I wanna share with you the backbone of a day trading strategy that I use all the time to maximize making money while minimizing my risk and just keeping peace of mind. If you're new to the markets, if you're just getting started and you're a beginner day trader, you may not be aware of just how mental of a game it is and how emotions can wreak havoc on you, but it's a very real thing. And I always kind of laugh because I totally get the point of view, but if you've never put money on the line before from a trading sense, You probably look at people like us and think, stop being so dramatic. It's not that mentally, you know, why are you okay? Do you need to go to a mental hospital?
Like, what is your deal? And I get it, I used to think the same thing, but I promise you, as soon as you start to put money on the line, you're gonna start to meet all these voices in your head that they just try to get you to do very, very silly things. But what I've learned to do over the years is just this basic strategy, but a very powerful strategy to just keep yourself To keep yourself sane, to keep yourself in the trade, and like I said, to maximize and give yourself the opportunity to make the most money possible while minimizing your risk.
Now I'm not gonna sit here and talk theory the whole time. I am gonna take you and walk you through and show you a live trade that I did where this principle takes place in the real world of trading. So no worries, I'm not gonna just sit here and talk in theory the whole time. But I have my cheat sheet here because I'm gonna walk you through what happened on the trade, that way you know what is happening. So to set things off, I was trading ticker symbol BA, which is Boeing, and I was going short.
Now, if you're a beginner, going short means making money when values go down. I get it, crazy, crazy to think. That's the first time you've ever heard that. But yes, believe it or not, you can make money when values go down in the markets, known as going short, shorting, just being short.
Any variations mean you wanna see prices go down because you make money. So that was going here. I was going, or I was doing Boeing. And I wanted to see the price go down because if the price went down, that means I would be making money.
And what you're gonna see here is I enter into the trade with 500 shares. So 500 shares was my opening allotment that I started with. And before anything else, when you get into a trade, I get it. The question that 99% of traders focus on, myself included, is you're focused on, all right, how much money can I make? How much money can I make?
Wrong, wrong. You need to be focused on how can I minimize risk? How can I control risk?
What are my risk mitigation plans? That's what you should actually be focused on. Now, of course, from a business perspective, from a marketing perspective, I'm trying to sell you something. Oh yes, talking about winning is the right way. It's fun to talk about winning.
But when I say risk manager, you're probably like, huh, who knows? Some people probably already clicked off the video. Risk management?
I don't got time for risk management. All right, fine. I get it.
It's not the most exciting topic to talk about, but. It's the important topic to talk about. So again, in for 500 shares here, and then you're gonna notice, oh and I should note that my entry was at one, like I said, let me check out my cheat sheet, 184.70.
Okay, so I wanted to see the price go down from that point. And as you're gonna see, the price did indeed start to go down. So price started to go down, and eventually it got to the point where I decided, you know what, it's time to minimize some risk. It's time to, and how do you minimize risk? Well, you put some profits in your pocket, right?
You lock some gains in. So at one point, you're gonna see it went down and then I covered 200 shares. Now, covered just means I exited the position.
Again, if you're new from the shorting side, going when you short and then you cover, that means you're exiting. And in order to exit a short-sided trade, you actually buy second. So yes, you wanna sell high, buy low. So right here, I bought 200 shares and I bought those 200 shares.
over here at a price of 184.25. So at this point, 500 minus 200, I still have 300 shares left. But by doing this, I put in, so over here I put, what was that? Yes, $90 into my pocket.
So at this point, I've now officially made $90 on the trade. So do you see how that can help from a peace of mind perspective? Okay, all right, I've made some money on it. Yeah, just that little thing, little things like that from a psychological standpoint can make a huge difference. So again, by doing so, I just put $90 into my pocket.
Now to pat myself on the back a little bit more, hey, you know what? Boeing continued to go down. So at this point I'm thinking, all right, I'm still in all about risk, managing risk, managing risk, minimizing risk, minimize the risk, control it. So right here, I covered, once again, covered meaning exited out. Another 100 shares.
And this was at a price. of 183.77. So as far as what did that do for my wallet? Well that put another $93 into it. So at this point I put $90 into my wallet, then I put another $93 into my wallet.
So from a mental standpoint, I'm feeling that much better about things. I am just having peace of mind. My risk is getting more and more minimized, and yeah, I'm also making some money.
But at this point, it's not about making money. It is about minimizing risk and that's what's going on. So again at this point, 500 minus 200 minus 100 means I have 200 shares left.
So price goes a little bit more in my favor and because of that, I now lock in another 100 shares. So you come over here and this all occurred at 183.53. And by doing that, again, as far as what I put in my pocket, that was $116. So at that point, I put in $90 in my pocket.
I put then another $93 in my pocket. Then I put in another $116 in my pocket. Now at this point, to do the math, I only have, here's a quick quiz. How well do you understand? How many shares do I have left at this point?
I started with 500. If you're saying, well, Clay, you had 500. then you exited out 200 plus 100 plus 100. That means you've exited out 400. It means you have 100 left. Yes, absolutely. So this last 100 shares is no longer about risk management.
Not at all. It is all about maximizing the money, letting the position work for you. So over here, yes, 100%, this is all about risk minimized, right?
That's all I was caring about. That's all you should care about. Just minimize risk, keep it controlled, but you still wanna be able to maximize the amount of money you can make, and you maximize it by taking care of risk first, and then when you're sitting here, I still have 100 shares left. And as you're gonna see here, what I started to do, and I'm not gonna walk you through all that because you'll see it in the video, but I put my stop in place. A stop is just an order that says, I'll get out if the price hits that price.
But in other words, I'm not gonna just remove myself from the trade. I'm only gonna remove myself from the trade if the market removes me from the trade. All these situations, I was manually saying, yup, I wanna get out, yup, I wanna get out. But in this situation, I will not get out until the market kicks me out of the trade by hitting my stop. And you'll see that the price goes down, I lower my stop.
The price goes down, I lower my stop. Meaning, I don't know how much money I'm gonna make because at that point, and I say this in the video, I have no idea how far down Boeing is gonna go. So therefore, I don't know how much money I'm gonna make.
I mean, how beautiful is that? How peace of mind would you have if you know you've minimized your risk, your risk is taken care of, but now you're sitting in a spot where literally the only unknown, the literally only concern you have is, hey, how much money am I gonna make? If you've never been there, trust me, it is a great feeling.
It is the best feeling that you can have as a trader, where the risk is taken care of, and now your only concern, The only thing you're biting your nails about, the only reason why your armpits are sweating is because I don't know how much money I'm gonna make. Truly a great thing to have and truly what you wanna be doing to maximize those profits. And like I said, you'll see all this take place.
So with all this being set up, let's see how this trade played out in the real world. Okay, watching. Okay, in, looking for the break of the 184.50-ish area. What is that? 184.65ish, so more so 184.65ish.
Let's see if we can get the push down through that area. I like the candle that formed quite a bit. Can it get down through that area?
That's gonna be the key question. Ooh, it's 184.50. So the big question becomes, did I jump the gun?
Trying to anticipate the break, but was I right to anticipate the break? That is the big question right now. And looking like I was. Can we get down below 184?
So took some off the table now. I have 100 shares. I wanna see if this thing can get down below 184. Well, that might have been the bounce, but I'm not gonna give up on it yet. My life is easier now that I've taken some profits off the table. But markets are pulling back right now, which should help me.
So I'm just watching the markets right now, and if they keep on coming down. that I'm gonna hold, and the markets are pulling back. There we go, so took another 100 off. Putting my stop loss at 180, what happened? What did I just do?
Oh, I still had excellent, even better news. All right, I accidentally took some off, but that's okay. So my stop for my final 150 is at 180. Let's see, we need to bring that down some more. So at this point, I'm in the best spot possible as a trader. Not if I make money, but how much money am I gonna make?
Because I have no idea how far down this thing wants to go. Okay, so I'm out there for $460. Absolutely beautiful. Pretty cool stuff, huh?
I mean, that was great. minimize the risk, had those 100 shares left, you saw me adjust to stop lower and lower and lower, and then the market finally decided to kick me out of the trade, and I walked away with $460 in a very small amount of time. But that's how you do it. That's what is gonna keep you involved in the game. Not making $400, but the habit, the principle of keeping yourself calm, minimizing risk.
and then actually maximizing your gains by keeping a portion of your position and letting it work for you. So just keep that in mind as you go forward and it's gonna make a big difference in your trading. Now, if you found this video helpful and you would like for me to make more like this, a very quick and easy way to... communicate that to me, just hit that like button, goes a long way and let me know that I'm, you know, using my time wisely by making videos like this.
Also comments, questions, suggestions for other videos, leave those down in the comment section. If you've ever watched any of my past videos, you know that I do read comments and will reply to them. And then finally check out the channel as a whole.
If you enjoy that little clip of me doing the live trading, I have an entire playlist of those live trade videos. So you can watch those to your heart's content, but overall lots of different videos on the channel. So hopefully you decide to hit that red subscribe button as I'd love to have you as a subscriber, but yeah, I get. Get out there, focus on minimizing risk first, and then maximize those profits.
First off, thanks so much for watching the entire video. Real quick, before you go, I wanna invite you to a live webinar, web class, training, workshop, online event, whatever you wanna call it, but it will be me live revealing to you what I've discovered that has allowed me to transform myself from being an employee to being my own boss, including how I had only one losing day out of 73 days in total. I'm going to cover three keys that have helped me unlock profitable consistency within the markets.
The first key is super weird, but in a productive type of way. The second key is super awesome because it quite literally is wired into our DNA as humans, making it very easy to use. But in a cruel way, this becomes a pitfall for many traders.
I'll explain it all though, including how to avoid the pitfall that it creates for some. And yeah, the third key when you hear it sounds way too good to be true. but it's not and I'll show you how it all works.
Then at the end, I open it up for a question and answer session that is again, totally live. Even if you can't make the live session, please still sign up as it will be recorded and you can go back and watch the replay that I will send you. Click the image on the screen or click the link down in the description box so you can get the date and time and claim your spot, which I should note is limited due to the fact that this truly is a live event. If you have any questions, let me know.
If not, I'll be seeing you soon.