Day Trading Strategies: Class Summary

Introduction

• Background of Lecturer: 10 years of experience, struggled initially but discovered a life-changing trading pattern
• Objective: Share pattern and strategy to help new traders
• Initial Success: Account grew from $583.15 to $17,000 in a month, averaging $893.24 per day with 87.8% accuracy

Key Concepts in Day Trading

Importance of Simplicity

• Simple Strategy: Find a trending stock, enter with a 5% stop loss, and sell half when up 10%, adjust remaining to a trailing 5% stop
• Goal: 10% account growth in one day, with one trade

Types of Stocks to Trade

• Criteria: Stocks that can go up 10% in one day, priced between $1 and $20 to maximize potential returns
• Indicators: 5 times relative volume, news catalyst (earnings, FDA approval, etc.), and high volatility

Finding Stocks

• Scanning: Identify stocks with high relative volume, news catalysts, and those up 10% or more
• Tools: Stock scanners, such as Finviz or custom tools
• Example: Stocks with 3.8 million to 39 million float are ideal targets

Trading Patterns and Setups

High-Relative Volume and Bull Flag Pattern

• Pattern: Stock moves higher, pulls back (not more than 50% of the move), buy at the first candle making a new high
• Stop Loss: Low of pullback
• Profit Target: New high

Real-Time Signs of Strength

• Indicators: Green on the tape, decreasing sell orders, jumping up levels on the ask price
• Weakness: Large sell orders, bursts of red on the tape, or dramatic reversals

Practical Examples

• Significant Moves: Examples showing stocks moving from $1.60 to $3.50, or $5.60 to $8.50
• Pattern Success: Utilizing pullback patterns to capitalize on significant stock movements
• Print & Recognize Patterns: Take screenshots and place them around your trading desk

Risk Management and Psychology

Cutting Losses Quickly

• Mindset: Successful traders lose quickly and then move on
• Risk Management: Tight stops, avoid averaging down

Common Mistakes

• Fear-Based Trading: Selling winners too soon, holding onto losers
• Solution: Scale into winners, cutting losers, capture FOMO without falling victim to it

Discipline and Recovery

• Rules: Max loss per day, position sizes, types of stocks traded
• Recovering from Losses: Taking 1-2 high-quality trades per day after a big loss
• Minimizing Risk: Walk away after small wins, avoid over-trading

Trading Tools and Platforms

• US Broker-Dealers: Require $25k for margin account (Charles Schwab, Lightspeed, Interactive Brokers)
• Offshore Broker-Dealers: Lower minimums, higher leverage (TradeZero, CMEG)
• Platform Requirements: Fast executions, stable performance, hotkeys

Plan for New Traders

• Morning Routine: Use scanners, research news, study charts
• Entries & Exits: Look for pullbacks, 2:1 profit/loss ratio, trail stops
• Consistent Growth: 4-6 weeks of profitability, focus on quality trades

Conclusion

• Expectations: It takes time to make consistent profits
• Scaling Up: Once consistent, increasing share sizes can significantly increase returns
• Discipline is Key: Follow rules, manage risk, and consistently apply strategies