beginners trading strategies

all right everyone welcome to class one of our day trading course um so as you guys know my name is ross cameron and this is uh our eight week long course in day trading all right so first chapter here we're going to cover a lot of the basics and we will get into more detail as we go um so you may have some questions today that will be answered in the coming days but you can of course feel free to call out your answers in the chat room uh anyone watching on the recording you can feel free to email me ross at daytradewarrior.com all right so first question here how does day trading work okay so uh another another thing to ask here is what are we looking for as day traders all right we talked about this a little bit today it's a very simple concept we're looking for stocks that are moving okay as day traders we profit from volatility in the market so if the markets are flat we're not going to make money we need to find stocks they're going to make quick moves to the upside or the downside in a relatively predictable manner okay so we profit from volatility when is the market the most volatile it's in the morning okay it's in the morning at the open 9 30 to 10 30 in the morning the first hour is when we have the most volume in the market okay so we have a lot of volatility and we have a lot of volume now the advantage of having that volume is it provides liquidity when we have a lot of volume it means there's a lot of buyers and a lot of sellers so we can easily get in and out of trades and now on the flip side midday we can have volatile markets but we don't have the volume which means we lack liquidity which means it'll be harder to get in and out of stocks okay especially if we want to take large size so my focus has always been trading at the open and trading in the morning i find that the first one to two day trades usually four out of five days i can hit my goal in the first 30 minutes with one to two trades i keep it simple i try to hit my daily goal and then ease up right we know how quick it is to lose money so once we have some money in our pocket we want to hold on to that all right so we know we want to find stocks that are moving but finding stocks are going to move in a relatively predictable way is the struggle right that's the struggle for every trader how do we find a stock that's going to make a move and get in with a low risk entry and that's the name of the game finding low risk entries every time we trade we know we're exposing ourselves to risk so how do we minimize that risk that's what we call finding a good setup any good setup is an opportunity for us to get into a trade with as little risk as possible so a good set up means we might be risking a hundred dollars but we have the potential to make three hundred okay so we would call that a three to one profit loss ratio risking 100 to make 300 is three to one all right now on the flip side if you get in a setup where you're risking a hundred dollars to make 10 you have a negative risk reward ratio and that's going to be a trade that you should not take all right so we're always looking for opportunities to get low risk entries with big win potential but being able to identify setups that have big win potential is also part of the learning process right as a beginner trader you may not be able to differentiate different setups and recognize what is a home run potential flag and what is a most likely failing flag that's something that comes with experience but also with training okay so our job as day traders is to always hunt for volume and volatility okay so we're searching the market all day long looking for that volatility so we look for earnings releases we look for press releases any type of catalyst that can cause big movement in the stock we're going to be interested in it all right and it comes in many forms and we'll review those in more detail later in the course so here's another question why do most traders fail right day trading requires you to make quick decisions and at the same time it requires you to be very disciplined right now when we hear breaking news that activist investor has just taken a stake in amazon okay the initial reaction might be to load the boat let's buy five thousand shares at amazon right put put on a big order that's like a 1.5 million dollar order right but you need to be able to make a quick decision whether you should buy or sell or short that stock and make it with discipline does this fit into my trading strategy what strategy would this fit into if this trade goes the wrong way what is my stop how much am i risking in this trade and what is the reward potential right being able to make all those decisions and making sure those decisions fit into our risk tolerance and our strategy parameters is what for a lot of traders is very difficult it's multitasking but it's multitasking when you're under stress you know there's times where i've been in a trade where i had too much size maybe i had ten thousand fifteen thousand shares and all i need to do is sell and i'm looking at my keys and it becomes hard to even figure out how to punch the right keys you just sort of get this moment of paralysis where you're overwhelmed and anytime that happens you realize that you pushed yourself a little too far out of your comfort zone and that'll happen to every one of us i mean it happened it's happened to me it'll happen to all of you from time to time right it's it's good to work on the edge of our comfort level so we're always pushing our boundaries but if we find ourselves far outside our comfort level and outside our risk tolerance we can really end up making some big mistakes so it's always good to be in touch with ourselves uh both with our sort of emotional state of you know are you focused are you calm are you making good decisions um you know and also be in touch with the result of your decisions are you trading profitably have you had five winners in a row or if you had five losers in a row right because inevitably when we get on a losing streak it's going to start to impair our judgment so being able to be in touch with your own emotions and maintain composure even through a losing streak is really really critical okay so skill and discipline these are like muscles they require exercise to grow and it's not something that once you grow them you have them forever and you don't have to work on them anymore you still have to exercise them right and that that's what i experience every day i'm still exercising my ability to have self-control to have discipline right now the skill is something that i've built up so you can't take away the skill to ride a bicycle and you can't take away the skill to identify uh good stock charts right those are skills but the discipline is something that we always have to work on and the skills um you know in truth are something that we're always developing and refining it's uh this is a job where we're always learning which is great um it's very stimulating but it's important to remember that if you start to get complacent and think oh i know everything you know i don't need to you know i don't need to study anymore oftentimes you'll get a quick correction and you'll lose money so that's the market correcting you all right so being able to uh make quick decisions and follow your trading rules um that is critical for success in the market as we go on with this course we're going to talk a lot about risk management everything that we do is going to come back to how are you managing risk because ultimately that is the most important concept for a trader to understand all day long i'm managing risk that's what i'm doing i'm trading stocks but i'm managing risk okay so we're going to teach you how to manage risk so you can make good decisions all right now next how do you find trades okay this is really hard for a lot of new traders you may understand the theory of trading but when it comes down to actually finding setups in real time it can be really difficult i certainly experience this as a new trader i might be able to see setups in hindsight when i looked back on charts during the day but to find them while the day was unfolding was really difficult for me um so we're gonna go over how to find the trades right so first we'll start with scanning how do we scan the market to find stocks that are set up uh in a good way so first we have to find the stocks and then once we've found the stocks we'll start to look for the individual setups okay now we are going to be very specific about what types of stocks and what type of setups we're willing to trade all right and i focus a lot on quality versus quantity now there are millions of traders out there and there are millions of strategies out there i'm trading a strategy that works for me right and that's what we're teaching and we're finding that it works really well for our students as well so it's a strategy that's easy to implement easy to learn and for a lot of our students and certainly for me has been very profitable okay so that means only taking the best setups and waiting on the sidelines until we see something worth trading and this gets into the value of patience learning to be patient is extremely important there are a lot of traders out there that are over traders if you over trade that's where you're going to see yourself trading 20 30 40 times a day that's over trading over trading results in very high commissions your broker will love you but you're paying him a lot in commissions to do all those trades okay so you're going to lose money in commissions you're also going to lose money on trades that go south because of slippage slippage is an inevitable factor in the market slippage is when you go to sell and you thought you were selling at five dollars but the market filled at 490. so you lost an extra 10 cents

and so what it's an extra 10 cents it's not that big a deal but when you're an over trader and you're trading 20 30 40 times a day that slippage starts to really add up right 10 cents with a thousand shares is a hundred dollars if you do that 10 times in a day with slippage you just lost a thousand bucks right so you can see how if you're going to put yourself into the market and take a trade you're you know you're immediately exposing yourself to the potential of uh slippage and the potential of other forms of risk that we'll review later in the course okay so as soon as you're in a trade you're exposed to risk so we don't want to expose ourselves to risk unless we have proven that this is a setup and a strategy worth trading okay so my strategy is a pattern-based strategy i don't care about companies i don't care about what they do i don't care about their earnings i just care about the patterns i focus on charts okay and i focus on the symbols i know more stock symbols than i know the names of companies i've trained myself to just focus on the patterns the candlesticks and the symbols i don't mingle fundamental analysis with technical analysis i focus just on the technicals now with that said i do hunt for a fundamental catalyst a reason why a stock is running up if we have a stock that's running up 80 i want to know what the catalyst is oh it's a biopharmaceutical stock they just got fda approval or they just passed through clinical trials okay there's a catalyst there i can understand that right but beyond that i'm not going to be sifting through the conference call i'm not going to be listening in on conference calls i'm not going to be sifting through the earnings papers i don't care about that stuff i'm not a long-term investor i'm a day trader we trade very very quickly sometimes we trade as quickly as uh 10 second to 30 second long trades and i can tell you from experience that in 10 seconds you can make thousands of dollars i've done it in 10 seconds you can also lose thousands of dollars i've done that too so both ways the market moves quickly we need to make sure we're positioned in the right place to take advantage of the profits and reduce our risk exposure right it's really important to recognize that like i said millions of traders out there millions of strategies but every trader needs an edge okay and you need to find your spot in the market where you feel comfortable my edge is focusing on patterns okay i focused on patterns because this is just what worked for me now before i was a day trader i worked as an architect in new york city patterns have always been something that fascinate me i'm drawn to patterns i pick them out everywhere i see them on charts and i recognize early on in my trading career that the best setups were breakouts of patterns very simple patterns a breakout of resistance a breakdown of support these patterns work really well and the reason they work really well is because so many people are watching them okay now using this strategy i can be wrong forty percent of the time and still make money that's because i'm using proper risk management so we'll talk about the risk management parameters that i use later in the course but just at this point remember that we don't have to be right a hundred percent of the time to make money we can be right even just fifty percent of time and you can still book a profit okay now another thing to remember is that in this market right now over 60 percent of the volume is algorithmic high frequency trading that means we're trading against computers so if you've ever tried to play chess against a computer you know you're always going to lose you will always lose we're trading stocks against computer systems okay sixty percent of the volume is algorithmic trading that for us on the one hand represents a problem it means that the majority of stocks that we're looking at the the price action that we're seeing is simply the result of computers moving shares around okay now on the other hand it means that there's a small handful of stocks each day that are going to be trading on such heavy retail volume okay retail as opposed to institutional algorithmic trading you'll be trading on such high retail volume that we will overpower the algorithmic trading and we will as retail traders control that stock we focus on trading those stocks each day those are stocks typically that are gapping up on earnings a pr of some type they have a ton of retail interest and a ton of retail volume so regular traders like myself and all of you are going to be buying these stocks and we're overpowering the computer systems okay so these are the stocks that are going to run up 20 30 40 percent intraday we've even seen stocks run 200 percent intraday you get a big catalyst like fda approval on a new drug and all the retail traders see it and they buy that stock is going up okay so we focus on that handful of stocks now if we try to trade the stocks that are trading on very light volume and if you think that sixty percent of the volume in the market is high frequency trading sixty percent's on average so it's going to be much higher on some stocks and much lower on others so if we trade the stocks that are dominated and much higher in high frequency trading we're going to lose money hands down every time it's very hard to make money when you're trading against a computer okay so instead we should try to focus on the stocks that are going to have a very low level of institutional high frequency trading okay so those are going to be the stocks that have therefore a high level of retail interest and what creates a high level of retail interest or buzz around the name it's going to be okay so every single day i'm looking for the catalyst that's going to drive the small handful of stocks up right so pattern trading when price action is plotted on a chart patterns are formed i personally use candlestick charts so each candlestick represents a period of time and you can choose the time frame of the chart that you're looking at you can choose daily charts hourly charts five minute charts one minute charts etc i prefer one minute and five minute candlestick charts okay here's an example of what a candlestick looks like you have the low which is the bottom of the candle wick you have the high which is the high of the candle wick you have the open which is the bottom of the body right here in the case of a green candle and you have a close which is the top of the body in the case of a green candle okay this upper area here this is the upper candle wick this lower area is the lower candle wick okay so these are candlesticks candlesticks can tell us a great deal about the general trend of a stock okay large body candles like this one right here are very bullish candles like this that have a high wick and a low wick are usually going to be a little bit more indecisive candles of indecision okay and red candles that have this big red body means that open was at the high and the closes at the low this is a pretty good indication of bearishness in the market right so just by learning to read candlesticks we can begin to generate some opinion on what's the general attitude for this stock okay and we'll review more of these later these candlesticks how they form patterns this pattern right here is called a flag you have three big candles going up it can be anywhere from three to ten or whatever you have a series of candles shooting up and then you have a series of candles consolidating this is a move a stair step consolidation resting another move up this is a very common pattern that we see here's another one a pop-up consolidation and then another move up stair stepping very common patterns i love trading patterns because everyone can see this everyone is watching this stock because this stock is a hot name today it's a hot stock right it's a gapper it has everyone's attention so we're all watching it we see this pattern unfolding it has resistance at 37.50 that's very clear visually it's very clear as soon as we break 37.50 buyers come in and anyone that is short covers and you get that spike up okay then it consolidates again here you guys that have followed me for a while you know that i trade the first and the second pullback okay so here's the first flag the first pullback here's the second pullback i never trade almost never trade the third i trade the first and second pullback we'll review that more when we review my actual trading strategies and setups but just for now recognize that these patterns are very well respected in the market but remember they're only well respected on that small handful of stocks that have a lot of volume this is not going to be well respected on a stock that's dominated by the computers because these patterns are meaningless okay this is only a value because lots of people are watching these names okay so my routine every morning is finding these names that we should be trading okay so what do other traders do right there's millions of traders out there well some focus on technical indicators like the relative strength index moving average convergence divergence moving average crossovers okay there's a lot of technical indicators out there there's thousands right and some traders think they have the holy grail of technical indicators you know a combination of the relative strength index with the moving average crossover is a 90 successful you know buy setup but i don't believe in any of that stuff i don't believe that stuff works especially over the long term i tried for a long time i did write algorithmic scanners i did some black box trading and what i found was that i would write a set of uh conditions i would write a formula i would back test it and i would see when i back tested that formula that i would have a you know an 80 chance of being right an 80 success rate okay i would run that formula live for 60 days and what at one time when i first back tested it was 80 success rate would drop to 40 percent okay at the end of that 60-day period i would review that formula i would tweak it i would fix it i would bring it back up to 80 percent so when i back-tested it it would say it was 80 successful i'd run it again and the profit curve would drop off again so what was happening well what i was doing was i was writing a formula to match in inadvertently i was writing a formula to match a certain set of back test results so every time we change those back test results there was the result of the scanner would change so the scanner was great backward testing but was impossible forward testing it would never run positively forward because the market is always changing okay so that for me i don't think is a sustainable way to trade i think pattern-based trading is much much better because these patterns will always be here and retail traders will always be watching them okay now yes we do use the relative strength index for some of our trading uh in particular reversal trading we have scanners that do rely on a high-low rsi but that is that is more a condition to find stocks at extremes it's not by any means a buy or sell indicator it's just something that we use in addition to the pattern-based scan that's a great question about the fibonacci retracement and that's not a tool that i use or an indicator that i use okay so some day traders scout volume spikes and high a day moves so they have high of day scanners and anything hitting that hive day scanner with high relative volume they're going to be watching okay i personally uh i have high day scanners but i don't find it to be a successful strategy just to buy a stock because it's hitting high a day i'm usually chasing when i do that and it doesn't work okay and some day traders focus exclusively on counter trend trading now i do myself some counter trend trading but it's not the cornerstone of my trading strategy okay so with pattern trading the more traders using these patterns the better they work right the more people that recognize that this is the line in the sand where we should be a buyer that means more people are going to buy at that point which means the stock is going to move up faster right the more buyers the quicker it'll move so this is the type of thing where i'm so happy to share pattern-based trading not only to help other traders become more profitable but in truth the more people that are trading this strategy the better it'll work and the reason it works is because these small handful of stocks each day are being very well watched so lots of people are watching them for that simple breakout right that flag breakout that wedge breakout that ascending wedge that breakout so many people are watching it it comes true okay so pattern trading you have to remember does not work on all stocks and we'll go into the details in our stock selection chapter but it only works on the stocks that have high relative volume okay so volume is relative right some stocks like apple are going to trade millions and millions of shares a day on average other stocks on average might only trade 500 000 shares a day so what is high volume is going to be relative from one stock to another so we actually look for high relative volume okay if we just look for a high total volume that's going to really throw us off right because there's some stocks that trade on average with a lot of volume so we just look for what's above average for that stock okay now in particular for pattern trading i am a breakout trader i love buying breakout this is also called momentum trading okay i want to buy when we're having a stock that's running i don't like to buy during consolidation during that waiting and holding phase okay so some of those charts we looked at a few minutes ago we saw that quick pop-up followed by that period of consolidation i don't like to buy during that period of consolidation i wait for us to break the top of that resistance area that's going to be the apex point that's the breakout if i buy there that's where everyone else should be buying who's looking at taking this for the breakout so it's it's just instant it either works instantly or it doesn't so one of the risk factors that we'll talk about later in this course is your exposure time the longer you're in the market the more you're sitting exposed right so i reduced my exposure time by only buying at the breakout instead of buying and holding and waiting which would have increased exposure time i just wait for the breakout and then i punch my order i get in and i get out quickly right i take my money and i run that's been my philosophy trading get in the breakout get your profit get out of the way right and that's why i only trade the first and second pullback i don't want to overstay my what my welcome with these setups i know they run quickly but i don't want to stay too long i don't want to be caught in the people in the flood of people selling because they chased it all right so um yeah we'll review the apex point on a few trades but we'll do that um at the end of the lesson okay now with reversal patterns in contrast to the breakout patterns with reversal patterns we're looking for a clear conformation that the pattern is beginning to reverse okay so for me this is usually going to be the first candle to make a new high i'm going to be looking for the first one minute or the first five minute candle to make a new high when we review reversal strategies we'll be talking about the rubber band snapback so we think of stocks trading we think of them as a rubber band and when they get really stretched out to the downside inevitably they're due for a correction okay so when a stock is really squeezing down we know at some point it's going to make a bounce and we want to be in that for the bounce but we don't want to buy it when it's still selling okay if you buy a stock when it's still selling it's called catching a falling knife right it doesn't sound like a good idea in life and it's not a good idea in trading okay so stocks dropping we want to wait for the confirmation of the reversal that's going to be the first candle to start making a new high that's the place where i look to jump in all right i set my stop at the lows very important in day trading is setting a stop whether it's mental or alive stop you have to have a line in the sand where you get out okay this is the place where you admit defeat and you say i was wrong i'm getting out of the way now let's be honest i'm a successful trader but i still lose all the time so that means i must have found out a way to be a really good loser and it's true i lose all the time but i lose gracefully i take the losses and i walk away you have to be a good loser if you're not a good loser it's going to be really hard to be a good trader you just have to be able to walk away when it's the time to step back so you can ask yourself a few questions is the stock still moving up are we still trending up right what was the low of the last five minute candle and have we broken that low because if we broke the low of the last five minute candle in an uptrend then the trend may be starting to change we have to follow the charts and this is one of the issues where if you uh combine the fundamental analysis you can start getting yourself into the pattern of um justifying staying in a bad trade simply because of the fundamentals well you know it's nike and they make really great sneakers they're definitely not going out of business i'll just hold this longer okay you don't want to do that you want to follow the chart if the chart is telling you to get out you get out you can always get back in but it's really hard to recover from a big loss right you don't want to take a 50 loss well you certainly don't want to take a 200 loss but by the time you finally take the you know 800 loss it's really hard to get back from that so it's much better just to take the quick losses get out come back when the timing is better all right now it's also good to keep in mind that stocks will trend with the overall market unless they have a reason not to so this is part of the algorithmic trading this is part of what the computer systems do they're trending stocks with the market okay so the market's moving up stocks are moving up but they're going to be a handful of stocks that will buck the trend of the market because they have a catalyst again this is what we're looking for that small handful of stocks that are going to be running when the market's tanking or they're going to be tanking when the market's running because they have a reason to make that move that's what we want now if the market's running and these stocks are running too that's fine we have no problem with that we just want to make sure we're trading stocks that are moving because they have a reason to move so when i do reversal trades my favorite reversal trades are on stocks that are selling off because there's bad news out okay a quick sell off because of bad news lots of people are going to notice it and start watching it for a bottom bounce those are my favorite bottom bounces they can be really really quick really solid okay now stocks are just trending down with the overall market the way oil was a few a few weeks ago you try to do a bottom bounce they pop up 10 cents and then they sell off another 50 cents try to do another bottom bounce they pop up 15 cents and then they sell off another 60 cents they're selling off because they're trending with the market and it's a weak sector so that's where we have to differentiate is this moving because the market is moving or is this moving because it has a unique catalyst okay so that's where we have to do a little bit of research and as you have more experience as a trader you'll be able to differentiate what is catalyst based price action and what is just um you know market general market trending all right so retail traders versus institutional traders okay so retail traders that's all of us regular traders part-time traders full-time traders but we're not working for a firm and we're not managing other people's money okay retail traders uh we are a small percentage of the volume in the market the majority of the volume in the market is institutional traders these are traders that represent large amounts of capital okay they may be trading with banks hedge funds mutual funds they have a lot of money behind them and they can be very aggressive and we have to be careful that we're not on the wrong side of institutional traders okay but how do we identify uh where the institutional traders are in the market okay now we'll go over this a little bit later in the class but for right now just recognize that what we want to do is instead of trying to find institutional traders uh they're everywhere so what we want to try to do is find where are the retail traders hanging out today and let's trade with them okay so think of all the kids on the playground and everyone's hanging out at the slides because that's what's fun okay but you're over fiddling around you know in the sandbox just doing your own thing well you're off on your own in the sandbox trading a stock that no one's paying attention to you're in the wrong place focus where everyone else is focused that is going to be the stock that's moving okay and there's usually a stock every single day that's getting a ton of action that's what day traders are going to be looking at so can we day trade a stock like apple or priceline or coca-cola or ibm sure we could but these are slow-moving stocks they're dominated by institutional traders algorithmic traders and in general they're going to be very hard to day trade okay so how do we find what retail traders are focused on how do we find the cool place in the playground there's a couple ways one is watching our scanners okay the stocks that are gapping up the most those are going to be the stocks that retail traders are watching okay so first watching the gappers secondly it's good to be in touch with social media stock twits twitter and see what is trending okay what stocks are trending and this is especially helpful on stock twits um twitter it's got so much other stuff going on but if you follow a handful of traders then you'll be able to see what everyone's talking about and this is another huge advantage of being in a trap a chat room like the one that we have at warrior trading right you've got hundreds of traders and we're all talking about what's hot today okay so if you're trading completely on your own you know you're off in the corner of the playground you're not in touch with other people are doing uh inevitably it's going to make it really hard on yourself you just don't know where the activity is i tried doing that you know i tried trading in a bubble i tried blocking out social media and blocking out you know all these things and just doing my own thing it didn't work it did not work so you can try it if you want my experience was that it didn't work at all okay so what do i do well i don't trade fundamentals right i'm not a value investor i'm not a long-term investor i don't trade forex i don't trade futures right i don't trade commodities i'm an equities day trader okay and i focus on real stocks we don't trade penny stocks we don't trade the otc markets we don't trade that junk we trade real stocks and sometimes we are trading coca-cola and sometimes we are trading apple but we'll be trading the stocks that are having a big day every single day in the market there's a stock having a big day because they release earnings maybe it's expedia right maybe it's fire eye maybe it's first solar but these are big companies okay these are the companies we're going to be trading this is how i've made my living it's what works for me this is the strategy that we'll be sharing with you right so a day in the life for me typically starts around 8 a.m 8 30 with pre-market scanning okay so pre-market i'm scanning to see where is their volume in the market right now as early as 8 30 9 a.m we'll know what stocks are gapping up okay i look at the top 10 gappers and i start sorting through the news okay what's the catalyst causing the gap right then i put together a watch list i start ruling some out i start picking and choosing which ones do i like which do i not like by 9 a.m we're in the chat room warrior trading going over our watch list right going over the watch list with all of our students and all of our traders by 9 30 when the bell rings my orders are ready i've placed orders as early as 9 30 and one second okay and i've been up two thousand dollars in the first five minutes more times than i can count i trade aggressively at the open trading these gappers trading these momentum stocks right 9 30 to 12 that's when i'm the most aggressive that's when we have the most volume and momentum in the market from noon to four i really ease up on the throttle i don't want to go overboard midday and afternoon because that's when we have lower volume in the market lower volume means lower liquidity less liquidity and higher risk okay so afternoon i really go easy with the exception of trading breaking news if we have breaking news that's an instant catalyst that's going to cause a tremendous amount of volume in terms of trading pre-market i avoid pre-market trading because there's very low liquidity there's very few traders trading pre-market which means stocks can pop up a dollar drop a dollar you can't get in and out with large size so i can't go heavy with thousands of shares you have to go really small and you have to use such small positions that for me it's not even worth it if you don't mind trading a couple hundred shares you could trade pre-market you know you you can size up a little bit pre-market maybe a thousand two thousand but uh you don't have good liquidity and that's why i avoid pre-market trading okay so on a good day i have my goal by 10 a.m

and i'm easing out lightening up trading and by four o'clock i'm done right but oftentimes by lunchtime i've already hit my goal and i'm going to be sitting on my hands unless there is that perfect setup from 4 to 6 p.m we've got our trading courses and we're reviewing our trades from the day now let's think a little bit about the market okay if you make a thousand dollars by 10 a.m what do you think you're gonna do are you gonna walk away take the profit some will many will okay so a lot of people if they make their thousand dollars by 10 am they're done for the day they're going to go golfing they're going to go do whatever they want but if you lost a thousand dollars by 10 a.m

most traders are going to keep fighting it out okay they're going to stay in the market they're going to keep trading and they're going to try to make back what they lost so that means midday trading is dominated by traders that have lost in the morning and are aggressively trying to make it back that causes a lot of volatility but not in the good way that causes stocks to shoot up and then shoot down because people are going in and out with market orders it's a time that i consider dominated by more amateur trading okay so i go really easy midday the only trades i take midday would be breaking news or swing trades trades that we're giving a lot of space and that we don't need to micromanage on the one minute or five minute chart i would not trade the one minute or five minute midday unless we have a stock that's really running on big momentum in order to get started trading you need a few things you need charts you need a broker you need stock scanners and you're going to want news okay i use e-signal for my charts e-signal is a terrific platform for charting now i personally have so many monitors that i have e-signal running on one two three four five six different monitors and it's running on six monitors with no lag okay now there are other charting platforms you can use but my problem has been that they result in lag when you try to run them on multiple monitors so e-signals very low latency very quick charting software all right in combination with e-signal i use tas market profile indicators all right these are a custom suite of indicators used by over 15 000 traders on the bloomberg bloomberg terminals okay bloomberg terminals that's what hedge fund traders are using right and i like to see what the big guys are seeing i don't want to be going against them all right so we'll go over those uh tas market profile indicators later in the course but for right now for right now just know the e-signal is the charting platform that i use all right best brokers you need hotkeys you need to be able to move in and out of trades quickly okay now i personally use speed trader i love speed trader we've got the direct access routing we have high speed executions and we have hotkeys all right so this and we have aggressive pricing so these are some of the real fundamental things to look for in a broker if your broker doesn't have hotkeys you're not going to be able to get in and out of trades quickly okay that's critical you need to be able to get in that trades quickly i can't tell you how many times i've been up a thousand dollars in a matter of seconds because all of a sudden all of a sudden the stock spikes right when you see a stock spike like that you want to be able to put money in your pocket and profit from it you don't want to be fumbling with your orders and trying to enter your order window and then confirm it and then send it again it doesn't work you need quick uh executions all right so i highly recommend a broker such a speed trader it's going to give you the technology to be the fast day trader you need to be to make money there's a lot of full service brokers out there e-trade ameritrade those are terrific if you're trading a couple times a month you know a little bit of day trading here and there but mostly you know investing but when you're an active trader meaning 10 trades a day or more yeah you need better software okay so remember that brokers will give you four times leverage so if you put in thirty thousand dollars you're going to have a twenty hundred and twenty thousand dollars of buying power okay so that leverage is margin you're allowed to trade on margin but you have to be responsible if you're going to trade on margin you have to be responsible we'll review that in the risk management section of the class scanning tools i use trade ideas and i can't say enough good things about them i love trade ideas ninety percent of my trades i find on the scanners that i built in trade ideas so you need a way to find stocks i mean this is just part of the deal we need a way to find stocks trade ideas for me that's how i do it alright so when you're in the chat room you can see my screen while i'm screen sharing you can see all my scanners running you can watch the scanners that i'm watching so if you're in chat you don't need to separately have a subscription to trade ideas you can just watch my scanners and benefit from it but you know if you do go out on your own you want those tools you're going to need it okay now something i've talked about and i'll say again is that tools are of no value if you don't know how to use them so this course is going to be focused on teaching you how to use these tools all right in streaming news i use the benzynca pro for the squawk box this is basically a radio that's constantly talking about the stock news right breaking news on stocks options activity takeover chatter anything you can think of it's coming out on the radio this is really terrific i love benzynga for the news all right so i generally when i'm trading news i'm going to wait for the dust to settle we will go into more detail about news based trading strategies but for right now remember you don't want to be an impulsive trader right we know we have to make quick decisions but we also need to maintain discipline and composure and make sure all of our trades fit within one of the strategies that were that were live trading all right now on another note we have to think a little bit about the ebb and flow of the market okay now there are times when the market the overall market is very choppy we it is okay for us and it's advisable for us to adjust our risk based on market conditions if we're in a period where the market is choppy we're having a hard time generating profits it's a good idea to scale back taper back the risk a little bit right reduce the exposure so our losses aren't so bad then when the market starts picking back up and we get on a hot streak we can start to lean into it a little bit and go heavier so knowing when to lean into trades and when to ease up a little bit is important it's something that will come with experience and we will review that again more in the course okay and you can look at the macro channels on the spy and draw trend lines and if you can see that we're trading at the top or bottom of a macro channel you can expect a little bit of choppiness so it's kind of like a pinball you're bouncing up and down between these channels okay when we're moving between them we often have nice clean moves but we're consolidating along the highs wrong along the lows we can get a little bit of choppiness so something that is absolutely critical for every trader is that you're trading a strategy i wish someone had told me this when i was first starting trading ross you need to trade a strategy if you're trading with real money you must be trading a written strategy it must have historical data to prove to verify that it's worth trading with real money we must justify to ourselves that we're worth investing in otherwise we might as well put the money somewhere else in a mutual fund or in a cd because at least there we won't probably lose half of it right but the experience for a lot of traders is that they fail they lose money okay and a large a large percentage of those traders they're not getting the education that all of you are getting here um and they're going to be live trading strategies that are not even they're not even hammered out right they're just haphazardly trading a little of this a little bit of that until their account's gone and then they wonder what happened so everyone here in this class uh you have the big advantage of working with me and the other traders in our chat room to help develop a strategy worth trading okay so remember the market is going to be here we don't need to rush this is a marathon not a sprint it's not about making 50 000 by the end of next week it's about developing a set of skills that can last for a lifetime okay so we don't want to live trade a new strategy until we've proven that it's worth investing in and we don't want to be impulsive and this is part of going back to having patience and it's also a big part of managing risk we all have our place in the market all right trading is not for everyone uh but for everyone that feels like trading is a good fit for them we still have our own place in the market i may be a one minute five minute trader you may be a 60 minute 120 minute trader right maybe a 60 minute four hour trader you may be a daily trader weekly trader there's a place in the market for everyone okay so you have to find your place what time frame works for you what strategies work for you inevitably what you're learning here are going to be pieces of the puzzle learning to trade it's like a big puzzle you're going to look you're going to get some pieces here in our trading course you're going to pick up pieces on your own from your own reading your own research inevitably you're going to create the puzzle it's going to be your own unique trading strategy it's going to be unique to you it'll have a little bit of what ross does it'll have a little bit of what someone else does you know have a little bit of your own thing you're going to take what works for you i don't expect everything i do to work exactly for you right we're all individuals we all have our unique approach that's fine that's okay and i'm happy to help you develop the strategy that's gonna work for you the important thing is that you need to be good at one strategy right one strategy once you can tread water in the market if you can just tread water you can get by right the longer you sit in the market the longer you can be a trader but without blowing up your account the better your odds are this is just a matter of having time in the chair right the more time you see watching these charts the more you learn so this is a job where you survive until you can make it so if you can just survive if you can just break even just tread water until you learn to swim that's what you do and with one setup with one strategy you could be successful and you can tread water and you can just sit and wait for that one setup to come to you right it's like having a very very narrow diet you only eat apples well you just have to wait for apples to come all right and sometimes you're gonna sit and there's not gonna be any apples for a while you just have to wait for them to come to you alright and then eventually you start eating pears and peaches and oranges and stuff like that so you start branching out but first you need to get down one strategy okay all right so that can be the gap and go that can be the momentum strategy that can be the reversal strategy or it can be one of your own okay but those are the three that i trade most actively and my favorite is the gap and go all right so this was what worked for me focusing first on what i was good at and then narrowing down narrowing it down developing that area of strength into a workable strategy and then using that strategy to survive until i could develop others right one of the first things i did as a trader was create an excel doc i wanted to tr i want to track all my trades and i actually did this uh when i was younger when i was i don't know maybe uh 14 or 15 i had some some stocks that i was buying i was buying caterpillar and some computer companies and some bicycle companies car companies i was buying stuff that i liked with like 100 shares just a little of this and a little that and i had it all on a yellow legal pad and i was so pumped to make that um kind of spreadsheet on you know legal yellow paperwork i love doing that and as soon as i started trading um when i got into it to day trade full time i opened up my excel doc and started making a spreadsheet and it was one of the best things i did because i was able to track my performance so i would track okay these trades are this strategy this strategy and this strategy i'll be able to categorize them and then sort that data and i was able to find okay look ross you're doing a great job buying breakouts of resistance that's where you have the biggest winners that's where you have the most consistency focus on that so i highly recommend tracking your trades um get to know your statistics you're going to learn a lot from those all right so homework for today's class start tracking your trades all right and if you're already tracking them and start going

2021-07-06 01:18

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