Full transcript
0:00In this session, I'm going to present the ultimate guide of how to start trading in
0:04a small account. For those you guys returning to the channel,
0:07you know we're about to jump into a deep dive. And for those of you guys who are brand new,
0:12let me briefly introduce myself to you. My name is Ross Cameron. I'm a full-time trader. I funded
0:16my first account in 2001. And in 2013, I created this YouTube channel right here. Begin sharing the
0:23strategies and the techniques that I have found have worked so well for me over the years. I am
0:28probably best known for turning a small account with less than $600 into what is now more than
0:35$20 million of gross profit. So everything I share with you today is not just theory of what
0:41I think may work in the market. It's actually tried and trueue strategies and techniques
0:46that I use and implement every single day. So we're going to go ahead and jump on the screen
0:50share. We have a lot to cover. You can see my profits from today sitting up $21,690.15.
0:58And I should be the first to tell you that my results are not typical. I have been trading for
1:02a long time. There's no guarantee that you'll find success in the market. And this actually reminds
1:07me of a topic that uh came up at a birthday party I was recently at. Before I share that with you,
1:13why don't you look at these nine topics that we'll be covering in today's deep dive. So I'm
1:18going to walk you through how to start trading and I'm going to do it se sequentially going through
1:23these nine topics which I would consider to be essentially the building blocks of learning how to
1:29trade. So these are the building blocks. This is how we're going to set our foundation right down
1:32here. And as I touch on each of these concepts and I don't know if that's nine but you get the
1:36idea. What you're going to recognize is that I'm going to do initially cliffnotes. I'm going to
1:41give you high level for each of these topics each of these concepts. And then what we do is we go
1:46back to them and we add more detail, more detail, more detail until eventually you have a solid
1:51foundation. And my goal is to help you prepare for day one of trading in that small account. Now, by
1:58the end of this session, you're going to actually have a PDF worksheet that you can take away with
2:02you and a strategy, an outline of a strategy and a trading plan that you can begin implementing
2:07in your own trading starting today. Now, if you want to download that PDF, I'll put the link in
2:12the top of the comments and I'll also put in the description so you can download the PDF resources.
2:16You can print them out and you can follow along with them as we go through this class. Now, before
2:21I jump into uh part one, which is alpha phase of sim trading, let me tell you about this little
2:26um story. So, I was at a birthday party uh recently and uh someone came up to me and
2:32they were asking me what I do for a living and I said that I'm a trader and I also said that
2:35I'm a teacher and I provide a lot of content on YouTube and so on so forth. But they were really
2:39curious about trading and I explained to them that of course that I am a trader and they said, "Well,
2:44so what do you do? Do you trade, you know, the S&P 500? Do you trade oil and gold?" You know,
2:50they had no idea the area of the market that I traded. They asked me this question. They said,
2:54"How do you know what to trade?" And I said, "I'm going to explain it." And and when I explain you,
2:57it's going to click. And so what I said is that I am a volatility trader, which means I make money
3:04trading things that are moving. If something's not moving, I can't make any money on it. And
3:08so what is typically the catalyst that gives us a move? And I asked the question and they said,
3:13"A catalyst that gives you a move? I I guess some type of breaking news." I said, "Exactly
3:17right." And so they said, "Oh, so you must sit what reading the Wall Street Journal and reading
3:22the news like all day long. Is that what you Do you listen to Bloomberg and this and that? I said,
3:26"No, I don't do that because there are hundreds and hundreds of news stories coming out probably
3:30every hour of the day. You'd be inundated with news. You would never know where to begin. So,
3:35no, I don't read all the headlines. I work the other way around. I look for stocks that are
3:41already starting to move. And if a stock is up 10%, just by being up 10%, it's doing something
3:48that 99% of the stocks on the market are not doing on any given day. Most days stocks go up and down
3:55a little bit. Going up 10% is statistically significant. So once a stock has broken that
4:00first threshold, now I just have to go and check to see whether or not there's a catalyst. And nine
4:06times out of 10, there is a catalyst. So rather than reading all the news headlines and trying
4:11to comb through what's good, what's bad, I just wait for the stocks to show themselves to me.
4:15So does it mean that I missed the first 10% of the move? It sure does. And I'm okay with that because
4:21typically when we have a stock with a really good catalyst, a company that comes out with FDA
4:26approval for a new drug that's, you know, going to treat a very common illness, that type of catalyst
4:33can send a stock up 500% in a single day. So even if I miss the first 10%, it doesn't matter.
4:40I'm still going to be getting in very early. So she said, "Well, this all makes sense. In fact,
4:44it sounds downright simple. You just look for stocks that are moving. you check the catalyst and
4:49then you you you get in. And I said, "Exactly." She said, "But I've heard from people that trading
4:55is very difficult and people lose money. Why? Why do they lose if it's so simple?" And I said,
5:00"That's right. It is simple." And yet people continue to struggle. Why is that? It's because
5:06they can't get out of their own way. And this is the most important thing that I want you to learn
5:10right here, right? The very beginning. Success in trading is about following a playbook, following
5:16a set of rules. It's about a system. And what traders who lose often do is they think they know
5:23better and they break the rules of the strategy. Why would you do that? It's because your intuition
5:30of what you think you know feels right. I'll give you an example. If you've ever gone fishing as a
5:36kid or even as an adult, whatever. If you ever got a fish hook in your in your thumb or in your hand,
5:41your instinct, what's your instinct to do? Your instinct is to pull it to pull it out.
5:46Now, if you pull it, the barb is going to hook even deeper. In fact, what you need to do is you
5:52need to push it in to release the barb. You got to push it in. Now, pushing it in feels like the
5:57exact opposite of what you should do. Give you another analogy. Think about being in quicksand.
6:02What do people do? They flail. They flail and they sink deeper. What do you have to do? You've
6:06got to stop. You've got to spread yourself out. So, sometimes, as is the case in other aspects
6:11of life, your intuition doesn't serve you well. your gut response, your gut reaction. And that's
6:17exactly the case in the market. Your gut reaction of when to buy and when to sell by default will
6:24lose you money. That's the reality. So we actually have to follow a very specific outline, a system,
6:31a set of rules in order to achieve predictable results. And so what I'm going to share with you
6:37is exactly that blueprint. I'm going to make it as simple as I can, but it requires you
6:43to have the discipline to follow the rules, and that's what can be very challenging. All right,
6:49so we're going to go ahead and dive right in here. We've got a lot to cover. Um I'm going
6:53to begin right here with um alpha phase one. And as I already mentioned, everything that I share
6:58with you here is actually based on my own success. It's based on my own trading profits. This is not
7:03just a theory of what I think might work well in the market. This is all based on what I actually
7:07know to work well in the market. It's data from over $22 million of trading profit. And this is
7:13as of today. I just exported this um just this morning so I could have this updated. Now, I also
7:19want to share with you that um I am no stranger to these small account challenges as you already
7:23know. And I'm actually getting ready to begin a brand new challenge. And every time I do these
7:28small account challenges, I also couple them with a fundraiser. And so for this challenge, every
7:35dollar that I make will get donated to charity. However, I will give you guys the opportunity to
7:42help me double that donation. So, in addition to me donating all of the trading profit that I make,
7:48I'm also going to offer a double. So, I'll go ahead and double whatever I make in trading.
7:53And the way you guys can unlock that double or that match is every time you hit the thumbs up
7:59on the episodes in this series, I'll add an extra dollar to how much I'm donating. So, right now,
8:05you guys by hitting the thumbs up can add a dollar to our fundraiser for charity. We've already
8:10raised over $200,000 right here, which brings our total fundraising to just shy of $2 million. But
8:16this is just from the last uh couple of challenges that I've been doing. So, every time I do these
8:21challenges, it's an opportunity to raise awareness and uh raise money for good causes. And so these
8:26are some of the charities I've been donating to during this last round. Primarily, as you can see,
8:30children's hospitals um and um humane societies and things like that. Okay, so let's go ahead and
8:37jump right into the alpha phase. So alpha phase is when you are practicing in a simulator. Practicing
8:45in a simulator is critical before you ever put real money on the line. Now, it doesn't matter
8:50if you use our simulator that we've built here at Warrior Trading or you use a different simulator.
8:55This is our simulator right here. And this gives you the chance to pull up a stock, whatever it is.
9:00And you can see the market data, which I'm going to walk you through um what all these numbers mean
9:05during today's session. You can see the charts, you can see the news headlines, and you can
9:10actually go ahead and you click the the price, you can click the buy button, and boom, you're going
9:14to execute a trade, and you're in. And now you decide you want to get out. You click down here,
9:19you click sell, and you're back out. So, this was a break even trade. I was in, I was out,
9:23I was break even. But every single time you take a trade in the simulator, we're aggregating your
9:30data. So, you can go at the end of the day or the end of the week or the end of the month, whatever
9:34the case might be that you like to do, and you can review all of your metrics. And this is very
9:38important because you should never trade with real money until you've first proven you could
9:42be profitable in a simulator. All right. So, phase one is trading in the simulator. That's the first
9:50step. By trading in the simulator, you're going to gain a ton of experience. And this is how you
9:55begin to build your educated intuition. There's a process of converting knowledge into skill. Just
10:04because you read a book about skydiving doesn't mean you should jump out of a plane. You've got
10:08to practice. Just because you've watched a a workshop or a class like this on day trading
10:12doesn't mean you're ready to trade with real money. You've got to do some time, pay your dues,
10:16and and do some time in a simulator practicing. So, I encourage you guys to start right away. And
10:21during your time in a simulator, alpha phase is all about gaining lots of experience. It's
10:26about taking as many trades as possible. Most days there are enough stocks experiencing some
10:32degree of volatility throughout the entire day to give you the opportunity to put time in studying
10:38the level two, getting in, getting out, studying the tape, getting better at reading when there's
10:43hidden buyers, hidden sellers, looking at chart patterns, and getting into all of the technicals
10:49that make up the the the skills that you need to learn in order to be a successful trader.
10:55So, we're going to begin this class with a reminder to always trade in a simulator before
10:59putting real money on the line. Part two, risk management. You know, trading is risky. You've
11:04heard it from me a million times. I'm going to say it again. How do we minimize our risk? It
11:10first requires understanding that for most traders, what most traders do is they come
11:16into the market and initially they first put money into the market and they lose it because
11:22they do not have a strategy. They don't have a system and they don't have a set of rules. So,
11:26they're really just shooting from the hip. They throw that money into the market and that creates,
11:30as you would imagine, a poor track record. So, you begin with a poor track record. What does that
11:36lead to? That leads to poor self-confidence. That then leads to increased pressure, desperation,
11:42and reckless trading because now you feel a sense of loss and you want to make back that money.
11:48And so again, even though the logical response to the loss would be to stop doing what you're doing,
11:56most people try to muscle through it. They say, "I'm going to get to the other side of this.
12:00I just have to stick with it." And they end up taking more trades, increasing their risk in an
12:05attempt to recoup previous losses, and that just further accelerates the poor track record. And
12:10what that ends up doing is creating a downward spiral. I don't want you to go on a downward
12:14spiral. I want you to go on an upward spiral. So the first element of risk management is trading
12:21a quality stocks. Making sure you're trading the right stocks is the most important thing because
12:28when you're trading the wrong stocks, that's when you get yourself into trouble. So what are the
12:32right stocks? We're going to talk about that in a moment with stock selection. But before we do,
12:36I'll just show you today ENVB, WLDDS, those are two stocks I made the most on today. And look at
12:42this. These two stocks right here are the top gainers in the entire US equities market today
12:50combined. 200 million shares of volume up 129% up 90%. Both of them have breaking news. So these
12:59were the right stocks to trade. The most important thing is you're trading the right stock. Getting
13:04into the exact entry point and the exact ent exit point. We'll get there. But first things first,
13:10you want to make sure you're managing your risk by trading the right stocks. Because when you trade
13:14the wrong stocks, what ends up happening is you subject yourself to unnecessary losses. You're
13:21taking risk, as we all do whenever we trade, but you never really stood to gain that much. When
13:26you trade an Aquality stock, you're trading the type of stock that has the potential to go up 30,
13:3240, 50%, maybe even 100% within the next 10, 15 minutes. So if you're risking 5% to make 50% we
13:41would consider that to be a good riskto-reward ratio. That's the way I think about trading and
13:46that's the way everyone should think about it is risk and reward. So if you are risking $1 to make
13:56$1, how often do you have to be right to break even? 50% of the time. Right? Now, if you risk
14:02$2 to make only $1, you would have to be right 66% of the time just to break even. On the other hand,
14:10if you risk $1 to make $2, you only need to be right 33% of the time in order to break even. Now,
14:19I would say that's setting the bar pretty low. You could be wrong nearly 70% of the time and
14:24you'd still be a break even trader. Isn't that Isn't that exactly what you want to do? You want
14:29to set the bar so low that it's easier for you to be successful. That's what lo That's what
14:35the logic would tell us. So now, if we pull my metrics back up here, let's just take a
14:39look at where I'm performing. I'm at about 68.5% accuracy. And this is on over 33,000 trades that
14:47span more than a decade. What's my average profit loss ratio? As of this 10 plus year period, my
14:55average winners are about $1,600. And my average losers are about $1,400, which gives me, you know,
15:02a slightly better than one:1 profit to loss ratio. Now, if we looked at just the last year,
15:08we just look at last year for instance, last year was a $6.5 million year with 71% accuracy,
15:15as you can see right here. And the average winners were 3500, and the average losers were only 2,000,
15:20which was getting closer to a 2:1 profit to loss ratio. One of the things I'll tell you is that
15:25when the market is stronger and we're in a bullish market, the winners become bigger and accuracy
15:31becomes bigger. But when you're in a cooler market, obviously the losers become a little bit
15:36bigger, accuracy declines. And so it averages out over the span of 5 10 years, so on and so forth.
15:43So what's really important to take away here is that if you think first about risk, how much am
15:50I risking on this trade? and then asking myself, can I double whatever I'm risking? That you're
15:56you're then by doing that positioning the trade in a structural way where you're setting yourself up
16:02statistically to succeed as long as you're trading the right stock. This is very important. This
16:10is where you want to be. Now, even if you don't end up here, even if you don't average two times
16:16whatever you you were risking, if that was at least a reasonable target, it justifies taking the
16:21trade. And that's what's important. And so, a lot of beginner traders when you begin trading, and I
16:27was no different, you don't even think about that. You're not thinking about profit to loss ratio.
16:30you're not think we don't think in those terms which again is a reminder that our our sort of uh
16:37default instinct of the way we think about trading is not aligned for uh what is required in order to
16:43have success. So getting into a positive feedback loop means you begin first with and we'll just go
16:51back to this previous slide here real quick. So we we begin first with high accuracy focusing on
16:56trading aquality stocks. By trading high quality stocks will invariably have a better average
17:01winner versus average loser ratio, also called the profit to loss ratio. And that's going to then
17:07breed higher levels of consistency. When you've got high accuracy, a better profit loss ratio,
17:12and consistency, that's going to create a strong track record, which creates self-confidence. Now,
17:18that self-confidence is going to increase profitability because now you could justify taking
17:24larger positions on every trade you take. When you look at my metrics right now and you see that I'm
17:30obviously doing quite well over long periods of time, you probably say, "Ross, why why don't you
17:35increase your share size? Why don't you increase it by, you know, 10%, 20%, 50%." And the truth is,
17:41I do. That's exactly what I do. I continue to gradually increase share size. Now, you can't
17:46increase your share size 10 times overnight. You don't know how the market will respond,
17:50if your strategy will still be sustainable and profitable at those highly elevated levels.
17:55Will you be able to get in and out as quickly? So on so forth. And so you just continue to sort of
18:00gently push at the edge of your comfort zone to increase your share size and therefore increase
18:05your profitability. Which is why last year was my most profitable year to date. I'm increasing
18:10profitability as I get further and further into my career. But this can begin even as a brand
18:16new trader. You focus on trading the right stocks, building a strong track record, and
18:21you do all of this before you ever put real money on the line. Now, let's talk about number three,
18:27stock selection. So, stock selection. How do you choose the strongest stocks each day? This is very
18:34simple. I don't want to over complicate it for you and I don't need to because I simply look at the
18:40leading gainers in the market this day. GLTO MOVE, those two stocks were the leading gainers. So,
18:47you better bet those are the stocks I was trading today. The leading gainers are, as you could see,
18:52what was it? Um, ENVB, ENVB right here, and WLDDS. These were the leading gainers. Therefore, those
18:58are the stocks I'm trading now. ARTL and JTI, those are other stocks I traded. At the time, they
19:05were a leading gainer. They were looking good. And then at a certain point, they rolled over,
19:09momentum changed. And so, some stocks will sustain that first position placed for a long time, the
19:14whole day perhaps. others will be in first place and then there's a shift in momentum as traders
19:20move away from that stock as perhaps another stock comes out with news and attention shifts
19:25and that's very common but there's a theme a common denominator if we look at all of my biggest
19:31winners and the first is that I make the most money on stocks that have five times higher volume
19:38on the day that I'm trading it than their 50-day average. So, why would a stock have five times
19:47more volume today than what it averages? Well, we can look back to this example right here. We've
19:53got ENVB. ENVB today right now is actually trading 1,931 times higher volume today than its average
20:02currently. Right now, it has a 121 million shares of volume and yesterday it had only 1 million and
20:09a week ago it had 10,000 20,000 shares of volume. So this stock basically went from having no volume
20:15for all of this period of time right here. I mean I could actually measure the volume. So during all
20:20of these days it had a combined volume. This is over the course of um 76 days. It had 3 million
20:26shares of volume over 76 days. And then today so 76 divided by 3 million whatever that is. And then
20:32today it has 120 million shares of volume. It's because it had breaking news. The breaking news
20:38catalyst is what brought in the volume. And so when we recognize that I do the best on stocks
20:44that have five times above average volume, we realize pretty quickly that stocks don't have
20:50that type of volume for no reason at all. They have it typically because there is breaking news.
20:56But from a technical perspective, if I'm looking for a stock to trade, I can pretty concretely rule
21:03out that if it doesn't have at least five times above average volume, it's not worth touching. And
21:08then second is I do better when the stocks also have high total volume today. High total volume
21:15means that there's millions of shares of volume, which means it's easier to get in and easier to
21:20get out. It's very liquid. So more volume means you can take bigger positions. Bigger positions
21:25means you can make more money. So it makes sense. I would do better on a stock that has millions of
21:29shares of volume versus a stock that has only hundreds of thousands of shares of volume.
21:34Then I do the best when I'm focusing on stocks that are gapping up. A gap is when a stock moves
21:40up during the overnight or afterhour pre-market trading session before the official market open
21:46at 9:30. And so gapping up essentially is another confirmation that the stock had some sort of news
21:53that was occurring overnight. So why would a stock gap up on five times above average volume? It's
21:59because of breaking news. So, I'm a volatility trader and I'm a discretionary trader. I trade
22:06myself. I don't use an algorithm to trade. I don't have robo trading or anything like that.
22:10I manually choose when to buy and when to sell. And I do it based on searching for volatility,
22:15which is the result of stocks with breaking news. I also do the best on stocks between
22:22$2 and $20. And within that range, stocks between five and 10 are actually my, you know,
22:28ultimate sweet spot. as you can see right here representing um you know a considerable chunk
22:34of the total profit. But between 2 and 20 is really where I do the best. Now the reasoning
22:40here is that stocks between 2 and 20 offer larger percentage returns for account growth. And so if
22:49I'm trading in a $2,000 account, I could buy a th000 shares of a stock at $2. If that stock
22:55goes from $2 to 250 to three, all of a sudden I could double my account potentially in one
23:00day or at least grow it by 40 or 50%. You simply cannot do that trading stocks like Tesla, Nvidia,
23:07or any large cap company unless you're trading options. But of course, the risk with trading
23:13options is that as a derivative, they have the risk of expiring worthless based on the movement
23:18of the underlying asset. And a lot of beginner traders and even more seasoned traders really
23:24struggle with options trading because of all of the factors um that that are used to determine the
23:31premium and that you can actually be directionally correct. The stock can go the direction you wanted
23:36um and you can lose money because of time decay or because of volatility decay. And so while some
23:43traders may get into options, what I've always found to be more consistent for small account
23:47growth is trading outright stock on lowerpriced securities. So between two and 20 is really the
23:55sweet spot. And no doubt for the next small account challenge, I'll be focusing in this
23:58area. Now, everything I've shared with you so far um is is helpful insight into the type of
24:05stocks I make the most money on. But there's another criteria which is very important,
24:10perhaps the most important, and that is the float. The float is the number of shares available to
24:15trade. And stocks with floats of under 10 million shares make bigger percentage returns than stocks
24:21with larger shares that are outstanding. Float is the number of shares available to trade. And
24:26so when a company has a float of 5 million shares, that means that's the total number of shares that
24:32have been released on the open market. So, if the stock is up, let's say for example,
24:36let's just use a a large cap company. We'll pull up a chart for uh Bank of America here. So,
24:42Bank of America right here has a float of 7.1 billion shares. That's how many shares they had
24:49to sell to investors on the open market to raise enough money to provide capital for the bank,
24:54including buying all of the real estate, opening all of the branches, all the equipment, plus
24:59having the money on their balance sheet. So, if Bank of America went up, let's say 50% in one day,
25:08how many of these 7 billion shareholders would want to sell? How many of those 7 billion shares
25:15would be up for sale because the stock is up 50%. Let's let's say le let's just say a quarter of
25:22them. So, you've got, you know, a little less than two million two billion shares that are for sale.
25:27Well, has this stock ever traded on even one billion shares of volume? And the highest
25:33volume day that we have here just in the last five years is about 200 million shares. That's
25:39the highest volume day ever. So, what that means is that if the stock somehow was up that much,
25:46there would be far more selling than there was buying because all of these people want to lock
25:50up their profit. And so it would in fact prevent the stock from ever going up even close to 50%.
25:57Because even as it started to get up to 5% and 8% and 10% and 15 and 20, you would have new sellers
26:02that are coming out to get pro to take profit take profit take profit. Now on the other hand,
26:07when we have a stock like ENVB, ENVB has a total float of 1.8 million shares. So there were 1.8
26:168 million shares yesterday that were owning the stock and whatever and today they're up 150%. So
26:23if all of them want to sell and cash out because the stock going up 150% overnight is phenomenal,
26:30would they be able to do it without crushing the price? And the answer is yes. Because there are
26:37so many people that are interested in buying this. Total volume today, as we can see, is actually in
26:43excess of a 100 million shares. Now, you might say, how could there only be 2 million shares
26:49rounding up available, but 100 million shares of buying and selling? And that's because of trading.
26:54You buy from someone who's selling, you then sell to someone who's buying, and it's just this frenzy
26:58trading back and forth, back and forth, back and forth. So, people are just trading the same shares
27:02back and forth. one person's getting out, taking profit, and another person's buying their shares,
27:07looking for the next leg up, and then the price goes higher, and then they sell to someone who,
27:12you know, thinks it's going to go even higher yet. And so, it's just this constant cycling of shares.
27:16But you need that cycling of shares to allow people who may have been holding it from the
27:21day before to get out with profit. And so, this introduces the concept of float rotation. the
27:28number of times that the float has rotated will help us understand whether or not all of those
27:32insiders could sell. And so in this case, we've got float rotation of 60. The float is rolled over
27:3860 times in terms of the amount of volume, total volume and the float. And so that means that right
27:46now the stock is still up 130%. And everyone and anyone who wanted to sell has already sold and
27:52it's still holding up. And that's a really good thing. that couldn't happen with Bank of America
27:57because there there just really could never be enough volume on it that everyone who wants to
28:02sell could sell. And so, as a result, Bank of America is a low volatility stock, which makes
28:09it excellent for long-term investing. It makes it excellent for pension funds and and mutual funds.
28:15It does not make it excellent for day trading. So, for day trading, we seek volatility. We need that
28:22range. And that means by default we're looking at stocks with lower floats. So look at all of the
28:28floats on this day right here. None of them are more than 20 million shares. These are the leading
28:33gainers in the entire market. So this is a common denominator of these leading gainers. So stocks
28:39need high relative volume. We have a criteria for volume right here which is the stock for me
28:44to trade should already be up 30% on the day. It should have a breaking news headline. The price
28:49ideally should be between five and 10 for like the real sweet spot with five times relative volume.
28:54It should be a hot sector. What what is hot changes from time to time. So whether it's crypto,
28:59biotech, or AI, whatever is the current hot theme. And the the the time of day when we see
29:04the heightened demand is between 7 a.m. and 10 a.m. This is an overlap between US trading and
29:09European trading when both US and European traders are able to participate in the New York market
29:16open. So even though this is quite early, it's Eastern Standard Time for uh West Coast traders,
29:21they do get up in order to capitalize on this early morning volatility and it's later in the
29:26day in uh in Europe, but they are still of course awake because it's only in the afternoon um really
29:31at 1:00 in the afternoon and so they're trading um the the same time. So we have an overlap of time
29:37zones which increases the number of participants in the market. So when you have all of this demand
29:43corresponding with a very limited level of supply, that is when we see these really big moves. That's
29:51when things get exciting. And here's an example right here. MLGO 432% on the day with 300 million
29:59shares of volume. Yes, absolutely. I would trade this every single day I see it. So to break down
30:06my five pillars of stock selection, it's the stock at a minimum should be up 10%, five times relative
30:13volume, breaking news, between two and 20, and less than 10 million shares. We can in we can
30:18tighten up those filters a little bit by boosting up the percentage return, boosting up the relative
30:23volume or dialing in the price to get into a really sweet spot. But if you make it too dialed
30:28in, then you might run out of opportunities. So, by the way, everything that I'm sharing with you
30:33right now, you could download and it's in the my PDF. So, I have these PDFs I've put together as
30:38worksheets that accompany these classes and are also available for members of Warrior Trading.
30:43But those of you guys tuning in on YouTube, you're welcome to download these. They will be a resource
30:47that you can utilize in your own trading starting right now. And it it prevents you from having
30:52to memorize or take notes on everything that I'm walking you through right here. So now let's go to
30:58number four. Understanding candlesticks. So what we've talked about so far is trading a simulator,
31:03understanding risk management and stock selection. Candlesticks are the universal language of the
31:09financial markets. We utilize candlestick charts to give us context around price action
31:15to understand if the price is strong or if it's weak relative to where it's been. If you say,
31:20"Hey Ross, the stock's $5. I don't know if that's good or bad. I don't know where the stock has
31:24been." So candlesticks give us the context. So I'm going to give you a quick lesson on decoding
31:30candlestick shapes. Every candlestick is made with four pieces of information. Every candlestick
31:35represents a period of time. The period of time is based on the candlestick chart. And so if I pull
31:41up this chart right here, I actually have four charts of the same stock. This is a daily chart,
31:47which means every single one of these candlesticks represents a day of time. Now, this is a stock,
31:52as you can see, has sold off for a long time. But each one of these candlesticks represents one day
31:56of time. So, that's one day of price action. So, the four pieces of information is the open, the
32:03close, which is our current price, the high, and the low. Those are our four pieces of information.
32:09This candle's currently green because it opened low and is closing higher. Now, in this case, the
32:13candle is still forming. Yesterday's candle here opened at the top, closed at the bottom. That was
32:18the low. And the high of day was also uh the open price. So that was a very weak candle. Now this
32:25is a 10-second chart, which means these candles are closing every 10 seconds. They're forming
32:30that quickly. This is a high-speed time frame for people who are very actively trading the markets.
32:37A lot of brokers don't offer 10-second charts because they use too much bandwidth. Uh we do
32:43offer them for our simulator and for our members at Warrior Trading, so you can utilize them. and
32:47I use them in my own trading. This is a one minute chart, meaning each candle represents one minute
32:52of time. And this is a five minute chart, meaning each candle represents five minutes of time. So,
32:58we've got the open, we've got the close, we've got the high, and we've got the low. Those are our
33:02four pieces of information that every candlestick communicates. This is the open and the low and the
33:09close and the low and the high. So red opens at the top and closes at the bottom whereas green
33:14opens at the bottom and closes at the top. So we do need our our candlesticks um differentiated
33:21as being red or green. Historically in the age of black and white, you know, everything uh a green
33:27candle was white, it was hollow, and a red candle was uh black and was solid filled. So now you know
33:35the anatomy of an individual candlestick. Let's go over a few candlestick shapes.
33:39The long body candle is a candle that has a very long body and a short body candle is a candle that
33:44has a very short body. So a longbody candle being very tall is very bullish. It can it communicates
33:52very strong sentiment. Traders are very euphoric. They're very enthusiastic. There's a lot of greed.
33:58Maybe there's fear of missing out. People are being very aggressive buying up the stock.
34:03So if I see a stock and it's moving higher and I see a candle, let's say that's a long body candle
34:11like that, I understand the communication there is that this is strong. So the next candle then adds
34:17context and the previous one adds context. If the previous candle was smaller like this, then what
34:24this is showing is that it's gaining momentum, right? If the next candle's bigger, the momentum
34:30is continuing and the previous one's smaller than that. Or if the next candle starts to get smaller,
34:35then we're kind of running out of momentum. We're cooling off. So, you can see based on the shape
34:40of the candle whether momentum is building or it's waning. The areas that I pay the closest attention
34:46are when I think the trend is about to shift from moving higher to moving lower. So, then it slows
34:54down right down here. and we might think, uhoh, the trend is getting ready to shift again. And so,
35:00we're looking for that first green candle and then a rally back up. Now, that's a very big swing,
35:05but you get the idea that the areas I focus are where the trend is about to change. The quicker
35:10you are at identifying changes in trend, the more money you'll make. You'll be buying before the
35:15trend changes or right as it changes from down to up, and you'll be selling just before it changes
35:20from up back to down. And what you'll find is that most stocks trade in sort of these waves
35:26where they move up and down and up and down. And so you get many opportunities throughout the day
35:31to time these entries and exits right around the pivots in price. So long body candles are
35:37very bullish and smaller body candles or short body candles are a little bit more bearish,
35:42communicating a bit weaker sentiment. We then have dogee candlesticks. A dogee candlestick
35:48is defined by a candle that opens and closes at nearly the same price as these ones that
35:53are circled do. So open and closing at the same price, which is giving us that flat line. Opening,
35:59closing at the same price right here. Opening and closing at the same price right here. But in this
36:04case right here, this is called a gravestone dogee. And it's called that because while
36:09the price opened and closed at the same spot, it pushed higher and then dropped back down. That's
36:15ominous. It's bad. What it means is that while the stock squeezed up, the sellers pulled the price
36:21back down and ended up closing flat. Whereas down here, the Dragonfly Dogee, Dragonflyy's uh lifting
36:27off is bullish because although the price sold off at the bottom of this candle wick, it rallied
36:32back up and closed at the top. Now, this one here opened and closed at the same price, but popped
36:37up and and dropped back down, which communicates indecision. So if we are looking for a potential
36:43change in trend, these would be great indicators to be searching for looking for these dogeis
36:49because they communicate indecision. If a stock is indecisive after having just made a big move
36:55up or a big move down, then that indecisiveness could be the beginning of a change in trend. A
37:01spinning top candle is similarly indecisive. There's a small body, but there's an upper
37:07candle wick and a lower candle wick. The hammer candle is present at the bottom of a sell-off.
37:12You have the lower candle wick right here, which is bullish because while the price sold off, the
37:18buyers came in and rallied it back up. And then this little small body takes the form visually of
37:24almost like a mallet. And so we say it's hammering out the base. So a hammer here is bullish. Now,
37:31in this case, an inverted hammer after a big squeeze up is considered bearish because you've
37:38got that big topping tail candle and then you've got the drop back down and you've got this small
37:42little body right here. Shooting stars come back down to earth. So, this is indicating a
37:47possible change in trend. Now, the shooting star could be green or it could be red. If it's red,
37:52it indicates the reversal has already begun and then it's confirmed that it continues as those
37:56next candles drop further. This is a tweezer top. two topping tails back to back. This is bearish.
38:03These tweezer tops typically mean that this is the top. There's resistance and the price cannot
38:08go higher. Whereas a tweezer bottom represents support and the price is holding that level for
38:13reversal back up. So what you're learning here are the building blocks. Individual candlesticks
38:19are letters of the alphabet and they combine to form words. And those words are buy or sell.
38:27That's how I interpret them. So the individual candlesticks combine to form multicandlestick
38:33chart patterns. And those multi-candlestick chart patterns are what we teach and I go over in depth
38:38for members at Warrior Trading. Now I want to share with you so you can walk away today
38:43with one multi-candlestick pattern that you can begin trading. I want to share with you one of my
38:48favorites. This simple pattern is something that I trade almost every single day and it and it's so
38:57logical when you think about it. So, first we have a stock squeezing up very quickly. So, how do we
39:03find it? We'll find the stock squeezing up on the scanners. So, in this case, UPXI hits my scanners
39:10right here. And these are the same scanners. This is um a high of day momentum scanner. And so what
39:15it's doing is it's searching the entire market in real time for stocks that are moving higher. You
39:20set your audio alerts on it and then you'll get a ding through your speakers on your computer and
39:25you'll hear ding ding ding. We've got something moving. So when I see something moving like this,
39:30I click the stock. I pull up the chart and I look for the pattern. So what's the pattern?
39:35I let it squeeze up and I wait for a pullback. I let it dip. And now what I'm looking for is
39:41a change in trend. So, sometimes we'll have a a dogee here. Sometimes we'll have a hammer,
39:47a bottoming tail. Other times we just have a small little red candle, a short body candle,
39:52and then the next candle we're looking to go green. So, right here, as that candle goes green,
39:56the change in trend has occurred. So, what is the moment that the change occurred? The
40:03moment is when this green candle broke the high of this candle right here. That's the moment the
40:10change occurred. And so that's the moment that I buy. What's my max loss on this trade? My max
40:15loss becomes the low of the pullback. So now I'm risking 1x for max loss and profit target
40:21has to be 2x, right? To justify the 2:1 profit loss ratio. And that would give me a target of
40:26back to the high a day. Now retesting high a day is a logical target. Usually stocks will retest
40:31the high a day and then they'll push a little bit higher before then giving another pullback which
40:36presents yet another opportunity to take another trade. And that's the beginning of these waves
40:41that we see in the market. So, I'm going to give you a little pop quiz here. All right. So, we're
40:46going to look at the actual chart. Now, you've seen the green candle squeezing up, the little
40:51pullback. And what we're looking for is that first candle to make a new high. So, would you be a
40:55buyer right here if that next candle goes green? I hope the answer was yes. You can see right there,
41:00that was the apex, the moment that candle made a new high, and then we squeezed all the way back to
41:05a new high of day. And that's a simple base hit. jumping in, jumping out, and taking profit. Now,
41:11I do have specific exit indicators that I rely on which tell me when to get out. So,
41:15I don't sell too soon, and so I also don't hold too long. But, uh, the entry is arguably more
41:22important so you're not chasing. You've got to make sure you've got a good entry. So, we focus
41:26on entries first. What about this one? We've got all these green candles in a row. We wait
41:31for a pullback. Now, we have that bottoming tail. Not quite a hammer, but almost. We're looking for
41:36first candle to make a new high right there and then a retest a high a day. This one goes even
41:40higher. That's great. That's an entry at about 370 and a squeeze all the way up to over $4.70
41:46right up here. That's phenomenal. It's a dollar a share. That's a great risk-to-reward ratio. Now,
41:51what about this right here? Okay, so in this case, this is a little bit different. We already had a
41:57pop. We had a pullback right here, which was good. That was fine. But now we have a little bit higher
42:03selling. These are bigger red candles. Notice the volume profile. We're seeing more selling. The
42:09problem when you start to see high volume selling coming in is that these stocks often unwind. So,
42:14the amount of volume on any given candle helps communicate whether these are going to go up or
42:19go down. One of the things that you guys have the benefit of is that for members at least at Warrior
42:24Trading, you can listen to my real-time market commentary as I'm trading. You get to see my
42:28positions window. You get to see as I'm getting in and getting out of trades. And so you get to hear
42:33me share with you my interpretation of the price action and call out things like, "Hey, we've got
42:39higher volume selling right here." Now, I might be wrong. I'm not right on everything, but it seems
42:44to me that it makes a lot of sense to listen to someone with real money on the line who's been
42:48trading for a long time, especially as a beginner versus trying to just figure this all out yourself
42:52because it's so easy to miss one of these little subtle indicators. So, is this an entry right down
42:59here? The answer is no. There is no setup here. The stock had setups earlier in this area, but now
43:05it's just going sideways. There's no trades there. This one, what about this? Well, unfortunately,
43:12you might say it looks good, but this indicator right down here shows us that the blue line has
43:16gone below the orange. That's a negative MACD, which is a divergence. We don't like that. This
43:21is a no trade. And boom, that's a no trade. It doesn't work. What about this one? Higher volume
43:26selling. Once again, that's a problem. So, we look at the volume profile. What about this one? Now,
43:31this is okay. High volume building. Yes, you've got a red candle here, but but in total,
43:36the buying volume is much stronger. Our MACD is positive. And this is a good entry spot. Boom.
43:41That's a nice squeeze higher. And so, it once you start using your technical indicators, once you
43:47start recognizing these buy and sell signals, it's very quick to eliminate setups that just aren't
43:51going to work, and you don't trade them. What about this one? Now, this looks pretty good to
43:55me. That's a nice squeeze. Yes. You have a little higher volume on the top candle, but nice little
44:01pullback. We stayed positive on the MACD, higher volume on these green candles, which is good.
44:05Volume comes back in. We break through the high. This is another one right here. Higher volume now.
44:10Little pullback. MACD is still open. We push a little bit higher and then we kind of stall
44:14out up here. Then the MACD goes negative. Higher volume coming in. And this becomes a little bit
44:18choppier. You might not end up taking that trade right there. Right there because of this initial
44:22move. So, I usually find that I do the very best at the beginning of a move. and I don't want to
44:27overstay my welcome. Now, in order to trade, I have to execute my orders using market data
44:33and level two. So, when you pull up your trading software, and this is one of the platforms that
44:38I use, but you could also see um our simulator right up here. When you pull up this software,
44:44um you actually see all of these numbers. This is market data, and this is communicating to us all
44:49of the buyers on the left and all of the sellers on the right. The bid is what people are bidding
44:54to buy. The ask is what people are asking to sell. And because these people are selling at 439,
45:00you could buy from them right now. You click 437, whatever. You click buy and those shares are
45:05yours. If you want to get out, let's say at 437, 438. I put my sell order at 437. And now I've got
45:12to wait for the price to go up. I've got to wait for someone to come and buy my shares at 437. So,
45:19I could wait and wait and wait. And I might be okay doing that, especially if I'm already up
45:23on the position. Or if I decide, you know what, I think I should just get out. What I could also do
45:28is I could sell at any time to one of these buyers right here. And so in this market, you can buy the
45:34moment you want to and you can sell the moment you want to to any one of the buyers or sellers
45:38that are right here sitting on the book. Now, some of the buyers and sellers on the book are market
45:43makers. They make the market through arbitrage. So they're always buying from someone who sells and
45:49they're always selling to someone who wants to buy and they profit from the spread. So essentially
45:54some market maker institution bank with very deep pockets just sits there providing some degree of
45:59liquidity all day long. So now as it comes back up to 37 38. There we go. There's 39. I put my
46:05order at 39. Let the price go up and my order got filled and I'm out. Let's see. I got filled at 30
46:1138 I guess it was. So I'm out with profit and that's good. Now this is an important concept.
46:20Whenever you're trading, you're buying from someone who's selling. Whenever you're selling,
46:23you're selling from someone who's buying. And so, we're actively participating in this market. So,
46:28what if we pull up a stock, we look at this level two data, it's called level two data,
46:32and we saw that there was a 100,000 share buyer. That tells us that there's someone out there that
46:37wants to buy a lot of shares. That's very bullish. That's a positive thing. What if we see there's
46:42a 100,000 share seller? Well, that's a weakness. And so using the market data in combination with
46:48our charts and indicators, we now can form a very strong bias or well I don't want to say a bias,
46:55a thesis of what we think the stock is going to do. And so that gives me confidence in taking my
47:02trades. So I execute my orders using level two market data. And what's very important is that
47:08whenever I'm trading, I am using hotkeys. So I am empowering um I I am empowered through my keyboard
47:17to execute these orders very quickly. So if we go back to here, if I press shift one, it'll buy a
47:22thousand shares. So shift one, I'm in. And then control Z, I'm out. And just like that, I can
47:28buy and I can sell and I can buy and I could sell and I could do that all day long. Now, of course,
47:34if you just buy and sell like that, as you could see, you're not really making money. The price has
47:38to be going up. But what you want is software that allows you to get in and out that quickly. Now,
47:43uh I do have a list of brokers that I'm a big fan of that I think are phenomenal and have great
47:48software and a list of brokers that I would never use. So, I have other episodes here on YouTube
47:54where I rank the best brokers and the fastest brokers, which you guys could check out. But,
47:58um all that is to say, not all brokers are created equally. Is you want to make sure that when you're
48:03first practicing, of course, you're using a simulator. Some brokers don't offer simulators
48:08because they don't make money when you're trading a simulator. They just want you to use real money.
48:12So, unfortunately, most simulators you might have to pay for a little bit just to cover the market
48:17data cost, but you want to make sure when you're trading that you've got software that allows you
48:22to get in and out quickly. The last thing that you want to have happen is have a stock pop up
48:2740 or 50 cents a share and you can't sell and take profit because you're fumbling with your keyboard
48:34to point and click and enter the correct price and the correct numbers and your fingers are too
48:40fat and you can't press the buttons right and then finally h now the price is down and you miss the
48:45whole move. It used to happen to me all the time until I learned that there's brokers out there
48:49that are better. And lo and behold, that's what a lot of the more successful traders are using,
48:54better brokers. You use better tools. And so, it's important to match the tools for the type
48:58of trading you're trying to do. Number seven, you've got to understand your metrics before you
49:02ever trade with real money. And what that means is reviewing your performance. Your performance
49:07by day of the week, your performance by time of the day, your performance by the price. So,
49:11we aggregate all of the data for you guys. So you can look, for those of you guys who are trading in
49:16our simulator at least, so you can see how you're performing. If you're not using our simulator,
49:22you can still upload your metrics to a third-party um uh uh platform. I use Trader View. This is the
49:29platform that I've been using now for more than a decade. So all of my trades in Trader View
49:35um I mean, I've just I've I've been thrilled with the platform. It's been really solid. I don't have
49:39any affiliate relationship with them, so it makes really no difference to me one way or the other
49:44what you might choose to use. Um, but it it's been really good. And what I like about it is the way
49:50you can kind of break down your performance. So you can go into a detailed report and you
49:55can look at your profitability based on, you know, based on time of day, based on, of course,
50:00the price and the volume. So you see, oh, I make the most on this price range, right? That's good
50:05to know based on, you know, all of these details. And as I go through them, I recognize the stocks I
50:11make the most money on. Well, what do these stocks have in common? What's the sector? You start to
50:16develop a connection of you start to see patterns. And picking up on patterns is critical to success
50:22in the market. You recognize a pattern of this is where I make the most money, you want to lean
50:26into that. You recognize a pattern of this is where I'm struggling, you want to pull away from
50:30that. And that's ultimately what trading is. It's using your metrics to make informed decisions.
50:37You're not making decisions based on gut, what you think, based just on what you know. Now, part
50:44eight is the beta phase in the sim. Transitioning from a simulator to real money has to be done
50:49carefully. And so, your first phase is alpha phase where you're just trading as much as possible.
50:54Getting in, getting out, getting in, getting out. And now we move forward to the beta phase,
50:58which is your dry run for going live. During the beta phase, I encourage traders to focus on just
51:03taking one trade a day. Keeping it really simple. getting in, getting green, getting out. Success
51:08is about keeping it simple. You can make a living trading doing just one trade a day. There's people
51:13that trade hundreds of times a day and they don't make money. Just focus on finding one really good
51:17setup, getting in, getting out, maximizing your buying power on that opportunity, and capitalizing
51:23on it. So the one trade a day challenge for uh for the beta phase is focusing on stocks that
51:30meet all five pillars of stock selection. Looking for one of the entries such as the first pullback
51:35which I already shared with you and getting in at that apex and then not selling until you see a
51:41valid exit indicator. During this first 10 days of taking one trade a day, by the end of it, you will
51:48know whether your accuracy very very simply is greater than 60%. You want it to be greater than
51:5460% and you want to be profitable. If you are, you then replicate that same first 10 days with
52:02real money. Each day you report on your trades using this trade reporting dock and each week
52:08you report on your progress. And as you uh watch your progress, you monitor where you're seeing
52:14improvement and where you're struggling and you make adjustments as needed. So, the decision to go
52:20live and to start trading real money is not taken lightly. You don't do it until you've first proven
52:26you can make money through the beta phase. So, one trade a day. And I've asked members to send over
52:31some of their calendars so I could share them with you. And most traders are really good about this,
52:35taking one, maybe two trades a day. Some take a few more, some take a few less. But I want to see
52:40you have a calendar like this before you go live with real money. The reason is I want you to have
52:47a track record that you can anchor yourself to that is your source of self-confidence that you
52:52know it's worth putting real money on the line because of what you've done in the past. It's so
52:58important. So here's your next step. We have just scratched the surface and there is so much more
53:04to cover. So what I'm going to do is I'm going to put links to a couple other episodes right
53:07here that I think you guys will enjoy. They're a deeper dive. They continue further. There will be
53:11more episodes in this series leading up to my next small account challenge. If you want to watch over
53:16my shoulder during this challenge or any of my upcoming challenges, there will also be a link
53:21for a twoe trial at Warrior Trading, which is 20 bucks. $20 for two weeks watching over my shoulder
53:26going through a selection of classes for my full length Warrior Pro curriculum. You're going to get
53:31a lot out of it. Now, if you found value in this episode, I hope you hit the thumbs up. Remember,
53:36every thumbs up will add an extra dollar to the match for donating money to charity. And so,
53:40I want to thank you guys for participating in this challenge with me. It's really exciting. And stay
53:45tuned for the next episode coming real soon. And a final reminder as always that trading is risky and
53:50my results aren't typical. So, manage your risk by always practicing a simulator before putting
53:55real money on the line. And make sure you check out these episodes right here and right here that
54:00I think you will enjoy for a deeper dive. We've got a lot more to learn. So let's keep studying.