[Music] in today's episode I'm going to share with you the process I follow every single morning to help me find the best stocks to day trade my goal for you is that by the end of this lesson you're going to have a system and a strategy that you can Implement in your own trading to help you separate the stocks that are junky and aren't going anywhere from the ones that have real home run potential now I want you to know that everything I share with you in today's class comes from my own experience as an active Trader as you may know I turned an account with less than $600 into more than $10 million of verified and audited trading profits and I did it using the same system of finding strong stocks that I'm going to share with you today all right so the first question is Ross as an active day trader what type of stock are we really wanting to trade something I've said for a long time is that day Traders are Hunters of volatility and managers of risk what that means is that we profit from intraday fluctuations in price we need to find stocks that are moving in order to make money we don't want to buy a stock at $5 and then sell it hours later at $5 we're not going to make money on that we want to buy a stock at $5 and sell it at 550 for a 10% return and we would love to do that in maybe 15 minutes a 10% return in 15 minutes sign me up that sounds great now some of you are probably thinking Ross that's crazy you're not going to get 15% 20% 30% returns in such a short period of time after all the average mutual fund only returns 10% and that's an entire year now you're right but what I'll also tell you is that the average mutual fund has to diversify their risk because they're investing hundreds of millions sometimes billions of dollars and so they do that by buying hundreds if not thousands of different stocks but on any given day there's a really good chance that there are one or maybe even two stocks in their portfolio that are bucking the trend and those are the stocks on that particular day that I want to be trading so yes there are thousands and thousands of stocks that you could choose in the market on any given day and 99% of them they're not going to be good stocks to trade now some of you might think Ross what about getting really good at trading Apple or Netflix or Tesla and just trading it every single day after all those are stocks that move and I tried that I tried that really hard for several years when I was early in my career but what I found is that stocks like that on any given day while they are moving in terms of percentages they're not moving very many percent they might be going up or down half a percent maybe 1% and so in order to profit on those relatively small moves you're going to need to use a lot of Leverage if you start using a lot of Leverage you can expose yourself to lot of downside risk for me that's not worth it and when I was getting started trading I was trading in a small account a small account meant I couldn't afford to buy stocks like Netflix or Apple or Google I had to focus on the lower PRC stocks but one of the mistakes that I made early in my career was that I thought focusing on Lower PRC stocks meant I should trade penny stocks and that was a disaster so while large cap stocks aren't great because they're not volatile enough penny stocks aren't great either because on the one hand they can be too volatile and on the other hand a lot of penny stocks especially OTC stocks are involved in pump and dump schemes and while you can trade them and make money by being in early and not holding too long it's playing with fire because you never know when the Insiders are going to start dumping shares and so I learned through trial and error and I learned the hard way that the stocks that I actually have the biggest Edge on are the stocks each day that are going up because they have a real reason to move not because text messages and and email newsletters are being sent out to tens of thousands or hundreds of thousands of people on a pump and dump but because the stock has let's say quarterly earnings that they've just reported or maybe FDA approvals or positive clinical trial results these are the types of catalysts that can drive a stock to go up 20% 30% 50% or more in a single day okay so the type of stocks that we want to trade are stocks that are volatile but have a catalyst behind the volatility that we can understand and that we can feel is safe so if 99% of stocks are trading within a standard deviation of up 4% or down 4% on any given day I already know that I'm not going to be interested in the they're not moving enough for me to be profitable I need volatility but of course I still need to be able to manage risk so I can do two things number one I can look for stocks that are down more than 4% a stock that's down 10% every now and then we'll even see a stock that's down 50% in one day the problem with considering those stocks for day trades is that when a stock drops 50% in one day it's usually because there's some really bad news which means the company could have risk of going bankrupt so I don't like to trade those types of stocks that doesn't really fit my profile of volatility plus risk management okay so instead I want to focus on the stocks that are up more than 4% and honestly I'd like to focus on the stock that's in the number one position of being the leading Gainer on any given day I find that the stocks that are the leading gainers on any given day are the ones that are the most obvious they're the ones that have the cleanest price action and even though a stock could be up 50% and you might think it's very extended it can't possibly go higher the fact that the stock is up that much only makes people want to buy it even more there's an incredible psychology in the market and we saw this with Tesla during 2020 21 and 22 the price kept going higher and higher and higher and higher and people kept buying it higher and higher so if you understand that market sentiment that psychology that when stocks are up people only want it even more you no longer feel afraid to trade a stock that's up 40 50 or 60% on the day so this is what I do I use stock scanners to help me filter out all of the noise because out of literally thousands and thousands of stocks that I could choose on any given day I already know essentially if it's not up at least 4 4% I don't care about it so now what I can do is I can program a stock scanner to search the entire market for stocks simply up more than 4% by doing that on any given day I usually have a list of not more than 30 or 40 stocks so just like that I reduce from thousands and thousands to 30 or 40 stocks but 30 or 40 stocks is still a lot of stocks to choose from how do you know which one is going to be the obvious and so the next thing I do is I sort those stocks by the biggest percentage Gainer and I'm looking at the top 5 to 10 so it's kind of like page one of Google search if a stock is not on the top of page one well people probably aren't going to focus on it now here's something that's also interesting to keep in mind many retail Brokers are actively sharing and telling their clients which stocks are the leading gainers on any given day why do you think they're doing that they're doing that because they want their clients to trade those stocks they want them to trade because every time they trade in the free commission structure the broker gets paid from the order flow right this is called payment for order flow so the broker is incentivized to have you trade they want you to trade actively you and your order flow are the commodity that's why they give you the free commissions so so as a result the stocks that are the number one number two number three percentage gainers they're getting a lot of attention from these retail Brokers and they're even spilling over into the mainstream media okay so we know that the leading gainers are the most important stocks to focus on and we know that we're going to use scanners to find them this is what those scanners look like and it's communicating a lot of information now right now we're not even looking at stock charts stock charts is sort of like the next level the first level is just figuring out what is the type of stock I want to trade how do I find it once you figured out you like a stock then the chart analysis comes into play that's when we start getting into technical analysis looking at the position of the moving averages the Candlestick patterns and everything else but we're going to set that aside for step two so step one right now is just building that watch list every day so this is what the scan looks like and I have this so I can run it on my phone and I can actually pull it up in the morning before I even get out of bed and I can see which stocks are moving up I always have this scan sorted by change from close so if you look right here 97% Gainer right here this stock symbol is cfrx so the symbol is um that's the ticker name for the company all right so if you clicked on this you would see the actual name of the company the price of this stock is $261 so if it's up 100% that means yesterday it was priced at $130 this is the type of stock that's moving quickly and if you think about this just for a moment and let's jump onto the Whiteboard and do the math so let's just say the stock was trading at a130 yesterday all right it's trading at $130 if you bought 10,000 shares 10,000 shares this that would be it's not a huge position 10,000 shares of a130 that's a $113,000 position all right $113,000 position the next day it's trading at $260 you're up $113,000 your account has doubled in one day well may not have doubled depending on how much you had in the account but the position is doubled in one day when I was starting as an active Trader early on while I was initially gravitated gravitating towards these penny stocks these low price stocks I realized that those were the ones that were too risky and instead I started focusing on stocks generally priced between $1 as my minimum cut off and about $20 a share the reason that I like these stocks is because they make big percentage moves like 90% 100% even more in potentially one day and by making those big percentage moves they're more likely to be in position one or two on a top Gainer scan the fact is this stock down here uh BFB priced at $36 it's up 20% but it's going to this stock is going to have to move a lot to be up 50% or 100% it's not likely to happen it would have to go from you know $30 a share to $60 a share so what I realized is that it's a lot easier for a stock to go from three to six than from 30 to 60 both are a 100% move but which one is more likely to happen in the market and it's the lower price stocks that are more likely to make those big percentage moves I think that there's also something here about the fact that a lot of retail Traders like myself when I was getting started were are trading in relatively small accounts which means when you have a stock that's $30 or 50 or 100 or 200 we just can't afford to buy that many shares of it which means the incentive to focus on it just isn't there but when you have a stock priced at a130 or 250 or three and it's moving quickly you realize wow even with a $5,000 or $10,000 account I can buy enough shares to make a substantial amount of money look think about this $113,000 in one day that is a that can be a lifechanging amount of money if that was happening to someone on a regular basis that is far more than you would make doing almost anything else certainly sitting in front of your computer for an hour or two a day okay so if we're going to get back on the scans here because I know that the stocks that generally are going to be the most obvious and will give me the biggest winners are priced between two and well between 1 and 10 between 1 and 10 is my real sweet spot and even within that I would say there's a little bit of a um a bell curve 5 to 10 is sort of like the peak but I'll trade one to five a dollar to5 that's fine I'm not going to have as many trades in this area but I'll still trade this is where I'm going to trade the most and make the most and then between 10 and 20 oops 10 and 20 I'll trade in this area as well but again the frequency of Trades are going to decline and the profits going to decline so when I see something that's in this range here of 5 to 10 that's when I start to get excited so the truth is cfrx priced at $2.60 maybe a little low in terms of my preferred price but obviously it's moving it is obvious Traders are focused on it and that's the one that I have to focus on too this is one of the reasons it's really important to be in a community with other Traders because you need to understand what other people are looking at because ultimately the reason stocks go up is because tens of thousands hundreds of thousands of people like the stock so you want to understand sentiment you want your hand on the pulse there where you can realize oh people really like this stock or HM this is one that nobody is talking about maybe I shouldn't be focused on it if you trade completely isolated some people like to do this because they want to close out any noise but the problem with doing that is that the price action that we see in the market is the result of human behavior and the way people are thinking so you have to have you know you kind of have to be inside the head of other Traders and know what they're thinking why they like a stock why maybe this month this particular type of stock is very interesting we see that very often that the market will go through these Cycles where for a period of time Chinese stocks will be really popular and then pharmaceutical stocks will be really popular and then AI stocks will be really popular and it kind of goes from cycle to cycle to cycle and the reason this happens is because at the beginning of a cycle one stock perhaps like a cfrx ends up squeezing up 100 200 300 400 500% doing something absolutely phenomenal and everyone gets so excited and they say after that one I am not going to miss the next one and so the next one that pops up that is somewhat similar is going to get that much more attention and this is why you have to really have you know your ear to the ground and understand what the sentiment is what are people focusing on right now what are people thinking what are people excited about what's the next one that people are looking for and once you understand that then as soon as you see it on the scans you recognize one morning wait a second this stock ukar you know right now it's up only 32% and let's say on that particular day these aren't here so this is the leader you say well wait a second this looks a lot like cfrx from a couple days ago and now you're starting to form a little bit of a thesis and some reasoning of why this is going to be the right stock to trade today now on the scans you may notice there's a number of different columns that are communicating different data points some of these columns are more important than others so one of the first criteria for me being interested in trading a stock is volatility and the potential for continued volatility as always I need to be able to feel that I can manage my risk which is why I avoid trading stocks that are down and why I would avoid trading penny stocks or stocks that I think are involved in a pump and dump scheme or or something like that I would rather focus on stocks that have some type of real Catalyst all right so one of the things that I'm going to look at is the news once I've identified a stock is moving it's a leading Gainer I'm going to click on the symbol and I'm going to pull up my news Windows right here these news windows are going to tell me what the catalyst is and this is very important because there will be times where that news window is blank there is no discernable Catalyst this is something that I always will trade with caution there are times where a stock will be up for 50 even 100% with no news at all and you might think Ross how is that even possible it's called a technical breakout typically it's because there is a chart pattern on the daily chart that is so obvious it's created a breakout Traders saw it they started to buy it the breakout began to form and now again as the stock becomes a a bigger and bigger percentage Gainer people are buying it just because it's moving higher and and then that's all how all of a sudden it could be up 50 60 70 80 100% or more and that's fine I don't mind trading that one of the uh patterns that we see uh very often in this um technical breakout is we'll see a stock that's been selling off for a long time and then all of a sudden off of this low you get the first candle that makes a new high and what happens in this area is anyone who is shorting the stock trying to profit from the companies to clim F once the stock starts moving up they're like oh gosh I have to get out of this position the stock is moving up and it's moving really quickly and for those that don't understand short selling the way Short Selling works and one of the reasons I don't like it is because you create a negative position on the stock so what that means is you see it down here you think it's going to go lower and you sell it and you have a minus let's just say for instance 1,000 share position on the stock and it goes lower and lower and lower and lower so if you short the stock at $8 a share right here $8 and it goes down to seven and then to six and to five and to four and to three when it goes down to $3 you would be up well $5 a share times $1,000 5 Time 5 you'd be up $5,000 in profit so you can profit from a stock going down but you eventually have to get out of the position and the way you get out of the position is by pressing the buy button here is the problem if you recall the GameStop short squeeze for a moment what you'll know is that there were some hedge funds that created such a large negative position oh they weren't trading with 1,000 shares they were trading more with like 10 million shares huge positions and when you need to cover 10 million shares that means you got to press the buy button you could do it on a million shares oops and you could do it 10 times but one way or another you've got to buy back those shares and when there's a lot of buyers coming in and all of a sudden you need to buy back those shares it's not going to be easy to do that because people aren't selling why would someone sell when the stock is clearly going up they're going to want to hold it longer and longer and longer and so the result is we have what are called short squeezes where a stock starts suddenly moving up and short sellers are buying to cover now this can be an opportunity like it was with GameStop for active Traders like myself to profit even if the stock in this case does not have a clear Catalyst but is purely technical a short squeeze is a technical phenomenon it can be triggered by a catalyst but can also occur without any fundamental Catalyst whatsoever but here's one of the big risks with short selling if this stock let's say all of a sudden keeps going higher and I could give you example but I saw a stock recently that went from about $20 a share 20 up to 500 it went that high that's $480 a share so if you had had a minus uh 1,000 share short position on this the most you could have made if you shorted a stock at $20 $20 and you shorted 1,000 shares your position is $20,000 the most you could make if is if the stock went to zero and you would make the full $20,000 right because you would buy back the stock at you know one penny a share and you would be back you would take the full $20,000 of profit but in this scenario the stock goes to 500 you have the potential to lose $480,000 in one trade this is what we would call a negative profit to loss rate ratio your average losers would be so much bigger than your average winners it would be staggering and in fact you could be right 99% of the time but it wouldn't matter if you lose half a million dollars on your losing trades now when you trade a stock to the long side you buy a stock at $5 with the intention of selling it at 550 the most you can lose the most you can lose is if the stock goes to zero and that really would suck you would lose 100% of your position but losing 100% your position is not nearly as bad as being short a $20,000 position and having to somehow now come up with half a million dollars to cover it and so that's the reason that for most beginner Traders Short Selling is not an adequate strategy because you will not be able to manage your risk in a responsible way the downside risk is simply too high so nonetheless we like to see what the catalyst is and and while it's possible that we could have a purely technical setup or a short squeeze usually I like to see that there's a fundamental Catalyst and I'll see that simply in this software by clicking on the stock and seeing what the news is the type of news that I like trading includes uh clinical trial results this can be very strong for pharmaceutical companies um FDA approvals that can also be a very strong Catalyst certainly earnings for any company can be strong especially when you have low price stocks under 20 sometimes we'll have earnings from these companies and they're like their year-over-year profit increased by 400% they they'll like out of nowhere come out with these huge numbers and often times it's because maybe last year the company made let's say a million dollars in profit and this this year they're you know they're four five million or 4 million so they're like yeah we're up 400% so it sounds big but it is big for a company that's small and their stock price can certainly go up quickly to reflect that catalyst so I do like earnings a catalyst that I do not like is mergers and Acquisitions or buyouts the problem with this is that when a company gets bought out the value is now fixed there's no real speculation on the value anymore if a company is being bought out at $8 a share what's going to happen is when the stock um when we when we look at that stock we're going to see that basically it went straight up to eight and now it's just going sideways you know you'll see like a little bit of up and down but it basically just looks like a barcode it's just going up and down just a tiny bit it's sideways at eight the value of the stock has been determined it's not going to be volatile so I don't like buyouts mergers you know if the if we're talking about a headline where the company is merging uh a smaller company into it the shareholders aren't always really excited about that there can be delution involved it can affect the the the number of shares available to trade so that's not always great and if the stock is merging into another company then that stock is going to disappear and while shareholders may get a stake in the new company it's just too complicated to get into so I avoid it completely all right so earnings FDA approvals uh clinical trial results not to Catalyst such as mergers buyouts um or Acquisitions another cat that can be good with be new contracts for companies that pharmaceutical companies certainly tech companies AI companies we had a a long stretch where anything involving GPT contracts this was a big deal Traders would get super hyped up about it so much so that some Traders including institutional Traders were employing algorithms where if there was a keyword in the news headline they would immediately initiate a trade to buy the stock which is kind of crazy and and and the companies ended up realizing this and gaming their headlines to say you know launching a new Amazon partnership store with you know Chad GPT they would they would stuff in all the keywords but a lot of times those stocks would pop up initially on an algorithmic trading Spike but that would fade back down so those can work but you've got to be a little bit selective about it catalysts are important but don't try to be an expert at reading the fundamentals I don't before I'm not Warren Buffett I don't go to bed reading quarterly filings you know annual earnings reports and things like that I I I understand that I will never fully know as much about these companies as the people on the inside and big money they always have connections on the inside we're never going to be at that level so I will sometimes see a stock come out with news and I'm like wow that news looks great and then the stock sells off all day and there's other times where I see a headline and I'm like I don't think that's super significant and the stock goes up so what I've learned to do is aside from recognizing that certain headlines can be completely disregarded such as buyouts or mergers or Acquisitions for the most part I like to see there is a news cataly and then from that point forward I focus on the chart pattern because if the chart pattern is strong if the stock is going up then that's all that I really need to know people like the news I might not understand it fully but that doesn't matter trade the technicals the fundamentals will matter in the long run but as active Traders remember our job is to try to capitalize on intraday volatility and we're going to do that by just trading the price action okay so if we look at these columns the first column is the percentage change on the day the second right here the second column is the stock symbol uh this column in the middle gives you an arrow to indicate if the stock is currently moving up or down on this list so when you have arrows going up it means the stock is actually moving up the list arrows going down means the stock is moving down the list and then we have the price you can filter any of these columns or sort this uh this set of data based on what you might like I don't sort by price I don't find that helpful but I will occasionally sort by volume by when I sort by volume I can get an understanding of which stock is the most popular stock today in terms of number of shares traded certainly if a stock has 3,000 shares traded that's a lot fewer shares than 30 million so the stock with the more volume is usually the one to focus on except for the fact that sometimes a low price penny stock that's 10 20 30 cents will have millions of shares of volume but it's actually not a lot of money because the stock is so cheap so just keep that in mind total volume is not the end all Beall and I'm not looking on any given day for the stocks that have the most volume first and foremost I'm looking for the biggest movers but within the list of the big movers I do like to have a sense of which ones have the most attention and volume is a good way to identify that certainly on this day cfrx was leading in volume with 12 million shares the is the number of shares available to trade so one of the things that I often talk about are uh the criteria for being willing to trade a stock so I'm going to share with you um we're going to make a list here so number one uh so this is going to be best um stocks to trade to day trade all right so the best stock to day trade number one will be up at least 10% for sure they have I mean they have to be well the the the bare minimum is 4% to be breaking the standard deviation but we'd like to see even more than that 4% is okay but we'd like to see you know 50% or or even higher so bigger percentage Gaters gainers top um you know one through five basically number two we want to see if the stock has a catalyst we'd prefer that now as I said it's there's certain situations where it's okay we don't but I'd prefer a catalyst number three we know that we like stocks between $1 and $20 number four we want to see the relative volume relative volume is five times higher than average this is something that uh for some beginner Traders is a little hard to get your head around so relative volume is the amount of volume today relative to what's average for that particular stock over a set period of time and this is very interesting we very often see that the stocks that make the biggest moves on the previous day had almost no volume there's a certain element of surprise that happens so on the previous day the stock might have only had 5,000 shares of volume and then today has 12 million shares and of course the only way that happens is either from a crazy impressive technical short squeeze or more likely because there's some type of fundamental news Catalyst that's come out that is you know drawn in all these Traders so if a stock has an average volume of a million shares a day and today it has 5 million shares that's five times relative volume I like to trade stocks that have the minimum relative volume of five times above their average and this is going to tie back to one of the reasons I don't like trading large caps on a daily basis trying to trade a stock like Facebook or Tesla or Netflix meta whatever on a daily basis these stocks don't have high relative volume every single day it would be impossible for them to have high relative volume every day they have average volume and then a couple times a year there'll be some type of big news event that comes out and then the volume goes super high but even then it's very rare So when you trade stocks that have low relative volume you're trading stocks ultimately that not a lot of people are watching so who's trading these stocks well you could have mutual funds that are executing buy orders and sell orders throughout the day you have institutional traders who are moving in and out of positions to balance portfolios you have the occasional passive retail Trader who's taking a position or selling a position and you have algorithmic trading market makers who make the market by buying and selling stocks across the the market every single day but you don't really have a lot of eyes on the stock and as a result it's not likely to expect a stock with low relative volume will do anything particularly exciting all right so we definitely want High relative volume higher is better now everything that you're looking at here in Orange these all represent levels that I would say of De would be of demand a stock up at least 4% this indicates demand a catalyst demand price between 1 and 20 means it's going to be in hot demand among retail Traders relative volume of five times obviously indicating demand but there's an equation it's something and demand what is it supply and demand the supply and demand equation okay well where does Supply fit in here Supply is number five and Supply is float the number of shares available to trade so when a company does an initial public offering they sell shares onto the open market and from that point forward those are the number of shares available to trade so a lot of these small cap stocks these lower PRC stocks like a cfrx when they IPO they might have ipoed at5 six $7 a share and a lot of times they'll sell 5 million shares maybe less onto the market so at that point let's say 5 million shares times $7 a share they raise like 35 million bucks they have to pay some fees to the big bank that helps them bring their stock to the market so they walk away with maybe 30 million all right and they use that money to invest in the company hopefully they're able to grow the company but sometimes that money is used just to help insiders cash out it doesn't really help the stock grow and over time the company May decline in value nonetheless the number of shares available to trade is 5 million so let's look at cfrx on this particular day it has 12 million shares of volume but it only has 1.5 million shares available to trade this is why it's up 97% I can guarantee you that if this had 100 million shares of volume H sorry 100 million share float this 12 million shares wouldn't create a 97% gain in the price when you have this is called float rotation for each so if the float is a million shares and you have 10 million shares of volume that's called 10 times float rotation the whole float was changing hands at in that case 10 times in one day that is a crazy frenzy amount of trading people are buying and selling and buying and selling it's going high higher and higher and higher now if you have 100 million share float 12 million shares of volume well see that's not a lot and now let's say the stock is up 40 50% you still have all the other shares that are available to trade and those are going to be people who are going to want to start selling as soon as the stock is up they're going to want to sell that's natural when you're in a position and the stock goes up 50% 100% in one day you want to sell so at most you had 1.5 million shares of people that wanted to sell well clearly here with 12 million shares of volume they all could have sold they all could have sold and the stock is still going higher so this is a concept that may be a little bit hard to get your head around but the the the most important takeaway is that the lower the float the lower the level of Supply this is Supply so that's what can create that really big imbalance between supply and demand so typically when we see stocks that go up 100 200 300 400 500% or more in a single day they have a very low float generally speaking my cut off is 20 million shares a 20 million share float but in a colder Market when things aren't moving as fast I'm going to bring that cut off down to 10 million and I'm going to recognize that a stock with a 1 million share float is well it's likely to move 10 times quickly compared to a stock with a 10 million share float it's just going to move that much faster so it's not a perfect ratio that the rate of move will be relative to the float but there's definitely correlation okay so that column is float number of shares available to trade and you can sort the data based on this column if you want to you know if you do that you just see the lowest float stocks first but I don't do that because again this is what I want to focus on and this is what those retail bro Brokers are going to be sharing with their clients as well they're going to be like this is the leing Gap or it's up this much it's on news because they want to entice that active trading the relative volume on this stock is 11 all right so it's 11 that means yesterday or on the the average it trades around a million shares of volume and now we've got 12 million shares here on this day a million shares of volume is pretty decent daily volume you can see that some of the stocks on here don't even have a million shares 4,000 45,000 22,000 so some of these can be very light volume some Traders will ask me Ross what's the minimum volume you be willing to trade so there are times that we'll see a stock hitting the scanner up 30 40 50% as you can see here with BFB it's up 20% on 4,000 shares of volume and we might look at that and think well it's just not enough volume and and you're right 4,000 shares is basically nothing but it is up 20% I have seen stocks that have gone up 50% or 100% on less than 100,000 shares the volume so if a stock is moving quickly and I can understand the Catalyst and I feel that I can manage my risk I'm going to be interested in trading it however when you have very very light volume you have to understand that the risk is a little bit different because there's not as much liquidity liquidity refers to the ability to get in and get out and if a stock has just gone up 200% on 100,000 shares of volume it could also probably go back down the same amount on the 200,000 shares of volume which means if you let's just say tried to buy 20,000 shares you would be 10% of all of that volume and while the stock could go much higher if it turned around it could be hard for you to get out of that position so I generally when I see a lighter volume stock and it's moving I'll be interested but I mitigate the risk by reducing my share size if I don't feel I can manage my risk at all I certainly won't take the trade but usually if a stock is moving I'm going to be interested now there's a couple other columns um here that some Traders would look at but I don't look at these ones as actively the relative volume in the last five minutes these are all really big numbers I don't worry about that too much the Gap um this is pre-market this is the exact same as the top gainers so once the Market opens the Gap doesn't change for those that are a little bit um newer to reading stock charts I'll just share with you very briefly here that when we have a stock in in the case of the stock for instance that was selling off for a long time selling off for a long time and then all of a sudden goes up sometimes what'll happen is the move starts pre-market and it starts it looks on the chart like this and when that happens there's a gap between yesterday's close which was the bottom of this red candle top of that candle and this level right here this creates what's called a gap on the chart it's basically air there's no support or resistance because it just jumped over this level so generally speaking I'm always almost always trading stocks that are gapping higher Gap means the stock is moving but what's interesting is that uh in the older days stocks didn't really Gap in the same way so let me flip over my um my whiteboard here I was prepared for this question okay so we have regular trading hours which is 9:30 a.m. to 400 p.m. so the bell rings on Wall Street at 9:30 a.m. in the morning Eastern Standard Time New York City and in the old days that's when trading began right but with digitalization of the market the ringing of the Bell is symbolic it doesn't mean anything it doesn't really mean anything it's true though that 9:30 to 4:00 p.m. are considered regular trading hours so regular trading hours are 9:30 to 4 p.m. and when you're looking at a daily chart a daily chart is always a chart showing regular trading hours so this is showing how much the stock moved up or down on that particular day between the hours of 9:30 and 4 p.m. the reason pre-market and after hour price action is excluded on the charts is because often times premarket and after hours is very thinly traded you can have some anomalies like a a very large candle wick that goes up or down and it messes up the charts they don't usually look right and they're not very valid because those orders sort of just occur separate from the price action that happens during the day but more so Traders are participating in trading pre-market and after hours so in fact the market begins at 4:00 a.m. for pre-market trading pre-market goes from 4:00 a.m. to 9:30 a.m. eastern standard and after hours begins at 4 p.m. and ends at 8:00 p.m. which means in theory if you wanted to you could trade from 4: in the morning straight through to 8 p.m. at night a 16-hour trading session and I guess I should admit I've done that a couple of times I did it during the GameStop era I woke up at 3:45 opened up my laptop and started trading at 4:00 a.m. the second I was able to but most Traders aren't using Brokers that will allow them to do that most Brokers Charles Schwab Fidelity ER trade they don't allow you to start trading before 7 a.m. and that's just also from a logistical standpoint of them not wanting to have customer support available at 4 in the morning to answer your call about why you're having trouble getting in or out of a position so they open at 7: a.m. what that means is that on any given day although pre-market does begin at 4:00 a.m. and there is some trading between 4:00 a.m. and 7:00 trading really begins when the Brokers turn their lights on and let their clients begin trading and that's 700 a.m. so between 7:00 a.m. and 9:30 we see very active markets my strategy right now is to trade from essentially 7 a.m. until momentum cools off so when I first wake up I pull up my phone when I'm still in bed and I check my Gap scan my top Gainer scan to see what the you know top three four gainers look like I like to see what the prices what the float is with the Catalyst with the sector just to get an understanding of you know what's the feeling of the market what's the sentiment look like and then I come over to my office and usually by 7:00 a.m. I'm sitting down and I'm looking at the scan so if at 6:45 I see a leading Gainer that meets all of my criteria from the perspective of price how much it's up the cataly the float the relative volume then I'm ready to trade starting at 700 a.m. I could trade a little earlier if I want to the broker that I use does allow trading as early as 4:00 a.m. but usually I just wait for 7: a.m. to see if volume comes into the stock so at that point between 700 a.m. and 9:30 at the top and the bottom of each hour I wait for news to come out so headlines come out usually pre-market before the opening bell and they come out at 7 well they come come out earlier too 4:00 a.m. some headlines come out overnight there are some stocks in the US market that are international companies but they have a US listing so they might have news that comes out at 3: in the morning 2: in the morning and then right at 4:00 a.m. there are some traders who already begin trading that stock I don't like to do that on a regular basis I only did it in the exception of GameStop so on a regular day I'm not going to trade that I'm going to wait for the stock to come up come up with news and for it to start moving so this sort of the chicken or the egg some might be thinking Ross how are you scanning for news so the second news comes out you're buying a stock the problem is there is news that comes out every minute of the day all day long on stocks but most of them don't result in the stock doing anything at all so rather than searching for stocks that have a news headline I'm searching for stocks that are moving up right now and I have audio alerts that help me find it so even if I'm on the other side of my house I have my speakers turned up and I'll get an audio alert when a stock is meeting my criteria for being worth trading and this scanner is searching the entire market for stocks that are right within my wheelhouse of price float and are squeezing up right now once I see a stock squeezing up then I can very quickly pull up the news window and see does the stock have news what's the Catalyst why is it squeezing up 30 40% in 5 minutes and regardless of what the catalyst is the fact is the stock is moving so now I'm interested so for me rather than trying to predict what stock is going to move I wait for the stock to start to move and then I get in this is something that can be really challenging for some beginner Traders because they think that gosh there must be a way that I can find these stocks before they move Ross how do you find these stocks so early early well I find them early relatively speaking because I'm finding them as soon as they're hitting my scanners I'm finding them before a lot of people are finding them but I'm not finding them before they hit the scanners I'm not finding them before they make the move there's no way to know before they make the move before they're moving they're nothing but once they start moving from that point forward I'm interested my job as an active Trader is to be very patient I am hunting for Vol for volatility but I am often laying low in the tall grasses waiting for that next stock to hit my scanner and then once I see it boom I start trading in fact I spend more time sitting and waiting than I actually spend in a trade but patience is incredibly important if you're going to have long-term success as a Trader you cannot just jump in anything that's popping up a stock might pop up but it has low relative volume you know or the float is too high and other Traders might want to jump in it the probably lose on it but not you because now you are learning the system of finding the stocks that actually have the highest likelihood of making a big move so unless something meets that criteria it's not worth trading success requires the discipline to wait to sit and patiently wait for that stock that's perfect so I know that at 7 7:30 8 8:30 9 and 9:30 we're likely to see news headlines come out out they come out at the top and the bottom of the hour all the way to the market open and those are usually the opportunities where I'm going to see a stock that's going to start popping up on the scanner and I'm going to wait and find my first entry now we're not going to talk as much about the specific entries in this class that I'm hosting right now today but what I'm going to do is I'm going to put a link in the description and I'll pin it to the top of the comments where you can actually download my small account strategy this strategy includes where I am buying so what my actual entry indicators are and this is where we're going to get into the Candlestick charts and what my exit indicators are so that sort of puts the whole map together sort of it's a road map and that's going to put the pieces of the puzzle together so right now for the sake of time we're focusing just on stock selection and how to choose the best stocks to day trade but if you're also interested in learning about where to get in and where to get out download that small account strategy PDF that's going to be pinned in the top comments and linked in the description now once regular trading begins at 9:30 most companies won't put out fundamental news that has the potential to move the markets that is reserved for pre-market and for after hours trading so from 9:30 a.m. until 400 p.m. the market will continue to trade and of course stocks will continue to react from news that came out in the previous pre-market session but usually momentum starts to kind of well it either continues on a stock that's really really hot or Traders are waiting for the next stock so there's a window each day for me to be active it begins right at 700 a.m. when retail Traders start trading and it ends well it's usually done by 10:30 or 11: with the exception that if there's a stock that's incredibly strong from premarket I'll keep trading until that stock sort of rolls over and people give up on it usually at a certain point traders who were active early feel like they've made enough money and they kind to walk away and volume starts to decline Traders don't want to keep going back to the well too many times it's better to be early and to leave early than to trade late so that's usually My Philosophy to get in be aggressive and then get out hit the road and enjoy life so I'm usually done by 11:00 a.m. with the exception of some days the Market's really really hot and it makes sense on those days to to dig deep and trade longer something that I know about my trading is that uh generally speaking about 80% of my profits will come from just a small handful of days each month so on days when the market is hot and I have stocks that perfectly meet my criteria I'm going to dig deep I'm going to trade as much as I can I'm going to try to extract as much profit as I can but on days when it's cold I'm going to be patient I'm going to be okay with having zero trades or maybe taking one or two trades testing the water but not getting in the zone that is totally okay you want to lean in when the Market's hot and you want to ease off the throttle when it's cold so if my window is from about 7:00 a.m. until roughly 10:30 11: a.m. there are some traders who may trade more actively from 9:30 until 11: or or noon but then going into the middle of the day the lunch hour volume usually declines unless you have an anomaly stock that's doing something really exciting usually volume declines and then we have what's called Power Hour Power Hour is from 300 p.m. to 400 p.m. going into the close this is when investors often will adjust their portfolios based on how a stock is looking to close the day either taking new positions or closing positions so there's a kind of a bell curve here as well uh of a volume where you've got a lot of volume in the morning sort of inverted and then declines midday and then it picks back up toward towards the close and then after after hours is when companies can again start releasing news headlines so right at 400 p.m. 4:30 5 5:30 6 637 you'll have companies putting out news often earnings we'll see these earnings results posted and so there are some traders who will trade after hours one of the problems with trading after hours is you're trading at the end of the day and volume is declining and once people lose interest that volume is not going to come back so trading really close to the Finish Line can be a little risky and I I really have only done it in very very hot markets generally speaking for the bulk of my trading career my focus has been in the morning and for what it's worth I took my first trades when I was a teenager I've been trading full-time for more than 10 years I've been teaching at Warrior trading also for more than 10 years and I've done really well trading from about 7:00 a.m. to 10: a.m. each day there are some people who could kind of Whittle that down to a smaller window maybe from 8:30 to to 9:30 an hour a day for those of you who are tuning in who are on the west coast you know out in California or Oregon or wherever you do have the ability to show up to trade pre-market at 6:30 your time from from 5:30 to 6:30 your time and then go to a regular job and that's pretty cool those of you who are in Europe well if you don't mind uh having a little siesta you could trade from you know 2: in the afternoon to 3 or four in the afternoon and you're again you know trading on the on the US market open and that would work so what I I have known traders who trade the US market from all over the world from Asia from all parts of the US from Europe from Australia and they generally all try to find a way to trade those first couple hours of the day and they focus on the stocks that are the most obvious the most obvious stock is going to be the leading percentage Gainer each day and when that stock has a float of less L than 10 million shares when it's priced under $10 between 5 and 10 it's got a good Catalyst that's when things can get really really exciting so this is the beginning of the road map the rest of the road map is actually learning the strategy of where to get in and where to get out so make sure you click the link down in the description to download my PDF of my small account strategy worksheet this will break down for you the strategy that I use myself when I'm trading in a small account which as you know I turn an account less than 600 bucks into more than 10 million and I did it using the strategies I share with you today for finding stocks of trade and in the PDF for my execution of where I get in and where I get out if you guys found this interesting please I hope you hit the thumbs up I hope you subscribe to the channel and I'm looking forward to seeing you for the next episode real [Music] soon
