying it at the day's high, they're actually managing their risk against this pullback, so that your maximum loss on this trade is right down here at the low of this candle, so if it appears here and then immediately rejects and forms this red candle, it breaks this low and that is my maximum loss, which means that while I'm trading I'm looking very carefully at these patterns and if let's say I know the price down there was, you know, 1 1850, I could be looking at 1 1850 at level two, what if I'm looking at 18850 at the depth of the market and I see there is a 10,000 share? buyer at that price that now tells me that there is supply support, there is support right at this level.

It's also worth noting that many stocks trade with real respect to psychological areas of support and resistance, meaning that if we see a stock that is squeezing it higher, it is very common for us to see the price move between these critical levels. and we saw exactly this on nxtp or nexi on nexi while I was trading it contracts down to 19 and then pulls back just for a moment and then breaks and goes up to 1950 on the right and then pulls back up just for a moment and then breaks 1950 and goes up to 20 this is Classic this is that step pattern so instead of buying, you know, literally in the middle of this candle right here, I would prefer to wait for this little moment of pullback and consolidation before the next leg up, so I visualized this using the chart patterns so I look at the chart and see the first green candle and in real time I see the shape of the red candle and then the next candle is green and therefore something that active traders get really good is at recognizing classic chart patterns.

There is a whole language in financial markets. Now it may seem like a completely new language that you have never seen. graphics, you haven't gone deep yet and that's okay, now some of you are quite experienced with graphics and you're just trying to learn more and that's okay too, but for those who are very

beginners

I want to encourage you by saying that this is not much different To learn a completely new language, if you are trying to learn Spanish, French, Italian or any language you want to learn, how do you do it? The best way is to fully immerse yourself in the culture of a community. of people who speak the language that you can only read and in some ways, I don't know, they absorb so much from a textbook and that's one of the reasons why in my book I had a daily exchange, the honest truth, I didn't try do this. a textbook because I firmly believe that you really can't learn everything there is to learn about trading by reading a book.

This is a great book and in this book I give you the 20 barriers that I follow in my trading. This is a Great book, but to really learn chart patterns, what you need to do is start studying them on the actual chart and watch how they develop. This means that once you get really good at recognizing these chart patterns while looking at a chart. you're going to see only half of the pattern remember so let's jump on the board so on the board we sit down and say we see this nxi stock and it's tightening we see the first green candle now as it's tightening. above is going to hit one of my stock scanners, so I'm using real-time stock scanners to search the entire market for that small handful of stocks that are up more than 10%, that are moving quickly, and that have news , so this is a tool that gives me real-time alerts saying you know, it's almost like the radars are beeping, it's telling me something is moving, this is an incredibly valuable tool, okay, so I see a action by hitting the scanner and at first there may be a temptation as you are hitting the scanner. to go ahead and jump in, I can say, oh my God, I don't want to miss this, I'm just going to shop here, in the middle of this candle, I have that temptation called fomo, the fear of missing out, okay? than give in fomo this is what I want to do I want to let that first candle form I want to see the stock contract I want to make sure the number one stock here is my checklist the right number one stock to trade Is it the right stock ?

Well, number two, can I manage my risk? I can't do that with this pattern, this isn't a pattern yet, so number three, where is the pattern? Show me the pattern. Oops, pattern, okay, so I'm looking for the pattern and we get this. come up here and let's say you make something super classic and it costs a whole dollar, let's say it costs $6 here and then back off a little bit. Now this is kind of a Moment of Truth and I'm going to do this. green candle a little bit smaller so we can demonstrate and show you the volume, so let's say the volume of this first candle looks like this and the volume of the second candle looks like this and let's say the volume of the third candle looks like this, that?

Do you think it's going to happen next? I'm going to predict that because we have this really high volume red candle, the next candle will actually go down significantly more, we shouldn't have as much selling on this candle at the top this For me to feel that the pattern is valid and a place safe to buy, there should actually be a slight volume. Why have buyers stopped buying, so there is less volume? There are some people who are selling, so there is still some volume, but we are not getting a massive increase in sales that would indicate short selling or a lot of profit taking by people who don't believe the stock is going to go up, so what we want to see is high volume on the move up, light volume on the pullback now going forward. a micro retracement, this can occur on a 10 second chart but can also occur on a one minute chart, we may only have a momentary red candle before the next wave of buyers arrives depending on how strong they are News. how quickly the next wave of buyers comes, what we want to see is the volume increases even more if as it goes up here the volume is initially higher than this candle but it starts to decrease like this which also It is a volume profile. indicative of a possible reversal, the ideal volume profile.

I will draw you the perfect volume profile and it will not take into account what the candles look like. This is the perfect volume profile, such a big volume on the move up, a slight pullback from even higher volume. volume as it goes up maybe four candles and a rogue up and then there will be volume again on the pullback and then even higher volume is what we want to see to see a stock with price action going That won't happen if this It doesn't happen with a volume profile, so one of the technical indicators that I use almost exclusively in my trading is to look closely at those volume profiles, so we want to see that move up, light volume, pullback, light volume. pullback next move up goes through that level to the new high goes up a little bit more we can get a second pullback but one thing I will tell you is that I will not change the third pullback, which often happens when we get the third The pullback here is now, the buyers say, look, you know, we already had a good first pullback right here.

I got it and made money. I came back on the second pullback, but I'm not going to go back a third time, we often find by the When we get to that third pullback is when we start to see a longer-term correction and again maybe it bounces a little bit here, it holds and then starts to return to the highs or sell down again and this pattern. Right here what you're looking at is called a head and shoulders pattern, that's the face, this is the shoulder here and that's his really long arm and it looks like this, so it's kind of a classic Head and Shoulders, this is a self portrait. by the way, um, really Inc has an amazing body, um, but this is a very common pattern, so we want to trade only the movement up and something that I really take seriously is not to overtrade a stock, you take your money, you get in, you turn green and you come back and do it another day you don't want to overstay your welcome you don't want to push your luck get in get green and get out so now you understand the concept of volatility and why it is so important for active traders you understand the right actions To trade, you understand about risk management and have a basic knowledge of one of my favorite ways to buy a strong stock, which is to wait for that momentary pullback before the next bullish wave.

I would encourage you that this is actually another um, another thing from this book right here, Annie Duke, she said that when her brother was teaching her how to play poker Bo, he gave her a list of cards to play every time he was dealt those cards, those are the cards that she would play and she sits at the table and she says, well, wait. I see other people who played cards that are different from the ones on my approved list but won the hand. I don't understand it and he said: listen. I gave you that list, not because those are the only cards you could play, but because those are the setups that have the highest degree of probability, those are the best ones for a beginner, so when I talk about a micro pullback trade, That micro pullback trade is the first pullback that can happen in a period of one or five minutes.

I share this with you, not because it will be the only pattern you will see me trade, but because as a beginner trader, I want to build trust so I can build a track record.To achieve success you need to focus on being really good at a single pattern, if you can be good at placing trades in a single pattern, good at finding the setup, good at executing the trade, that may be enough to keep your head above water and survive until you thrive, okay, that's very important, so we've talked about these patterns, but what I haven't talked about with you yet is the exit indicators, how do you know when to exit?

Well, this is very important, obviously, when we perform an operation that we have. a pre-established level of risk, so if in the event that I get into a stock at 19 and it goes down to 1975 and I already said 1975 is my, you know, my cutoff, that's my hard stop, then what am I going to do? do? it comes down to 1975 if I look at 1975 on sale and see red on a ribbon and people selling. I'm going to hit the sell button now. I actually have a cell button on my keyboard. I press it with two. keys and I'm out of a trade, that's all, it's like I'm so ruthless about cutting those losses, so naturally we're going to cut the loss if we hit our maximum loss, but I'm not the type of trader that you're going to take a position and hold it until one of two things happens: target profit or stop loss because a lot of things can happen in between, like well, let's say for example, I go in at 19, I think the stock will go up to $19, 50, but as it gets to 1925, suddenly at level two, a big seller appears, let's just look at the board, let's assume this stock has made its move right here, made its little pullback, I'll draw it in red, it came here and then when it pulled back and when it rose again to this level, suddenly here we have a seller of 100,000 shares, okay, that's a big wall, it's unlikely to be a big seller, especially since a higher price stock is Yes If I'm going to be able to beat that on the first try, the first few traders will most likely see it and panic sell and say, "I better get out of the way" and then the people who didn't see it soon enough will be dating everyone else and that's when this reversal occurs.

Now the worst case scenario is if that seller moves their order to 100,000 shares down here and as the stock continues to fall they keep moving their order lower and lower and lower, when that happens you could essentially be a huge hedge fund. it could be an individual trader that is pushing the stock down, okay that happens, so if I see that at the time I see it, if I'm not already, if I'm basically breaking even and I see that I'm out of the operation, okay, so let's pause for a second. I think a good way to think about exit indicators is to reverse this and let's think about what are the indicators that confirm that the trade that I took is incredible, which is working number one, I enter and the price immediately goes up, okay, so I do it.

The opposite is that I enter and the price, let's see. I'm going to draw this on the board, price number one stagnates, okay, so price stagnates if I go in and price stagnates, that's not cool if I go in and see that big seller number two, big seller, that's not good either, what is another possible indicator? You know well? What is an indicator of something I really like and want? to see the price going up, I don't want to see big sellers applying, I want to see it just breaking through these levels, but what if we see it approaching a psychological resistance area maybe at 1950 or 20, we might not see a big seller individual, but what we can see is a stack of sellers, so if we see a stack of sellers, let's say 10 or 15 sellers deep, all in 1950 or 20, we probably have In addition, the traders will need a little effort to accumulate all those sell orders before you can get over that price and break through it and go higher so if I see big sellers or a lot of sellers a lot of sellers this is going to be another indicator to sell okay so these are all exit indicators number four , um, another output indicator is if we have a knife.

I don't know if it's spelled with 2ks, but in any case, a razor, a razor is, uh, yeah. Have you ever seen someone on a springboard do a jackknife, they jump, they go like this and then they do like that, so when you have a stock that goes up and then goes like this on a jackknife, that's a jackknife and I don't like to see that. , so if we see a knife I get out immediately, so number five, number four, knife, those are all exit indicators for me now, if I don't see any of those exit indicators, the price is not stagnating.

It's just going up. I will hold the position as long as possible. Something I never want to do is limit my profits as an active trader when you are lucky enough to be in your trade and it goes up that much. If you want to take advantage of that momentum, there is a certain degree of luck in trading. I mean, obviously, it depends on the skills to be successful in the long term, but in any individual trade you can have a trade that makes a big move and you never really know whether or not. That's not going to happen, even if you think a stock could go up 203 cents, you don't know for sure if it's going to happen, so when it does, when you get that really big move, you're going to want to hold onto as much as you can. as much as you can until you see an exit indicator, one of the things I would really encourage you all to do is print out examples of the charts that are like perfect examples of perfect trades, the reason I want you to do that.

Do this because I want you to get really good at visualizing the middle of the pattern and being able to project what's going to happen next, so what I want you to do is write in the comments pinned to the top of the comments and linked. the description is my ultimate starter kit is the starter kit for

beginners

that has a ton of pdf resources that you can download for free. This includes my small account strategy, my micro pullback PDF, which is a deeper breakdown and a resource you can print. It's right at your side and it includes these chart patterns.

I want you to download it. I want you to print it. And I want you to surround yourself with these patterns. Immersing yourself in this community of active Traders is what it takes to learn the language of the financial markets. I find it very helpful every day when I'm trading to talk to other traders in the community's Warrior trading chat room because I get a sense of whether I'm looking at the right stock. I think I am, but I want to make sure other people are okay with it when you operate completely isolated in a bubble.

What you lack is an understanding of what the general consensus is. What are other people interested in right now? What do other people think about this specific topic? stock, it's important to be able to take the temperature ultimately, when we had that crazy move in GameStop, everyone was very optimistic about it now, when we have a situation like that, it's really important to pay attention, this is when we can have extreme emotions in the market. extreme volatility in the market, you must be careful, you want to capitalize on it without being a victim of it and that means that every time you trade, you respect the fundamental rules that lead to success, you maintain your discipline. understanding your risk for each trade if you are placing a trade and you don't know how much you are risking, you are not trading you are betting, that is what separates the players in the market from the traders, you need to understand risk by watching This episode, by tuning in this series will hopefully, by pressing the thumbs up, bring you good luck, but you're also reinforcing, at least to me, that you're really trying not to want to be a statistic of another failed trader, so if you made it to the end of this episode, that must mean you really enjoyed this class.

I hope you hit that subscribe button, hit the thumbs up, and tune in to the next episode of this little beading challenge coming very soon when it first arrives. I started trading, one of the things I focused on was trading penny stocks, so that's something we'll talk about in the next episode, in case you trade penny stocks, we'll find out very soon.