Small Account Trading Challenge Insights

[Music] in today's episode we're going to do a deep dive into the first month of trading in a small account in just 20 individual days I grew the account by over $166,000 of profit 16 times return on my initial deposit that is phenomenal now I'll be the first to remind you that those results are not typical I have more than a decade of full-time trading experience under my belt I do these small account challenges so I can demonstrate to you what it looks like when a seasoned Trader puts themselves under the pressure of trading in a tiny account because let's face it trading in a small account is difficult and the first day the first week and the first month is probably the hardest this is part one of a multi-art series where we will analyze each of the phases of a small account from the first month which we'll discuss today and then we'll talk about making the first $100,000 then making the first million and so on and so forth my name is Cameron I'm a full-time Trader and let's go ahead and jump in by looking at the first day of this small account challenge all right so there it is $25.70 that's day one and that's a great result but I don't want to focus entirely on the result I want to focus on the process that's equally if not more important so what did I need in order to set myself up for success for day one of this small account challenge what is the basic level of information your minimal viable product for day one now for you I would encourage day one to be in a simulator not with real money because all being or Traders will make mistakes so you might as well make the mistakes in a safe environment learn from them before flipping the switch and going live but in any case to get yourself ready for day one what do you need at a minimum I would say at a minimum you need some degree of strategy this is something that so many beginner Traders Overlook me included when I was getting started when I got started I realized the internet and online trading is incredibly accessible you can connect on your phone you can connect on a computer from anywhere in the world and boop boop you can press a couple buttons and you've bought and sold a stock and just like that you can be making or losing tens of thousands of dollars it's incredible and it's a bit of a rush when you do that the first time and you have your first winner because you will realize as many of you already have how quickly you can make money in the market and that's what going to get you hooked that's what got me hooked the fact that I could make more in 10 minutes that I could make in any other job probably in the world that I'm qualified for so for me to get ready for day one I need a strategy I know from my own experience that attacking the market haphazardly shooting from the hip doing a little of this a little of that buying some Nvidia throwing some money on Tesla that is not a recipe for success success comes from traders who have a systematic approach for the stocks they buy the time of day they trade where they get in where they get out so that's what we need to talk about first because that is your minimal viable level of information that you need for day one so for me it begins with the system of knowing which type of stocks to trade ultimately for me I find that stock selection is one of the best ways that I can mitigate risk we know that trading is risky there's no denying that but it is invariably inevitably more risky if you are trading the worst stocks in the market and then therefore it's less risky if you're trading the best stocks in the market but how do we quantify which stocks are good or bad the answer is going to be different for different Traders depending on their strategy so I'll introduce you to my strategy you're going to see clearly in this episode that my strategy produces some exceptional results for me and it does for many of the other Traders in the world that are trading this strategy my strategy isn't like just mine I discovered it through trial and error but then I realized that there are probably millions of other Traders trading pretty much the same way in total I would say there are like three different types of strategies that a Trader could choose from the first is momentum trading and that's the way that I trade a momentum Trader is looking for a stock to buy that is moving up so essentially you're looking for this and a momentum Trader is buying on little pullbacks like this and it's selling up here it's called buy high sell higher now the other strategy so number one is momentum number two is counter Trend so a counter Trend Trader is going to look for stocks that are going down and look to buy them when they curl off the bottom or look for stocks that are going up and it's going to short them coming back down now this is a difficult strategy in my opinion because free beginner Trader it can be very hard to be able to predict when momentum is going to shift and in a sense it's like you're laying down in front of a moving train and hoping it's going to you know turn and and not roll over you I find it's a lot easier to find something that's already moving with momentum and just to hop on that train for a couple of stops I may not get from you know the beginning of the move all the way to the very top but it just feels a lot easier to catch a little bit of momentum and a little bit of profit as something is already moving now the third strategy would be uh range bound and a range bound strategy is something that is not going to be realistic for most Traders with small accounts because you need to use complex options strategies in order to profit from stocks that are in tight ranges like this so I'm not going to spend a lot of time covering that because it's just not relevant probably to anyone who's trading in a small account so when it comes to trading I am a momentum Trader as a momentum Trader or a trend Trader my first objective is to find a stock that has a trend so as you could see on day one making $125 is great and since my account had less than $1,000 in it $125 is a fantastic return from a percentage basis right from that perspective this is really good how am I able to grow the account that quickly in just one day it's because I found an underlying asset stock that was moving up 30 40 50% in one day I needed to find something that was moving very quickly so for my strategy I focus on volatility I say that I'm a Hunter of volatility and I'm a manager of risk I need stocks are moving quickly I don't profit by buying a stock at $3 and selling it at $3 I profit by buying a stock at three and selling it at 360 for a 20% return and if I can do that in 15 minutes I'm going to be thrilled now some of you might think Ross there's no way you're going to find a you know 20% return in 15 minutes that doesn't exist I'll tell you that it does exist it doesn't exist as far as sort of the mainstream media is concerned because when they're talking about stocks they're talking about F meta Facebook whatever feda call it feta um they're talking about Google they're talking about Netflix they're talking about Tesla Nvidia they're talking about these big big companies and they don't go up 20% in one day they never do but there is a sector of the market where we do see that type of volatility and those are called small cap stocks these stocks are lower priced a lot of them have been beaten up for a long time and if they have a news headline that is strong these stocks can bounce off the lows 30 40 50 100% or more in a single day now it's not exactly counter Trend trading as a day trading strategy even though the stock has been selling off on the day that we're trading it it has a tremendous amount of momentum it's moving higher and I may be buying it up here and selling it up here I'm not getting in off the low something that you will never see me do is just buying stocks or going lower or just buying stocks in hopes that maybe they will start to turn around the reason I don't do that is because when I began trading I had a relatively small account and I couldn't afford to tie up money on a stock that maybe would turn around in a few days a few weeks or a few months because that was an opportunity cost so I kept my account in all cash until saw a stock that was moving and then when I saw a stock that was moving I had the available buying power to move into it take a decent sized position if I could capture 15 20% in one day I could pop out of that and I would be good for several days that would be several days of profit for me in one trade so I only needed to do that a couple times a week and a few times a month in order to hit my goals it's about quality not quantity now during my small account challenge I have traded pretty much every day day but for the most part I'm only taking two trades a day there are a couple days I traded more because the market was very strong but on most days I'm being very selective about the stocks I'm looking at I know the type of stock I want to trade I know the type of pattern chart pattern that I'm willing to buy and if I don't see it I'm not going to take a trade so one of the other things that's important for me during a small account challenge is the philosophy of building my cushion I need to build a cushion as quickly as I can when I've got $1,000 or $500 my account is basically one trade away from blowing it up one mistake and the account is gone and I have to start over so I have to take it very seriously when I'm considering pressing the buy button so and I'm looking for a stock to trade I'm not going to be you know willy-nilly jumping in this or that I'm going to be doing my full due diligence and asking myself if this stock really has the potential to make a big move okay so as a momentum Trader we know that that's my strategy so we'll get rid of these ones as a momentum Trader what type of stocks once you know your strategy the strategy is going to dictate the type of stocks you're going to trade so the type of stocks that I'm going to trade generally for a momentum uh based strategy our stocks are up at least 10% today they have to be up at least 10% today because I need something that's volatile if it's not up at least 10% it's just not moving enough now here's something really interesting once a stock is up 10% it has a much higher likelihood of going up to 20% and doubling its gain on the day then a stock that is at zero going to 10 so once a stock has picked up sort of that first little bit of momentum it's so much easier for it to keep going than for a stock that has zero momentum to get started it's really hard for these stocks to get started but once they get started they can move quickly so the reason these stocks are going to be up 10% and the reason these stocks are going to have high uh what I call High relative volume today relative volume by the way is a measure of today's volume relative to what's normal for that that stock so let's say a stock trades on average of 150,000 shares of volume a day and then today has 1.5 million shares of volume if it has 1.5 million shares of volume that's a relative volume ratio well 10 would be 150,000 to 1.5 million so 100 would be 150 all the way to uh 15 million right all of a sudden you've got 100 times relative volume that is huge now why would a stock have 100 times relative volume it's because it's got news it's because there's some type of news catalyst so as a momentum Trader a lot of times I would also characterize myself as a news Trader I trade breaking news I trade I'm a volatility Trader and volatility comes from news now it's true that sometimes we'll have stocks that move higher and they don't have a clear Catalyst that does happen uh just the very fact that the stock started to move higher Traders will be attracted to it and then that sort of becomes a self-fulfilling prophecy where it moves yet again even higher but when there is no clear Catalyst short sellers are more inclined to sell into those moves people who have been holding the stock are more inclined to take profit off the table because there's no real reason for the stock to up so it makes sense to take your profit off the table so for me I prefer to see the stock has news now because I'm trading in a small account I'm going to add some of my own parameters to the momentum strategy I'm going to focus on stocks under $20 a share by focusing on stocks under $20 a share even with a $500,000 account I could still trade I could still trade it well enough now when the account is in those first couple of days I actually put the Restriction even tighter so what I did for the first week is I said I I wasn't going to trade anything that was over $10 a share and I was really focusing on trying to find stocks but less than $5 a share like generally as cheap as I could because then I could buy more shares so here's the thing with these low price stocks it's a lot easier for a stock to go from $1 to $2 and be up 100% then it is for a stock to go from 20 to4 from $20 to $40 that's $20 a share that's a huge move that that can happen but it doesn't happen nearly as often as we see stocks go from a dollar to two so that lower price range is where we're going to see bigger percentage moves and that's what I need to grow my account so I'm fine with trading a stock that's $3 or $4 or $5 and even one that's six or seven that's a little higher I I could work with it it wouldn't be uncommon to see a stock at 7 go from 7 to 750 to 8 or 850 or 9 $2 a share even if I could only buy a 100 shares I could still make1 to $200 on that trade so I can work with that range but for my focus at the beginning of the small account challenge I'm going to be looking for stocks under $20 now when it comes to risk management I know that I need to manage my risk very closely in this challenge so the way I approach it is number one I tell myself breakout or bailout so when I see a stock that meets my criteria it's up 10% it's got high relative volume it's got news it's also priced under 20 and by the way I didn't note this but we'll just add as a um as sort of a bonus here item and we'll just put it over here the stock needs to be oops obvious in other words it should be in the top three uh percent gainers on the day the reason we want to trade stocks that are obvious is because stocks that are obvious are going to be the stocks that pretty much all the momentum Traders are focused on and that means all the volume will be on that stock which means it has better liquidity it'll be easier to get in and easier to get out and the patterns will be respected better you know everyone's going to see the obvious green light when you see it on the chart so that means you're going to get better resolution at that green light when you see a red light on the chart everyone's going to see it you're going to have better resolution on the red light coming back down so the signals that are very clear on the chart they they they work better when more people see them because more people respond to them by actually buying and selling positions the problem with the language of the financial markets and reading technical analysis and stock charts is that when you try to apply it to the wrong stock people are not seeing these buy and sell signals you're what you're almost looking at is a part created by a high frequency trading algorithm I'll show you an example um I'll just show you for example Ford Motor Company Ford Motor Company um is a stock that is traded by high frequency trading algorithms and these highfrequency trading algorithms they make the chart almost look like a barcode this is like it's it's just a reflection of a lot of data it's not actually symbolic or really relevant to be honest so if you looking looking at this chart and trying to find a pattern uh you would be making a mistake there is no pattern here that is created and and will be seen by retail Traders re retail Traders are smart enough to know that this isn't something you would touch SO highfrequency trading algorithms they exist in the market and that's fine but the type of stocks that we want to focus on as momentum Traders are the ones that are volatile are obvious and are moving now and those are actually going to have a much lower degree of highfrequency trading algorithm actively trading them the reason is because those high frequency trading algorithms do not thrive on high volatility they thrive in range-bound markets where they can buy sell Buy sell Buy sell at basically the same price and just profit from What's called the spread between the bid and the offer on stocks that are very volatile there's just too much risk for those market makers so they sort of back away and that's where retail Traders sort of fill in so there's more liquidity in fact but it's created by retail Traders not by high frequency trading algorithms okay so that was an important um not to add when it comes to stock criteria so once I find a stock on my scanner that is obvious that is under 20 then I'm going to be looking at it and I'm looking for a possible position the scanners that I use are you can see them right here um this is a top gainers scanner this window here this is showing me the top percentage gainers in the entire stock market today so s GD up 88% aimd up 80% and these have millions and millions and millions of shares of volume and their relative volume is extremely high high relative volume now the float on both of these stocks is under 10 million shares one thing that you will notice is that stocks that have lower floats are going to tend to be more volatile so I'll actually I'm G to add a couple more lines here so I'm just going to say should have news it needs to be obvious and Float under 10 million shares preferably and then my additional filter is um price under $20 so now we're getting a little bit more detail about the stocks I'm willing to trade now the reason I didn't choose all of these metrics just arbitrarily these were chosen based done looking at my own metrics when I look at my own trading performance it tells me these are the stocks that I make the most money on so I have that historical data that guides my decisions moving forward as a beginner Trader if you've never traded before you don't have your own historical data to base anything on but you can benefit from using the historical data of other Traders right so you can use my historical data and gain insights from that like okay here's someone who's trading this is what they trade this is where they make money so this is a viable strategy I just need to learn it now whether or not you'll have the aptitude the skill and the ability to be profitable with my strategy is another question but it's always better in my opinion for an aspiring Trader to start with a proven strategy and to do everything they can to learn the ins and outs of it than to start from zero because since you have no historical data you're going to just start from zero and start testing the water trial and error that would it would be like trying to reinvent the computer starting just with like you know a a box of screwdrivers and like it just doesn't make sense to do it that way right there's a better starting point okay so when I sit down each morning I'm using this scanner now there are some free scans out there if you go to warriortrading.com daytrading we have a scanner right here that's available it's on delayed data um because we can't give away realtime data for free but this is a delayed dat a scanner that'll show you the stocks that are currently gapping up and it's updating throughout the the trading session so you know there are some tools like that that you could use this is going to show us the same stocks as I see here the only difference is that this is uh in real time so there's no delay whatsoever so when I'm actively trading in the market naturally I want to see things that are moving quickly so I don't don't miss opportunities so my goal first to manage risk on day one of this small account challenge is to find a stock that is in the top three positions right here it's got to be in the top three positions in in other words it's one of the top three leading percentage gappers or gainers on the day and I want to see that it meets all of my criteria it's got to be up 10% have high relative volume have news be obvious have a float of under 10 million shares and be priced under 20 if check check check check check it meets all of these criterias then at that point and only at that point can I begin dissecting the the chart so I do my first level of due diligence without even looking at a stock chart I'm just looking at the technical characteristics of the potential stock once I have done that first level of analysis then from there I pull up the stock chart so I could click on the stock for instance SGD I could pull up the stock chart and I look the way I do it is I look at the five minute chart first sometimes I'll pull up a chart and I'll see that the stock uh squeeze from like this 50 cents to 250 it's back to $150 and I'll think well it's it's really giving back most of its move so n it's not really relevant if I look at it though and it's still holding up then the next place I look is at the daily chart the daily chart is down here and this is showing the Stock's performance over the past well this is showing like 6 months so this is very helpful for me because this gives me context and I start marking out my daily chart what I'm looking for are levels of possible resistance so I see there could be resistance here at about maybe 232 because of the high of this candle and it came up to about the high of those candles there so that's a possible area of resistance um going to the left and up we have this little area here at 514 the high there we have this high and then I always like to Mark out the all-time highs so this stock has an all-time high at 1046 that's not that far away when you think about it and in fact if it breaks over 514 the next resistance looking left and up is at 8:42 and then the next resistance looking left and up is at 10:46 so breaking over 514 would have been really critical for this stock if we wanted to have a chance of getting up to this level there are times where we'll look at a stock and we'll see well geez you know there's just a lot of sort of small areas of resistance on this one and I don't know if any of them are going to be super super sign ific but I look at the high of those candles as being possible areas of resistance so this stock well it seems like it does have some overhead resistance in this area here which it struggled with if at some point it gets over that 514 level though that's when things can get interesting one of the other things I also like to do is I like to analyze the position of the 200 moving average the 200 moving average is right here in purple this is one of the most respected indicators on the the daily chart and if a stock is below it it's almost always going to have resistance at it as you see right here it comes into it runs into it now this pulled back and then it broke through it which is great to see that's fine they can break through it they will always require high volume to break through a critical level like that uh but but when they first are coming up to it it's going to be upside resistance so I would never buy a stock right under the 200 knowing that resistance is right there I I don't want to say never but not I I almost never do something like that there might be an occasion where there's a incredibly strong news headline but not likely so I look at the position of the 200 and then again I look to the left and I look up so on this one uh you'll notice we came up to this level here the high of this candle 796 that was resistance on this particular day and this is not this gives you the ability to further reduce your risk because you can look at these charts and when you see that oh I've got resistance here then you're not going to be the person buying at 796 you're going to thinking well we might have some sell resistance up here so once you learn this language the better you get at it the the more of an edge you will have in your own trading again once it breaks over 796 I had room all the way up to the high here of 1208 above that level has lots of room up to the high of this candle which is a ways away all the way up at $26 so once I've analyzed the daily chart then I'm looking for my intraday opportunity I've checked the 5 minute it looks okay I've checked the daily I'm okay with that now I'm looking for an entry and I use the combination of the 10-second chart and the one minute chart I like using both of them uh especially on a fast moving stock because sometimes the one minute uh can even be too slow when a stock is popping up quickly this is actually a good example this stock here on the one minute went from $3.79 to almost $6 1 2 3 4 five green candles in a row and it didn't even look back so if you were only trading on the one minute chart there was no entry during that period but let's look at this on a 10 second chart and let's see if we can find an entry now I know I traded this one so I know that there was an entry so what I looked for here on this was a momentary pullback and we got a momentary pullback right here and we got another one right here right see those little red candles the dip right here and the dip right here so on the 10-sec chart we actually got micro pullbacks and that means a 1,000 share position of this at $4.80 could have yielded $11,000 a profit on a position that was only $4,800 that's a 20% return that's phenomenal and I made about $2,000 on this trade so this was a solid trade now it would have been nice if it kept going higher some of them will some of them won't and that's okay I'll trade the volatility I'll trade what's in front of us we also had uh another stock that made uh a pretty nice move here this one sort of similar it hits our scanners it's got a nice Catalyst we see this pullback and we see pullback here pullback in here all these pullbacks become buying opportunities now pullbacks are not always buying opportunities but pullbacks that occur on this type of stock that meets these criteria my metrics have shown me that statistically they resolve in my favor so that means once I found the stock the next step is to look for uh analyze analyze the daily and intraday charts and then we're going to look to buy uh pullbacks dips I'm going to do pullbacks dips and breakouts those are the three individual setups that I'm going to trade but again it all comes back here number one to stock selection this is something that I see so many Traders do they'll say Ross I see a picture perfect pattern and I'm like okay which stock is it on and they're like it's on Ford and I'm like no that's not going to work it's not going to work because it's not the right stock to trade what's if you were if you're going to say and you were going to weigh it what's better the perfect pattern or the perfect stock always going to be the perfect stock the perfect stock may not have a perfect pattern but it'll go higher so you learn that the qualifier of whether or not to take a trade is the quality of the stock not the pattern great patterns they don't resolve when it's not on the right stock so first and foremost is focusing on the stock okay so day one I locked up $125 of profit which was solid now on day two I came in and locked up $187 of profit two trades on day one two trades on day two on day one one of the trades was a smaller winner and the other trade was a solid one sort of similar to day two day three same thing two trades day four two trades so here I am four trades into the small account challenge my account is up $ 6846 this first week these first days are the most important and they are the most difficult when it comes to growing a small account some Traders have said Ross you know do you think you'd be able to turn an account from $500 into a million again and the answer is absolutely it's not a matter of if I could do it it's only a matter of how long it would take the hardest part of any small account challenge is the first phase and the first phase is the first week and the first month it's building that cushion once you make your your first5 $225,000 it's like you're sailing you're coasting from that point really that's how it was in my experience it's that first that first day those first weeks because in those first few days you know you get one day one one really solid day like we have here you know I'm up $125 that's a solid day second day up 187 third day 150 fourth day another 150 so now my account's gone from you know just roughly $600 plus 600 now I've got 1,200 in the account but remember the broker now there's there's a million different Brokers that you can choose but for my small account challenges I use international Brokers because they do not enforce the $25,000 PDT rule all right now I'm not going to name the brokers in this episode because the Brokers that I choose will vary from time to time and I want to have this episode be available for you guys to enjoy years from now so there will be a link pinned to the top of the comments pin the description if you click that link you can download a PDF for my small account strategy that's going to give you the breakdown of my small account strategy what we're talking about today in written form and I'll also share with you the broker that I like using so the broker that I'm using uh right now I fund the account with well $600 just for instance and I get uh six times leverage so I get six times leverage which means I have actually $3,600 of buying power on day one that means on day one if I see a stock you know let's just say I see a stock priced at $5 a share and I like it it meets all of my criteria that we already discussed you know check check check check check it's perfect then I say all right I want to buy this and I'm going to buy I'm going to buy 600 shares I could buy 600 shares of it 5 time 6 that's a $3,000 position 600 shares if this thing squeezes up to 550 which would be phenomenal that's a 10% return it goes up to 550 now my 600 Shares are worth 3,300 I'm locking up $300 of profit that's plus 300 in this example here my account would be up 50% in one day right so I want to remind you that Leverage is a sword that cuts both ways Leverage is very risky so I could also lose half my account in one day and that's why these first few days it is so important to me for me to be a sniper every every hit has to connect I cannot miss now you know look I I have had small count challenges where I have missed in the first few days and it's it's tall I mean it's happened but as much as possible I need to try to connect and that means I need to be focused on high quality setups so back to uh the Whiteboard here so now 3 4 days later I've got 1,200 so 1,200 time 6 right so now I've got $7,200 in buying power now if I see a stock that's priced at $7 I could buy a full 1,000 shares if this stock goes up to $8 which we could see it happen goes up to $8 I'm now making $1,000 of profit right and now my account is again in this case almost doubled in one day so this is literally the way this account grew if we look at these uh these days we're not seeing an equity curve here but it's $150 a day for one two three four five days and then I started to scale up my position size what happened on day 10 day 10 I made a conscientious decision that I had crossed over about $1,000 not quite but was getting close to $11,000 of profit and I was like I am now ready to start to increase my share size and take a little more risk because now I have a cushion so I had two days where I made $250 $280 and then on day four this was just good luck I mean I wouldn't attribute it to anything more than that it was just we had a stock that was fantastic and I made 1,700 bucks and then be usually the way it is with my trading my hot days are clustered together usually my big green days are are sort of all together because when the market starts to heat up we're seeing more and more stocks on that top Gainer list that are making huge moves so then next thing you know it's like trade three Trade four trade five and and all of a sudden the winners are stacking up so that's what happened there on Thursday and Friday uh Monday we had a market holiday so the market was closed Tuesday boom we're back record Green Day for the small count challenge so far slowed down a little on Wednesday but still solid uh Thursday was slow Friday was a little slower and then you know you can see how it kind of cooled off here for a couple days and then picked back up on Thursday and Friday before having a record-breaking day here on the 30th now this is also very common for me so if we do a um a an equity curve you know 120 150 180 180 then 200200 and then 1,700 and then we had 800 and then 2200 you know all of a sudden it starts to well I ran out of space so it starts to move fast and then I had that day where I gave back 5,000 this is very common for me that when the market it's hot I'll be pushing really hard I'll be really aggressive I'll be taking a lot of risk and then I'll catch a big loss so this is something that used to happen to me more I've gotten better at being able to ease off the throttle and and even like on a day where I'm starting to go red slow down faster but if you look how many trades did I take I only took one trade see I only took one trade here I took one trade on this day I took one trade on that day it just was a big loss loss cuz I took Big Share size so in net you know I was still green for that last week of January I can't really complain but I was naturally disappointed cuz I was up about 21,000 on the month and then you know had to settle for being up uh 16,000 or something you know around there 16,000 in profit so let's take this as an opportunity to talk for a moment about trading psychology I actually have a couple of books here that I think you may find very helpful one of the biggest challenges of trading in a small account is the pressure now some of you will say Ross there's no pressure for you you've made millions of dollars in the market and I would argue that that's not exactly true I am doing this challenge in front of an audience of millions of people on YouTube so there is pressure I don't want to fail I want to do well now the pressure is a little different for me but it's pressure all the same but what I've Gotten Good at over the years is managing those emotions trade mindfully is a great book by D Gary Dayton where he helps you understand the emotional cycles that so many Traders fall into when you have a state of you get frustrated and then next thing you know you're Revenge trading you're getting stubborn which we could probably say on that final day of January I got a little stubborn by holding that stock until I was down $5500 I probably should have cut my loss sooner I got emotional and the effect of getting emotional there the the result was that it made the loss even bigger right what likely happened is I took a trade a little impulsively I got in a little too quickly before doing my full due diligence around risk I might have liked the stock it was moving quickly I had news and then all of a sudden I'm jumping in it and it flashes down and I'm like uhoh I made a mistake during the headlights the moment that happens my heart starts pounding you know my eyes sort of it's like I'm I'm now starting to go into those primitive fight ORF flight responses and I'm thinking all right this is not good I'm feeling discomfort and so I want to alleviate that discomfort the best way is if this stock goes right back up and I don't have to sell for a loss so I hold it and I keep hoping that it's going to turn around and then as it goes lower and lower and lower I finally capitulate and I give in now the worst thing that could happen would be that a moment after taking this $5,000 loss in in the state of anger and frustration I go and slam the buy button and buy as many shares as I can of another stock and then I take another $5,000 loss and then the very worst thing I could do is the second after that I do it a third time and a fourth time and a fifth time until I have fully spiraled out of control the book by the way this is a this is a classic this is a really good one if you haven't checked this out it's it's by me Ross Cameron had day trade the plain Truth uh but thinking in bson quit these are two books by Annie Duke she's a professional poker player she's made millions of dollars and she talks about spiraling um going on tilt where a player loses their Edge by giving in and capitulating to emotions and becomes incredibly Reckless and that same phenomenon happens in trading as well it can happen you know when you make a mistake trading no one's stopping you from continuing to trade that day except yourself and that requires a high degree of discipline so the most successful Traders are traders who are they're they're they're smart they're driven they have a real aptitude for the markets but very importantly they have discipline so this success that I saw here in this first month the small count challenge it wouldn't have been possible without the discipline first of all to take only two trades most of those days and then walk away that is uh I would say the power of knowing when to walk away quit this is something now of course I was doing this um this challenge before I read this book but um but nonetheless it's it's a great book and I think that for you as an aspiring Trader you need to be able to know when to walk away when you get out of a taxi cab you don't think about where it goes after you get out you just get out and you go on with your life and yet when you get out of the market it's so easy for Traders to obsess about where the market went after I got out oh it went higher I could have would have should have held oh it went lower I perfectly timed the exit that is measuring your selfworth and your results based purely on the hindsight everything in hindsight is clear but in the moment you have a certain set of of information and you have to make the best decision with that and that's the decision you're going to make when you take a trade each morning when you're looking at a stock to potentially trade and it's a decision you make when you think about when to walk away so for me on day one when I was up $125 is that a huge winner no it's not a huge winner for me those are two small base hits I was actually hoping for a little bit more day two 1887 it was good if I'm going to be honest I had a goal of $200 for each of those days I was hoping that i' would be able to do that and it didn't happen but I had to be grateful for what I had and I had to recognize how easily I could give it back I knew that what I needed to do each day was consistently lock up a little bit of profit so that the next day my on day one you know 600 time6 equals $3,600 in buying power and then all of a sudden you know I'm going up to $750 and then I'm going up to $800 and I'm going up to 900 and then up to a th000 and suddenly my buying power has you know gone up to $6,000 or whatever right so this is what I was what this is what I knew I knew that I needed to make these small increment m al steps because each day my buying power would go up a little bit more a little bit more and that would mean that I could buy a few more shares a few more shares a few more shares and if I just kept my head down and focused on those base hit days then eventually you know I would just have the good fortune that there would be a stock that was just terrific and ended up doing far better than I expected trading longterm is not about luck but there is a degree of of you know good luck and bad luck that can happen and as long as you position yourself where you're managing your risk you're going to minimize your downsides from bad luck you know look you might be in a trade and you lose Internet that's bad luck you can have a backup internet but still things like that can happen or you can be in a trade and all of a sudden the stock just skyrockets and it just goes crazy you're like whoa that was great you know I was in the right place at the right time and I'll take it I'll be grateful for that and I got a couple of those during this first month and that certainly helped me so the moral of the story is that it's all about base hits base hit base hit base hit that's what these metrics reflect these metrics also by the way reflect accuracy of about it was over 80% they reflect a terrific profit loss ratio so my metrics across the board were really solid for this first month and then the total profit of course was really good as well again this all comes back number one to the fact that I had a track record going into this small account challenge which gave me confidence that confidence is why I was able to pull the trigger on day one with decent size you know making $125 on a small account you do that by basically putting your whole account into one trade now I'm not risking the whole account I'm not going to let the stock go to zero but I could lose 20% of the account in one day or conversely I could make grow the account by 20% in one day and of course that was the goal I I knew that risk going into it so in order to get yourself to a point where you have that degree of confidence what do you need well I would say if you're going to be a momentum Trader you need to already know the right stocks to trade you need to have experience analyzing daily charts the intraday charts and you need to be good at buying these pullbacks the dips and the breakouts and the way you get good at that is by practicing it you practice in a simulator watching episodes like this what attending my full length Warrior Pro curriculum those are invaluable in your Endeavor to learn more about the market but you have to put in the time of gaining experience that's how you convert knowledge into skill now for me it wasn't like that because for me when I was getting started I'm independent I I've never wanted to do kind of I'm a Hands-On learner I want to figure it out myself I don't want to follow the instructions I'm going to do it myself and I was the same way with the stock market I said I'll figure this out myself and that's kind of it's kind of ignorant of me to do that to think that I would be able to compete against people who are you know very skilled in these industries especially these like mathematicians and phds that these high frequency trading algorithms hire to compete in the market so to think that I was going to be able to compete against them was very naive it took me years of trial and error to develop my own set of historical data to find that these were the typ stocks that I was consistently making money on the problem for me was that when I was going through that trial and error period I was trading a little bit of everything I was trading options I was swing trading I was trading penny stocks I was trading large caps like apple you know I was trying to be a master of of everything and I was a jack of all trades and a master of none and that's not a way to be successful as a Trader in fact if you can be a master at just one strategy with just one setup that can be enough to keep your head above water and I'm serious about this because if you focus on just doing 15 20 cents a day from that strategy let's say you only get a three trades a week two are winners one is a loser all right that's fine you're still making progress you're keeping your head above water as long as you manage your risk and you keep your losses smaller than your winners and that's just the logic that I've always used I never want my losers to be bigger than my winners so in terms of profit to loss ratio they should at the very least be even and that way as long as I'm right 50% of time I break even and if I get really good at choosing the strongest stocks my accuracy is higher and I make money and that's where I'm at right now but it takes time to get there I wouldn't want to see you or any other beginner Trader make the same mistake that I made of trying to sort of reinvent the wheel and do like this trial and error phase that can last literally for years before you end up discovering oh there's this thing called momentum trading and wait millions of people are already doing it why didn't someone tell me about this I'm telling you about it hello we're here we're telling you about it you just maybe haven't been listening yet and listen I'm not judging because I was the same way fiercely independent want to figure it out for myself but I've realized now that that cost me a lot of uh money and a lot of time that both were very limited during my learning curve and I think that's one of the reasons that a lot of Traders don't find success they come into the market shooting from the hip taking some trades on their phone you know while they're in traffic at a stoplight and they don't take it seriously if you're not going to take it seriously I don't think you're going to get really good results so if you want to learn more about the strategy that I use for these small count challenges you want it in written PDF form there is a link pinned to the top of the comments pinned in the description and there will also be some info about my Brokers that I like using especially for small account challenges thank you as always for tuning in I hope you hit that thumbs up and make sure you subscribe the channel for more episodes on day training strategy just like [Music] this

[Music] in today&#39;s episode we&#39;re going to do a deep dive into the first month of trading in a small account in just 20 individual days I grew the account by over $166,000 of profit 16 times return on my initial deposit that is phenomenal now I&#39;ll be the first to remind you that those results are not typical I have more than a decade of full-time trading experience under my belt I do these small account challenges so I can demonstrate to you what it looks like when a seasoned Trader puts themselves under the pressure of trading in a tiny account because let&#39;s face it trading in a small account is difficult and the first day the first week and the first month is probably the hardest this is part one of a multi-art series where we will analyze each of the phases of a small account from the first month which we&#39;ll discuss today and then we&#39;ll talk about making the first $100,000 then making the first million and so on and so forth my name is Cameron I&#39;m a full-time Trader and let&#39;s go ahead and jump in by looking at the first day of this small account challenge all right so there it is $25.70 that&#39;s day one and that&#39;s a great result but I don&#39;t want to focus entirely on the result I want to focus on the process that&#39;s equally if not more important so what did I need in order to set myself up for success for day one of this small account challenge what is the basic level of information your minimal viable product for day one now for you I would encourage day one to be in a simulator not with real money because all being or Traders will make mistakes so you might as well make the mistakes in a safe environment learn from them before flipping the switch and going live but in any case to get yourself ready for day one what do you need at a minimum I would say at a minimum you need some degree of strategy this is something that so many beginner Traders Overlook me included when I was getting started when I got started I realized the internet and online trading is incredibly accessible you can connect on your phone you can connect on a computer from anywhere in the world and boop boop you can press a couple buttons and you&#39;ve bought and sold a stock and just like that you can be making or losing tens of thousands of dollars it&#39;s incredible and it&#39;s a bit of a rush when you do that the first time and you have your first winner because you will realize as many of you already have how quickly you can make money in the market and that&#39;s what going to get you hooked that&#39;s what got me hooked the fact that I could make more in 10 minutes that I could make in any other job probably in the world that I&#39;m qualified for so for me to get ready for day one I need a strategy I know from my own experience that attacking the market haphazardly shooting from the hip doing a little of this a little of that buying some Nvidia throwing some money on Tesla that is not a recipe for success success comes from traders who have a systematic approach for the stocks they buy the time of day they trade where they get in where they get out so that&#39;s what we need to talk about first because that is your minimal viable level of information that you need for day one so for me it begins with the system of knowing which type of stocks to trade ultimately for me I find that stock selection is one of the best ways that I can mitigate risk we know that trading is risky there&#39;s no denying that but it is invariably inevitably more risky if you are trading the worst stocks in the market and then therefore it&#39;s less risky if you&#39;re trading the best stocks in the market but how do we quantify which stocks are good or bad the answer is going to be different for different Traders depending on their strategy so I&#39;ll introduce you to my strategy you&#39;re going to see clearly in this episode that my strategy produces some exceptional results for me and it does for many of the other Traders in the world that are trading this strategy my strategy isn&#39;t like just mine I discovered it through trial and error but then I realized that there are probably millions of other Traders trading pretty much the same way in total I would say there are like three different types of strategies that a Trader could choose from the first is momentum trading and that&#39;s the way that I trade a momentum Trader is looking for a stock to buy that is moving up so essentially you&#39;re looking for this and a momentum Trader is buying on little pullbacks like this and it&#39;s selling up here it&#39;s called buy high sell higher now the other strategy so number one is momentum number two is counter Trend so a counter Trend Trader is going to look for stocks that are going down and look to buy them when they curl off the bottom or look for stocks that are going up and it&#39;s going to short them coming back down now this is a difficult strategy in my opinion because free beginner Trader it can be very hard to be able to predict when momentum is going to shift and in a sense it&#39;s like you&#39;re laying down in front of a moving train and hoping it&#39;s going to you know turn and and not roll over you I find it&#39;s a lot easier to find something that&#39;s already moving with momentum and just to hop on that train for a couple of stops I may not get from you know the beginning of the move all the way to the very top but it just feels a lot easier to catch a little bit of momentum and a little bit of profit as something is already moving now the third strategy would be uh range bound and a range bound strategy is something that is not going to be realistic for most Traders with small accounts because you need to use complex options strategies in order to profit from stocks that are in tight ranges like this so I&#39;m not going to spend a lot of time covering that because it&#39;s just not relevant probably to anyone who&#39;s trading in a small account so when it comes to trading I am a momentum Trader as a momentum Trader or a trend Trader my first objective is to find a stock that has a trend so as you could see on day one making $125 is great and since my account had less than $1,000 in it $125 is a fantastic return from a percentage basis right from that perspective this is really good how am I able to grow the account that quickly in just one day it&#39;s because I found an underlying asset stock that was moving up 30 40 50% in one day I needed to find something that was moving very quickly so for my strategy I focus on volatility I say that I&#39;m a Hunter of volatility and I&#39;m a manager of risk I need stocks are moving quickly I don&#39;t profit by buying a stock at $3 and selling it at $3 I profit by buying a stock at three and selling it at 360 for a 20% return and if I can do that in 15 minutes I&#39;m going to be thrilled now some of you might think Ross there&#39;s no way you&#39;re going to find a you know 20% return in 15 minutes that doesn&#39;t exist I&#39;ll tell you that it does exist it doesn&#39;t exist as far as sort of the mainstream media is concerned because when they&#39;re talking about stocks they&#39;re talking about F meta Facebook whatever feda call it feta um they&#39;re talking about Google they&#39;re talking about Netflix they&#39;re talking about Tesla Nvidia they&#39;re talking about these big big companies and they don&#39;t go up 20% in one day they never do but there is a sector of the market where we do see that type of volatility and those are called small cap stocks these stocks are lower priced a lot of them have been beaten up for a long time and if they have a news headline that is strong these stocks can bounce off the lows 30 40 50 100% or more in a single day now it&#39;s not exactly counter Trend trading as a day trading strategy even though the stock has been selling off on the day that we&#39;re trading it it has a tremendous amount of momentum it&#39;s moving higher and I may be buying it up here and selling it up here I&#39;m not getting in off the low something that you will never see me do is just buying stocks or going lower or just buying stocks in hopes that maybe they will start to turn around the reason I don&#39;t do that is because when I began trading I had a relatively small account and I couldn&#39;t afford to tie up money on a stock that maybe would turn around in a few days a few weeks or a few months because that was an opportunity cost so I kept my account in all cash until saw a stock that was moving and then when I saw a stock that was moving I had the available buying power to move into it take a decent sized position if I could capture 15 20% in one day I could pop out of that and I would be good for several days that would be several days of profit for me in one trade so I only needed to do that a couple times a week and a few times a month in order to hit my goals it&#39;s about quality not quantity now during my small account challenge I have traded pretty much every day day but for the most part I&#39;m only taking two trades a day there are a couple days I traded more because the market was very strong but on most days I&#39;m being very selective about the stocks I&#39;m looking at I know the type of stock I want to trade I know the type of pattern chart pattern that I&#39;m willing to buy and if I don&#39;t see it I&#39;m not going to take a trade so one of the other things that&#39;s important for me during a small account challenge is the philosophy of building my cushion I need to build a cushion as quickly as I can when I&#39;ve got $1,000 or $500 my account is basically one trade away from blowing it up one mistake and the account is gone and I have to start over so I have to take it very seriously when I&#39;m considering pressing the buy button so and I&#39;m looking for a stock to trade I&#39;m not going to be you know willy-nilly jumping in this or that I&#39;m going to be doing my full due diligence and asking myself if this stock really has the potential to make a big move okay so as a momentum Trader we know that that&#39;s my strategy so we&#39;ll get rid of these ones as a momentum Trader what type of stocks once you know your strategy the strategy is going to dictate the type of stocks you&#39;re going to trade so the type of stocks that I&#39;m going to trade generally for a momentum uh based strategy our stocks are up at least 10% today they have to be up at least 10% today because I need something that&#39;s volatile if it&#39;s not up at least 10% it&#39;s just not moving enough now here&#39;s something really interesting once a stock is up 10% it has a much higher likelihood of going up to 20% and doubling its gain on the day then a stock that is at zero going to 10 so once a stock has picked up sort of that first little bit of momentum it&#39;s so much easier for it to keep going than for a stock that has zero momentum to get started it&#39;s really hard for these stocks to get started but once they get started they can move quickly so the reason these stocks are going to be up 10% and the reason these stocks are going to have high uh what I call High relative volume today relative volume by the way is a measure of today&#39;s volume relative to what&#39;s normal for that that stock so let&#39;s say a stock trades on average of 150,000 shares of volume a day and then today has 1.5 million shares of volume if it has 1.5 million shares of volume that&#39;s a relative volume ratio well 10 would be 150,000 to 1.5 million so 100 would be 150 all the way to uh 15 million right all of a sudden you&#39;ve got 100 times relative volume that is huge now why would a stock have 100 times relative volume it&#39;s because it&#39;s got news it&#39;s because there&#39;s some type of news catalyst so as a momentum Trader a lot of times I would also characterize myself as a news Trader I trade breaking news I trade I&#39;m a volatility Trader and volatility comes from news now it&#39;s true that sometimes we&#39;ll have stocks that move higher and they don&#39;t have a clear Catalyst that does happen uh just the very fact that the stock started to move higher Traders will be attracted to it and then that sort of becomes a self-fulfilling prophecy where it moves yet again even higher but when there is no clear Catalyst short sellers are more inclined to sell into those moves people who have been holding the stock are more inclined to take profit off the table because there&#39;s no real reason for the stock to up so it makes sense to take your profit off the table so for me I prefer to see the stock has news now because I&#39;m trading in a small account I&#39;m going to add some of my own parameters to the momentum strategy I&#39;m going to focus on stocks under $20 a share by focusing on stocks under $20 a share even with a $500,000 account I could still trade I could still trade it well enough now when the account is in those first couple of days I actually put the Restriction even tighter so what I did for the first week is I said I I wasn&#39;t going to trade anything that was over $10 a share and I was really focusing on trying to find stocks but less than $5 a share like generally as cheap as I could because then I could buy more shares so here&#39;s the thing with these low price stocks it&#39;s a lot easier for a stock to go from $1 to $2 and be up 100% then it is for a stock to go from 20 to4 from $20 to $40 that&#39;s $20 a share that&#39;s a huge move that that can happen but it doesn&#39;t happen nearly as often as we see stocks go from a dollar to two so that lower price range is where we&#39;re going to see bigger percentage moves and that&#39;s what I need to grow my account so I&#39;m fine with trading a stock that&#39;s $3 or $4 or $5 and even one that&#39;s six or seven that&#39;s a little higher I I could work with it it wouldn&#39;t be uncommon to see a stock at 7 go from 7 to 750 to 8 or 850 or 9 $2 a share even if I could only buy a 100 shares I could still make1 to $200 on that trade so I can work with that range but for my focus at the beginning of the small account challenge I&#39;m going to be looking for stocks under $20 now when it comes to risk management I know that I need to manage my risk very closely in this challenge so the way I approach it is number one I tell myself breakout or bailout so when I see a stock that meets my criteria it&#39;s up 10% it&#39;s got high relative volume it&#39;s got news it&#39;s also priced under 20 and by the way I didn&#39;t note this but we&#39;ll just add as a um as sort of a bonus here item and we&#39;ll just put it over here the stock needs to be oops obvious in other words it should be in the top three uh percent gainers on the day the reason we want to trade stocks that are obvious is because stocks that are obvious are going to be the stocks that pretty much all the momentum Traders are focused on and that means all the volume will be on that stock which means it has better liquidity it&#39;ll be easier to get in and easier to get out and the patterns will be respected better you know everyone&#39;s going to see the obvious green light when you see it on the chart so that means you&#39;re going to get better resolution at that green light when you see a red light on the chart everyone&#39;s going to see it you&#39;re going to have better resolution on the red light coming back down so the signals that are very clear on the chart they they they work better when more people see them because more people respond to them by actually buying and selling positions the problem with the language of the financial markets and reading technical analysis and stock charts is that when you try to apply it to the wrong stock people are not seeing these buy and sell signals you&#39;re what you&#39;re almost looking at is a part created by a high frequency trading algorithm I&#39;ll show you an example um I&#39;ll just show you for example Ford Motor Company Ford Motor Company um is a stock that is traded by high frequency trading algorithms and these highfrequency trading algorithms they make the chart almost look like a barcode this is like it&#39;s it&#39;s just a reflection of a lot of data it&#39;s not actually symbolic or really relevant to be honest so if you looking looking at this chart and trying to find a pattern uh you would be making a mistake there is no pattern here that is created and and will be seen by retail Traders re retail Traders are smart enough to know that this isn&#39;t something you would touch SO highfrequency trading algorithms they exist in the market and that&#39;s fine but the type of stocks that we want to focus on as momentum Traders are the ones that are volatile are obvious and are moving now and those are actually going to have a much lower degree of highfrequency trading algorithm actively trading them the reason is because those high frequency trading algorithms do not thrive on high volatility they thrive in range-bound markets where they can buy sell Buy sell Buy sell at basically the same price and just profit from What&#39;s called the spread between the bid and the offer on stocks that are very volatile there&#39;s just too much risk for those market makers so they sort of back away and that&#39;s where retail Traders sort of fill in so there&#39;s more liquidity in fact but it&#39;s created by retail Traders not by high frequency trading algorithms okay so that was an important um not to add when it comes to stock criteria so once I find a stock on my scanner that is obvious that is under 20 then I&#39;m going to be looking at it and I&#39;m looking for a possible position the scanners that I use are you can see them right here um this is a top gainers scanner this window here this is showing me the top percentage gainers in the entire stock market today so s GD up 88% aimd up 80% and these have millions and millions and millions of shares of volume and their relative volume is extremely high high relative volume now the float on both of these stocks is under 10 million shares one thing that you will notice is that stocks that have lower floats are going to tend to be more volatile so I&#39;ll actually I&#39;m G to add a couple more lines here so I&#39;m just going to say should have news it needs to be obvious and Float under 10 million shares preferably and then my additional filter is um price under $20 so now we&#39;re getting a little bit more detail about the stocks I&#39;m willing to trade now the reason I didn&#39;t choose all of these metrics just arbitrarily these were chosen based done looking at my own metrics when I look at my own trading performance it tells me these are the stocks that I make the most money on so I have that historical data that guides my decisions moving forward as a beginner Trader if you&#39;ve never traded before you don&#39;t have your own historical data to base anything on but you can benefit from using the historical data of other Traders right so you can use my historical data and gain insights from that like okay here&#39;s someone who&#39;s trading this is what they trade this is where they make money so this is a viable strategy I just need to learn it now whether or not you&#39;ll have the aptitude the skill and the ability to be profitable with my strategy is another question but it&#39;s always better in my opinion for an aspiring Trader to start with a proven strategy and to do everything they can to learn the ins and outs of it than to start from zero because since you have no historical data you&#39;re going to just start from zero and start testing the water trial and error that would it would be like trying to reinvent the computer starting just with like you know a a box of screwdrivers and like it just doesn&#39;t make sense to do it that way right there&#39;s a better starting point okay so when I sit down each morning I&#39;m using this scanner now there are some free scans out there if you go to warriortrading.com daytrading we have a scanner right here that&#39;s available it&#39;s on delayed data um because we can&#39;t give away realtime data for free but this is a delayed dat a scanner that&#39;ll show you the stocks that are currently gapping up and it&#39;s updating throughout the the trading session so you know there are some tools like that that you could use this is going to show us the same stocks as I see here the only difference is that this is uh in real time so there&#39;s no delay whatsoever so when I&#39;m actively trading in the market naturally I want to see things that are moving quickly so I don&#39;t don&#39;t miss opportunities so my goal first to manage risk on day one of this small account challenge is to find a stock that is in the top three positions right here it&#39;s got to be in the top three positions in in other words it&#39;s one of the top three leading percentage gappers or gainers on the day and I want to see that it meets all of my criteria it&#39;s got to be up 10% have high relative volume have news be obvious have a float of under 10 million shares and be priced under 20 if check check check check check it meets all of these criterias then at that point and only at that point can I begin dissecting the the chart so I do my first level of due diligence without even looking at a stock chart I&#39;m just looking at the technical characteristics of the potential stock once I have done that first level of analysis then from there I pull up the stock chart so I could click on the stock for instance SGD I could pull up the stock chart and I look the way I do it is I look at the five minute chart first sometimes I&#39;ll pull up a chart and I&#39;ll see that the stock uh squeeze from like this 50 cents to 250 it&#39;s back to $150 and I&#39;ll think well it&#39;s it&#39;s really giving back most of its move so n it&#39;s not really relevant if I look at it though and it&#39;s still holding up then the next place I look is at the daily chart the daily chart is down here and this is showing the Stock&#39;s performance over the past well this is showing like 6 months so this is very helpful for me because this gives me context and I start marking out my daily chart what I&#39;m looking for are levels of possible resistance so I see there could be resistance here at about maybe 232 because of the high of this candle and it came up to about the high of those candles there so that&#39;s a possible area of resistance um going to the left and up we have this little area here at 514 the high there we have this high and then I always like to Mark out the all-time highs so this stock has an all-time high at 1046 that&#39;s not that far away when you think about it and in fact if it breaks over 514 the next resistance looking left and up is at 8:42 and then the next resistance looking left and up is at 10:46 so breaking over 514 would have been really critical for this stock if we wanted to have a chance of getting up to this level there are times where we&#39;ll look at a stock and we&#39;ll see well geez you know there&#39;s just a lot of sort of small areas of resistance on this one and I don&#39;t know if any of them are going to be super super sign ific but I look at the high of those candles as being possible areas of resistance so this stock well it seems like it does have some overhead resistance in this area here which it struggled with if at some point it gets over that 514 level though that&#39;s when things can get interesting one of the other things I also like to do is I like to analyze the position of the 200 moving average the 200 moving average is right here in purple this is one of the most respected indicators on the the daily chart and if a stock is below it it&#39;s almost always going to have resistance at it as you see right here it comes into it runs into it now this pulled back and then it broke through it which is great to see that&#39;s fine they can break through it they will always require high volume to break through a critical level like that uh but but when they first are coming up to it it&#39;s going to be upside resistance so I would never buy a stock right under the 200 knowing that resistance is right there I I don&#39;t want to say never but not I I almost never do something like that there might be an occasion where there&#39;s a incredibly strong news headline but not likely so I look at the position of the 200 and then again I look to the left and I look up so on this one uh you&#39;ll notice we came up to this level here the high of this candle 796 that was resistance on this particular day and this is not this gives you the ability to further reduce your risk because you can look at these charts and when you see that oh I&#39;ve got resistance here then you&#39;re not going to be the person buying at 796 you&#39;re going to thinking well we might have some sell resistance up here so once you learn this language the better you get at it the the more of an edge you will have in your own trading again once it breaks over 796 I had room all the way up to the high here of 1208 above that level has lots of room up to the high of this candle which is a ways away all the way up at $26 so once I&#39;ve analyzed the daily chart then I&#39;m looking for my intraday opportunity I&#39;ve checked the 5 minute it looks okay I&#39;ve checked the daily I&#39;m okay with that now I&#39;m looking for an entry and I use the combination of the 10-second chart and the one minute chart I like using both of them uh especially on a fast moving stock because sometimes the one minute uh can even be too slow when a stock is popping up quickly this is actually a good example this stock here on the one minute went from $3.79 to almost $6 1 2 3 4 five green candles in a row and it didn&#39;t even look back so if you were only trading on the one minute chart there was no entry during that period but let&#39;s look at this on a 10 second chart and let&#39;s see if we can find an entry now I know I traded this one so I know that there was an entry so what I looked for here on this was a momentary pullback and we got a momentary pullback right here and we got another one right here right see those little red candles the dip right here and the dip right here so on the 10-sec chart we actually got micro pullbacks and that means a 1,000 share position of this at $4.80 could have yielded $11,000 a profit on a position that was only $4,800 that&#39;s a 20% return that&#39;s phenomenal and I made about $2,000 on this trade so this was a solid trade now it would have been nice if it kept going higher some of them will some of them won&#39;t and that&#39;s okay I&#39;ll trade the volatility I&#39;ll trade what&#39;s in front of us we also had uh another stock that made uh a pretty nice move here this one sort of similar it hits our scanners it&#39;s got a nice Catalyst we see this pullback and we see pullback here pullback in here all these pullbacks become buying opportunities now pullbacks are not always buying opportunities but pullbacks that occur on this type of stock that meets these criteria my metrics have shown me that statistically they resolve in my favor so that means once I found the stock the next step is to look for uh analyze analyze the daily and intraday charts and then we&#39;re going to look to buy uh pullbacks dips I&#39;m going to do pullbacks dips and breakouts those are the three individual setups that I&#39;m going to trade but again it all comes back here number one to stock selection this is something that I see so many Traders do they&#39;ll say Ross I see a picture perfect pattern and I&#39;m like okay which stock is it on and they&#39;re like it&#39;s on Ford and I&#39;m like no that&#39;s not going to work it&#39;s not going to work because it&#39;s not the right stock to trade what&#39;s if you were if you&#39;re going to say and you were going to weigh it what&#39;s better the perfect pattern or the perfect stock always going to be the perfect stock the perfect stock may not have a perfect pattern but it&#39;ll go higher so you learn that the qualifier of whether or not to take a trade is the quality of the stock not the pattern great patterns they don&#39;t resolve when it&#39;s not on the right stock so first and foremost is focusing on the stock okay so day one I locked up $125 of profit which was solid now on day two I came in and locked up $187 of profit two trades on day one two trades on day two on day one one of the trades was a smaller winner and the other trade was a solid one sort of similar to day two day three same thing two trades day four two trades so here I am four trades into the small account challenge my account is up $ 6846 this first week these first days are the most important and they are the most difficult when it comes to growing a small account some Traders have said Ross you know do you think you&#39;d be able to turn an account from $500 into a million again and the answer is absolutely it&#39;s not a matter of if I could do it it&#39;s only a matter of how long it would take the hardest part of any small account challenge is the first phase and the first phase is the first week and the first month it&#39;s building that cushion once you make your your first5 $225,000 it&#39;s like you&#39;re sailing you&#39;re coasting from that point really that&#39;s how it was in my experience it&#39;s that first that first day those first weeks because in those first few days you know you get one day one one really solid day like we have here you know I&#39;m up $125 that&#39;s a solid day second day up 187 third day 150 fourth day another 150 so now my account&#39;s gone from you know just roughly $600 plus 600 now I&#39;ve got 1,200 in the account but remember the broker now there&#39;s there&#39;s a million different Brokers that you can choose but for my small account challenges I use international Brokers because they do not enforce the $25,000 PDT rule all right now I&#39;m not going to name the brokers in this episode because the Brokers that I choose will vary from time to time and I want to have this episode be available for you guys to enjoy years from now so there will be a link pinned to the top of the comments pin the description if you click that link you can download a PDF for my small account strategy that&#39;s going to give you the breakdown of my small account strategy what we&#39;re talking about today in written form and I&#39;ll also share with you the broker that I like using so the broker that I&#39;m using uh right now I fund the account with well $600 just for instance and I get uh six times leverage so I get six times leverage which means I have actually $3,600 of buying power on day one that means on day one if I see a stock you know let&#39;s just say I see a stock priced at $5 a share and I like it it meets all of my criteria that we already discussed you know check check check check check it&#39;s perfect then I say all right I want to buy this and I&#39;m going to buy I&#39;m going to buy 600 shares I could buy 600 shares of it 5 time 6 that&#39;s a $3,000 position 600 shares if this thing squeezes up to 550 which would be phenomenal that&#39;s a 10% return it goes up to 550 now my 600 Shares are worth 3,300 I&#39;m locking up $300 of profit that&#39;s plus 300 in this example here my account would be up 50% in one day right so I want to remind you that Leverage is a sword that cuts both ways Leverage is very risky so I could also lose half my account in one day and that&#39;s why these first few days it is so important to me for me to be a sniper every every hit has to connect I cannot miss now you know look I I have had small count challenges where I have missed in the first few days and it&#39;s it&#39;s tall I mean it&#39;s happened but as much as possible I need to try to connect and that means I need to be focused on high quality setups so back to uh the Whiteboard here so now 3 4 days later I&#39;ve got 1,200 so 1,200 time 6 right so now I&#39;ve got $7,200 in buying power now if I see a stock that&#39;s priced at $7 I could buy a full 1,000 shares if this stock goes up to $8 which we could see it happen goes up to $8 I&#39;m now making $1,000 of profit right and now my account is again in this case almost doubled in one day so this is literally the way this account grew if we look at these uh these days we&#39;re not seeing an equity curve here but it&#39;s $150 a day for one two three four five days and then I started to scale up my position size what happened on day 10 day 10 I made a conscientious decision that I had crossed over about $1,000 not quite but was getting close to $11,000 of profit and I was like I am now ready to start to increase my share size and take a little more risk because now I have a cushion so I had two days where I made $250 $280 and then on day four this was just good luck I mean I wouldn&#39;t attribute it to anything more than that it was just we had a stock that was fantastic and I made 1,700 bucks and then be usually the way it is with my trading my hot days are clustered together usually my big green days are are sort of all together because when the market starts to heat up we&#39;re seeing more and more stocks on that top Gainer list that are making huge moves so then next thing you know it&#39;s like trade three Trade four trade five and and all of a sudden the winners are stacking up so that&#39;s what happened there on Thursday and Friday uh Monday we had a market holiday so the market was closed Tuesday boom we&#39;re back record Green Day for the small count challenge so far slowed down a little on Wednesday but still solid uh Thursday was slow Friday was a little slower and then you know you can see how it kind of cooled off here for a couple days and then picked back up on Thursday and Friday before having a record-breaking day here on the 30th now this is also very common for me so if we do a um a an equity curve you know 120 150 180 180 then 200200 and then 1,700 and then we had 800 and then 2200 you know all of a sudden it starts to well I ran out of space so it starts to move fast and then I had that day where I gave back 5,000 this is very common for me that when the market it&#39;s hot I&#39;ll be pushing really hard I&#39;ll be really aggressive I&#39;ll be taking a lot of risk and then I&#39;ll catch a big loss so this is something that used to happen to me more I&#39;ve gotten better at being able to ease off the throttle and and even like on a day where I&#39;m starting to go red slow down faster but if you look how many trades did I take I only took one trade see I only took one trade here I took one trade on this day I took one trade on that day it just was a big loss loss cuz I took Big Share size so in net you know I was still green for that last week of January I can&#39;t really complain but I was naturally disappointed cuz I was up about 21,000 on the month and then you know had to settle for being up uh 16,000 or something you know around there 16,000 in profit so let&#39;s take this as an opportunity to talk for a moment about trading psychology I actually have a couple of books here that I think you may find very helpful one of the biggest challenges of trading in a small account is the pressure now some of you will say Ross there&#39;s no pressure for you you&#39;ve made millions of dollars in the market and I would argue that that&#39;s not exactly true I am doing this challenge in front of an audience of millions of people on YouTube so there is pressure I don&#39;t want to fail I want to do well now the pressure is a little different for me but it&#39;s pressure all the same but what I&#39;ve Gotten Good at over the years is managing those emotions trade mindfully is a great book by D Gary Dayton where he helps you understand the emotional cycles that so many Traders fall into when you have a state of you get frustrated and then next thing you know you&#39;re Revenge trading you&#39;re getting stubborn which we could probably say on that final day of January I got a little stubborn by holding that stock until I was down $5500 I probably should have cut my loss sooner I got emotional and the effect of getting emotional there the the result was that it made the loss even bigger right what likely happened is I took a trade a little impulsively I got in a little too quickly before doing my full due diligence around risk I might have liked the stock it was moving quickly I had news and then all of a sudden I&#39;m jumping in it and it flashes down and I&#39;m like uhoh I made a mistake during the headlights the moment that happens my heart starts pounding you know my eyes sort of it&#39;s like I&#39;m I&#39;m now starting to go into those primitive fight ORF flight responses and I&#39;m thinking all right this is not good I&#39;m feeling discomfort and so I want to alleviate that discomfort the best way is if this stock goes right back up and I don&#39;t have to sell for a loss so I hold it and I keep hoping that it&#39;s going to turn around and then as it goes lower and lower and lower I finally capitulate and I give in now the worst thing that could happen would be that a moment after taking this $5,000 loss in in the state of anger and frustration I go and slam the buy button and buy as many shares as I can of another stock and then I take another $5,000 loss and then the very worst thing I could do is the second after that I do it a third time and a fourth time and a fifth time until I have fully spiraled out of control the book by the way this is a this is a classic this is a really good one if you haven&#39;t checked this out it&#39;s it&#39;s by me Ross Cameron had day trade the plain Truth uh but thinking in bson quit these are two books by Annie Duke she&#39;s a professional poker player she&#39;s made millions of dollars and she talks about spiraling um going on tilt where a player loses their Edge by giving in and capitulating to emotions and becomes incredibly Reckless and that same phenomenon happens in trading as well it can happen you know when you make a mistake trading no one&#39;s stopping you from continuing to trade that day except yourself and that requires a high degree of discipline so the most successful Traders are traders who are they&#39;re they&#39;re they&#39;re smart they&#39;re driven they have a real aptitude for the markets but very importantly they have discipline so this success that I saw here in this first month the small count challenge it wouldn&#39;t have been possible without the discipline first of all to take only two trades most of those days and then walk away that is uh I would say the power of knowing when to walk away quit this is something now of course I was doing this um this challenge before I read this book but um but nonetheless it&#39;s it&#39;s a great book and I think that for you as an aspiring Trader you need to be able to know when to walk away when you get out of a taxi cab you don&#39;t think about where it goes after you get out you just get out and you go on with your life and yet when you get out of the market it&#39;s so easy for Traders to obsess about where the market went after I got out oh it went higher I could have would have should have held oh it went lower I perfectly timed the exit that is measuring your selfworth and your results based purely on the hindsight everything in hindsight is clear but in the moment you have a certain set of of information and you have to make the best decision with that and that&#39;s the decision you&#39;re going to make when you take a trade each morning when you&#39;re looking at a stock to potentially trade and it&#39;s a decision you make when you think about when to walk away so for me on day one when I was up $125 is that a huge winner no it&#39;s not a huge winner for me those are two small base hits I was actually hoping for a little bit more day two 1887 it was good if I&#39;m going to be honest I had a goal of $200 for each of those days I was hoping that i&#39; would be able to do that and it didn&#39;t happen but I had to be grateful for what I had and I had to recognize how easily I could give it back I knew that what I needed to do each day was consistently lock up a little bit of profit so that the next day my on day one you know 600 time6 equals $3,600 in buying power and then all of a sudden you know I&#39;m going up to $750 and then I&#39;m going up to $800 and I&#39;m going up to 900 and then up to a th000 and suddenly my buying power has you know gone up to $6,000 or whatever right so this is what I was what this is what I knew I knew that I needed to make these small increment m al steps because each day my buying power would go up a little bit more a little bit more and that would mean that I could buy a few more shares a few more shares a few more shares and if I just kept my head down and focused on those base hit days then eventually you know I would just have the good fortune that there would be a stock that was just terrific and ended up doing far better than I expected trading longterm is not about luck but there is a degree of of you know good luck and bad luck that can happen and as long as you position yourself where you&#39;re managing your risk you&#39;re going to minimize your downsides from bad luck you know look you might be in a trade and you lose Internet that&#39;s bad luck you can have a backup internet but still things like that can happen or you can be in a trade and all of a sudden the stock just skyrockets and it just goes crazy you&#39;re like whoa that was great you know I was in the right place at the right time and I&#39;ll take it I&#39;ll be grateful for that and I got a couple of those during this first month and that certainly helped me so the moral of the story is that it&#39;s all about base hits base hit base hit base hit that&#39;s what these metrics reflect these metrics also by the way reflect accuracy of about it was over 80% they reflect a terrific profit loss ratio so my metrics across the board were really solid for this first month and then the total profit of course was really good as well again this all comes back number one to the fact that I had a track record going into this small account challenge which gave me confidence that confidence is why I was able to pull the trigger on day one with decent size you know making $125 on a small account you do that by basically putting your whole account into one trade now I&#39;m not risking the whole account I&#39;m not going to let the stock go to zero but I could lose 20% of the account in one day or conversely I could make grow the account by 20% in one day and of course that was the goal I I knew that risk going into it so in order to get yourself to a point where you have that degree of confidence what do you need well I would say if you&#39;re going to be a momentum Trader you need to already know the right stocks to trade you need to have experience analyzing daily charts the intraday charts and you need to be good at buying these pullbacks the dips and the breakouts and the way you get good at that is by practicing it you practice in a simulator watching episodes like this what attending my full length Warrior Pro curriculum those are invaluable in your Endeavor to learn more about the market but you have to put in the time of gaining experience that&#39;s how you convert knowledge into skill now for me it wasn&#39;t like that because for me when I was getting started I&#39;m independent I I&#39;ve never wanted to do kind of I&#39;m a Hands-On learner I want to figure it out myself I don&#39;t want to follow the instructions I&#39;m going to do it myself and I was the same way with the stock market I said I&#39;ll figure this out myself and that&#39;s kind of it&#39;s kind of ignorant of me to do that to think that I would be able to compete against people who are you know very skilled in these industries especially these like mathematicians and phds that these high frequency trading algorithms hire to compete in the market so to think that I was going to be able to compete against them was very naive it took me years of trial and error to develop my own set of historical data to find that these were the typ stocks that I was consistently making money on the problem for me was that when I was going through that trial and error period I was trading a little bit of everything I was trading options I was swing trading I was trading penny stocks I was trading large caps like apple you know I was trying to be a master of of everything and I was a jack of all trades and a master of none and that&#39;s not a way to be successful as a Trader in fact if you can be a master at just one strategy with just one setup that can be enough to keep your head above water and I&#39;m serious about this because if you focus on just doing 15 20 cents a day from that strategy let&#39;s say you only get a three trades a week two are winners one is a loser all right that&#39;s fine you&#39;re still making progress you&#39;re keeping your head above water as long as you manage your risk and you keep your losses smaller than your winners and that&#39;s just the logic that I&#39;ve always used I never want my losers to be bigger than my winners so in terms of profit to loss ratio they should at the very least be even and that way as long as I&#39;m right 50% of time I break even and if I get really good at choosing the strongest stocks my accuracy is higher and I make money and that&#39;s where I&#39;m at right now but it takes time to get there I wouldn&#39;t want to see you or any other beginner Trader make the same mistake that I made of trying to sort of reinvent the wheel and do like this trial and error phase that can last literally for years before you end up discovering oh there&#39;s this thing called momentum trading and wait millions of people are already doing it why didn&#39;t someone tell me about this I&#39;m telling you about it hello we&#39;re here we&#39;re telling you about it you just maybe haven&#39;t been listening yet and listen I&#39;m not judging because I was the same way fiercely independent want to figure it out for myself but I&#39;ve realized now that that cost me a lot of uh money and a lot of time that both were very limited during my learning curve and I think that&#39;s one of the reasons that a lot of Traders don&#39;t find success they come into the market shooting from the hip taking some trades on their phone you know while they&#39;re in traffic at a stoplight and they don&#39;t take it seriously if you&#39;re not going to take it seriously I don&#39;t think you&#39;re going to get really good results so if you want to learn more about the strategy that I use for these small count challenges you want it in written PDF form there is a link pinned to the top of the comments pinned in the description and there will also be some info about my Brokers that I like using especially for small account challenges thank you as always for tuning in I hope you hit that thumbs up and make sure you subscribe the channel for more episodes on day training strategy just like [Music] this

Transcript for:Small Account Trading Challenge Insights

Transcript for:
Small Account Trading Challenge Insights