I am starting a brand new small account challenge today is day one and in this episode I'm going to share with you the strategy that I'm going to be using to grow this account okay gmbl just hit two of my best scanners I am going to see if I can get in this for the break a six let's see I can buy just under a th000 no Phill I chased it 600 shares at 650 there's s 749 718 748 I'm going to take it off the table here nice sold too soon you know what don't be greedy be grateful and just like that I broke the ice with my first trade now let's lay some ground rules for this day trading challenge to mimic what it's like as a beginner day trader I'm going to use just two pieces of equipment this old laptop that has not one not two but three broken keys and I'm going to use this 24-in monitor that was dropped on the ground and is broken we were going to throw it away but you know what as a beginner day trader you make do with what you've got now when it comes to account size I funded this account with 1,000 bucks and I know some of you already are saying hold up Ross I just saw you buy 600 shares of a stock at $6.50 I'm no mathematician but 600 shares time 650 equals at least $3,600 maybe a little bit more you are are correct okay so here's what I'm doing with my account I set up an international account and the reason I did that was because I did not want to be limited in how many times I could trade each day or be required to have a large account there's another thing that comes with using international Brokers International Brokers will give you different amounts of Leverage all right so what does all this mean what it means is that when I fund this account that I'm using right now with $1,000 $1,000 I have six times leverage which means I have $6,000 of buying power and that allowed me to buy up to a th000 shares of a $6 stock now this broker does have some rules about how leverage works one of their rules is that you can only use leverage on stocks over $5 so for this challenge I'm probably not going to be able to trade anything below $5 for a while not until my account has gotten bigger right now I actually have a sweet spot and that sweet spot is a stock between five and seven okay so now let's talk about strategy the strategy that I'm going to be trading during this small account challenge is a little bit different than the strategy I trade with my main account obviously I'm going to be focusing on stocks of a slightly different price range I'm going to be focusing on taking trades at slightly different places and ultimately all of this comes down to me having to be very very careful because when you have a small account you don't have a lot of cushion you don't have a lot of room to make mistakes so I know what this was like because I've been in this place with a small account many times before this is not my first challenge my hope is that by demonstrating the way I trade in this account it'll be inspiring for those of you who are earlier in your learning curve and who are trading in a small account not as a challenge by by sort of a choice but because that's really your only option okay so this is what the small account strategy is going to look like I first have to find a stock that is trending higher each day I'm a momentum Trader so I'm looking for stocks that are moving higher I'm going to look to buy the First pullback with a tight stop using a 2: one profit to loss ratio my target is $100 to $200 of profit per day with a $1,000 account obviously today in my first trade I broke the ice and blew that out of the water with $460 of profit now that was just my first trade today I took a total of three trades today I haven't shared them all with you yet so you're going to find out what happens on trade two and trade three as we go through this episode but let's start high level so when it comes to strategy what is going to be my Approach for finding stocks to trade now by the way for those of you who have been tuned in for a while you know my strategy pretty well if probably watch me trade and throw down some pretty big size and make some pretty big money for my small account strategy things are going to be a little different so what I would encourage you to do is if you check down in the description Pinn to the top of the comments and in the description there is a link where you can actually download my small account strategy PDF it is a worksheet that breaks down the small account strategy so it's a document that you can print out you can have it next to your desk and you can use it as a resource for yourself if if you're also trading in a small account now this worksheet is going to include a couple of different setups that I'm going to be trading a lot during the next several weeks of this challenge so I encourage you to click that link it's put pinned to the top of the comments and it's in the description download that worksheet print it out and then you'll have it on your desk okay so what I'm going to be focusing on in terms of the type of stocks I'm going to be looking number one for stocks that are moving quickly all right so I want to find a stock that has the potential to go up at least 10% now if we jump onto the Whiteboard here just for a moment the standard deviation for most stocks in the S&P 500 and even just most stocks in general is that they don't go up or down more than about 4% on any given day this is plus4 and this is minus four so 99% of stocks in the market stay Within These sort of standard deviation bands they don't really move okay so when a stock does break outside of that it is sort of an anomaly of the day it's doing something really special so what you see here on my screen share these are the characteristics that I have identified that give the highest likelihood of a stock making a really big move now if I'm trading with a $1,000 account which obviously I am I need stocks that are going to move so let's jump onto the Whiteboard again just for a moment and I'll show you an example okay so let's say we have a stock that's at $5 I want this stock to go to $550 now if I put my entire account into that trade as you know I have $1,000 cash but I have $6,000 of buying power which means I can actually buy a th000 shares of this stock it's $5,000 to buy it now I actually own 5,000 shares of this real company so I'm not risking $5,000 so to speak because for me I can turn around and sell this stock at any time on the market so really my risk is the difference between my entry price and where I'm willing to sell it at a loss so let's say my risk on this is $4.90 so in that case I'm risking only $100 it's $100 of risk now let's say my profit Target is 550 all right so if it goes up to 550 I'm going to make $500 of profit Prof now on the $5,000 position this is a return of 10% right 1,000 shares time $5 a share is $55,000 position it's a 10% return I'm up 500 bucks but because I've used leverage my account is up 50% so on that first trade where I'm up 460 bucks now I didn't get a 46% return on that trade but my account is up 46% because of the use of Leverage remember Leverage is a sword that cuts both ways you have to be very careful with leverage I feel comfortable using it because of how long I've been trading so leverage for me is a tool that allows me to grow my account faster than if I didn't use it but ultimately this tool doesn't work if you don't know how to use it correctly and it certainly doesn't work if you're not applying it to the right type of stocks so I'm looking for stocks that have the potential to make big moves let me pose a question for you for a moment I want you to think about what is the fastest way that you could blow up an account right now that you could blow up an account destroy it it's gone it's zero in fact it's negative what would be the fastest way you could do that if I was going to speculate I would say if I was going to try to blow up an account and I mean epically blow up an account what I would do is I would short a small cap stock with a really low float that has good news and high relative volume those are the types of stocks that we see go crazy just this last week we saw a stock that went from $25 a share to over $500 a share and if you had shorted 4,000 shares of that you could have lost over a million bucks cuz that's the thing with short selling the amount that you can lose is actually unlimited so certainly in for this small account challenge I will not be shorting stocks because I don't want that quick ticket to blowing up my account I also don't want to pay the borrowing locate fees to borrow shares to shorten because I don't have a lot of money in my account but the reason I asked you this question was because I wanted you to think about the fastest way to blow up an account if the fastest way to blow up account is to short a small cap you know lowf float stock with news that's moving higher then perhaps the fastest way to grow an account account would be to buy not short buy a stock that is a low float has news and is squeezing up today in fact it is those are the types of stocks that I have consistently made the most money on this is my track record I've been trading for a really long time so what I have identified and I'll just show you uh these are these are my own metrics my my own trading met metrics right here this is showing you that that basically all of my profit is on stocks that have five times relative volume which is 500 times higher volume uh today than the last 50 days average why would a stock have 500 times higher volume today than the last 50 days news there's some type of news now it could be Technical and it is technical sometimes but there's something happening there's an event happening there's a catalyst and and if you look at my performance by um over on this side by the uh by the percentage change you'll see that basically all of my profit is on stocks that are up more than 10% on the day okay so it's logical therefore that at a minimum criteria we say I have to choose stocks that are up at least 10% on the day I should choose stocks that have the potential to have five times higher volume than their 50-day average five times is is great that means there's usually something happening that's special number three I would prefer to trade a stock that has breaking news now I'm not always going to be lucky and get great breaking news in fact I actually know some traders who say they never read the news headlines this is interesting because other Traders I'll sometimes see and I've done this myself I have I get migraine headaches I actually have a little bit of a headache up here right now um so I I remember one day when I was trading I saw a stock that said they had news for treating migraines and I was like this news looks legitimately awesome so what did I do I bought a ton of shares and the stock dropped and dropped and dropped and I lost a lot of money and I was like gosh darn it but that news was so good yeah the news was good but you know the chart wasn't good so as day Traders we have to focus number one on the technicals so yes it's good when the stock has news um but it's also okay if it doesn't have news because ultimately if end of the day what we want to see is that the stock is moving so the stock that I traded this morning it was moving quickly it was already up over 10% on the day the relative volume was increasing all right it was in the right price range being between 2 and 20 now right now because the Restriction that my broker is set I can't use my leverage on stocks under $5 so I have been patiently waiting for a stock sort of right perfectly between five and six or seven where I could buy about 1,000 shares cuz 1,000 shares would allow me to take a big enough position that even if I only get 15 or 20 cents per share of profit I could still consider that to be a pretty good day for day one you know $150 $200 I obviously far exceeded that with trade number one uh wait to see trade number two but nonetheless I got in the green on trade number one and that was good so the price is important that's the fourth uh criteria and then number five is the float the number of shares available to trade so what I have found consistently is that the stocks that make the biggest moves have lower floats even GameStop the float was only like 36 maybe 40 million shares that's a very low float when you think about stocks like I don't know Ford or Bank of America that have sold billion shares onto the market so float is the number of shares available to trade and it's a fixed number when a company does their initial public offering they sell shares onto the open market and from that point forward that's the number of shares are available to trade now it can go up if they do secondary offerings if they sell more shares on the market it can go down if they do share BuyBacks but for the most part the number of shares available is a fixed number and what's important to know here is that this represents the supply so when you have these characteristics of demand you have five times relative volume you have a stock that's up more than 10% there's a news event the Stock's priced between one and 20s that sort of sweet spot where Traders like myself can buy a lot of shares and do well that's when we see high demand low Supply we see those big moves that's the type of momentum that I'm looking for in fact that's the type of momentum I need if I'm going to grow this small account now some people can be a little critical of trading low float stocks they'll say oh you know these low float stocks you know these are risky they're going to have bigger spreads you know they're not as safe as trading something like Tesla or or or Facebook or Netflix or something like that on the one hand I can agree with you that the spreads will be bigger and they will be more volatile on the other hand when I look around the room and I look at all of my members at Warrior trading who have earned profitability badges who have earned 100K 500k million doll badges they haven't done it trading large cap stocks like Facebook or Tesla or Netflix they've done it trading small cap stocks volatile stocks stocks that have the potential to go up 50% or 100% in one day these are the stocks we Traders retail Traders like you and I are making money what's important though is that we're focusing on the obvious stock each day because it's true that you know you can have these email services that email out out or send text message alerts telling everyone to buy a stock buy a stock and all of a sudden the price will go up and that's not really a strong Catalyst I'd prefer a catalyst that's based on some type of news event so what I do which is a little different from other people is I I wait for the stock to start moving once the stock starts moving I'm jumping on the moving train okay so I already showed you a little bit of my metrics right here uh in order for me to find stocks that are moving what you may have noticed when you're looking at my trade this morning on gmbl was at the bottom corner of my monitor there were some stock scanners so what I actually did was I hired a team of developers they work for me and they built out a set of stocks scanners and what these scanners are doing is they're searching the market in real time for stocks that meet my five criteria for having the potential to make a big move now in the past before I had a scanner like this what was I doing what were other people doing people were going on message boards they were going on social media they were just sort of asking people hey what's moving what's moving what's moving and it was a very disjointed and difficult way of figuring out what was moving in the market so when I brought on my development team what we do is we subscribe to Market data and we filter all of the data so we run these servers on Amazon we have all of this data coming in and what we're doing is we're filtering out all of the junk and we're looking for stocks that meet my criteria for having the potential to make these big moves and that's what you see in my scanners so this is the tool that I'm using now as a Trader you need tools because if you don't have tools you won't be able to find stocks to day trade if you don't have the right broker you won't be able to execute your trades so there are a certain set of tools that we need every day in order to trade successfully so this is what my layout looks like I've got my charts over on the right side and I've got my scanners on the left side and each day step number one is finding the leading Gainer guess what it was today gmbl that was a stock at that moment that was the leading Gainer okay so what was my workflow the second that stock hit the scanner what did I do it hits the scanner so I see it at the top of the scanner I see the Audio I hear the audio alert because I have audio alert set on my scans so even if I'm outside I turn my speakers way up if I'm making some coffee or I'm doing whatever I hear the audio alert and I come rushing over to see what's moving those audio alerts are a pavlovian response because I know those can mean money in my pocket and that is literally what happened today okay so step number one I looked at the stock hitting the scanner I look at the top gapper I check the news and then I'm looking for my favorite chart pattern and all of that happens super super fast so what I tried to do for our members is I try to sort of slow that down by doing these Recaps after the fact and explaining okay this is the stock that I saw this is what I liked about it this is where I got in this was sort of in that fraction of a second this was how much due diligence I did I checked the price I checked the float I checked the um the relative volume I checked to see see what the Catalyst was and then I'm looking at the stock chart okay so in the case of my first trade today I I fumbled this one I fumbled this one a little bit it was you know first day jitters with the new new account uh trading on this piece of garbage well I I don't want to be too critical it's computer sitting right here earm muffs ear muffs this this computer has three broken Keys it's not it's not what it used to be this monitor is garbage and in fact um something that that I really am looking forward to is replacing this monitor with something a little bit better so as part of this small account challenge you guys have some control there's two things you can control the first is you can force me to reset my account back to a 1,000 bucks that will happen when we cross 10,000 new subscribers as of today's date so the number of subscribers we have now I'm looking at it and it's plus 10,000 000 you will force me to reset my account back to 1,000 bucks okay so you've got some control you share this video with some friends you get some more subscribers you're going to push that reset date and make it even sooner okay the second thing that you have control over is my trading station and this is what I'm calling my inventory so I'm beginning this challenge with this laptop and this computer and every time we get 10,000 thumbs up on the videos in this series you will help me unlock my next piece of equipment now I definitely want to replace this Monitor and get another one I'd like to have three I'm probably going to be okay with having one crappy one and eventually I'll get all nice ones once we get to 20,000 30,000 40,000 50,000 thumbs up on videos in this whole series I also need to get a traveling monitor cuz I would like to travel a little bit this year and like to upgrade this computer to a newer one so you guys have some control by hitting the thumbs up you're going to help unlock new inventory and by subscribing to the channel you're going to help well you're going to force my next reset back down to 1,000 bucks but here's the ground rules I get to keep the inventory that I've collected so when I reset back to a th000 bucks I don't have to go back to the old inventory I get to keep what I've earned okay so that makes this a little bit more interesting and a little bit more fun okay so today yes my workflow is a little bit scrambled typically my process of getting into a trade is a little bit smoother but today was a little sloppy all right so we're going to look at the example of today's first trade and we're going to look at the second and the third trade in a moment but before we do let's look at the perfect chart pattern okay so I look for my favorite chart pattern this is what I love to see all right so what are we looking at here we're looking at a stock that squeezed up quickly it went from 5 to six to S all the way up to 775 then it pulled back right right around 7 and now it's curling back up to 8 and the pullback there that was the place to be a buyer for that next leg up so what's happening here psychologically is we have a stock that is clearly very strong but the move got sort of exhausted it squeezed up up up up up but then at a certain point buyers they weren't willing to keep buying that high and people that were in at a lower price started to say you know what I think I'm going to take a little profit off the table and so they started to press the sell button and so we got this squeeze up and then a little bit of exhaustion but something really important happens here the stock doesn't drop completely it doesn't do a complete reversal it pulls back and then it kind of bases out okay so the way I look at this is like a wave it's the wave up a little pull back and is this going to be the next wave higher now this is a difficult moment for a lot of beginner Traders because if we look at the Whiteboard here it could be hard for you as a beginner to differentiate the difference between this is a pullback and I should buy it versus that's going to happen right and I've been there I know what that's like so how do you know that it's going to go like this and not like this okay so let me walk you through how this pattern works this is a pullback pattern this is the pattern that I'm going to be trading during this small account challenge so what I'm looking for is a stock to make a strong move up and then pull back now what's important to note and I'm going to jump onto the Whiteboard here is there are a couple of levels that cannot be broken so first the stock starts squeezing up here now if for example the stock comes back down here and back down here this would be okay if it goes like this that would not be okay all right so what I say is that I don't like to see a stock retrace more than approximately 50 % of the move so I just eyeball it it's not an exact science but if it pulls back more than 50% of the move I feel like it's too weak so psychologically there's sort of a point of control kind of like a tug-of-war but when it crosses a certain line we're on the weak side not on the strong side so I I draw that line at 50% okay so if the stock pulls back you know a little bit 25% whatever 30% that's okay usually I look for one two maybe three candles if we get four candles or five candles at certain points like this stock is just pulling back too much Traders are sort of not interested in it if we pull back for only one candle the only problem with that is that sometimes the stock hasn't really pulled back enough to attract a new round of buyers to come into it because buyers will still feel like it's a little extended so ultimately one of the best pullbacks is going to be when the stock comes back to the nine em Ma on the one minute time frame and it's usually going to be a couple of green candles and then you know one or two or maybe three red candles just like that that's the proper pullback now the entry on this pattern is to buy the first candle that makes the new high so we're looking for that first candle to make a new high and if you look at on the Whiteboard let's say the high of this candle right here the high of that candle is $3 okay do I buy when this candle closes no I buy the second the stock breaks over $3 now what you're going to see when we look at my second trade today you're going to see that I did a trade to try to anticipate a break over a a whole dollar in this case it was seven so let's take a peek at trade number two from today okay so gmbl right now is consolidating right above volume weight average price I think if it can hold over seven we could get a move back up towards the high so I've got my order ready to go to buy here for the break of seven I'm just watching it for a second I'm looking for a little more green on the tape there we go okay I'm in there at seven there's a hidden sell it's not breaking it should have already broken okay back to 83 on the bid okay let's see I'm going to see if this there's still green on the tape though but back to 71 on the bid ah shoot man ah 7 oh man sh shoot I'm going to have to bail on this ah all right I got to cut it darn it wow okay so easy come easy go man that's trading wow all right so now I'm down $23 on the day shoot that was literally devastating I I went from a $460 the best first day I've ever had in a small account Challenge and now I am read 23 bucks what just happened that's now the biggest loss I've ever had on day one of a small account challenge but don't worry I still have a third trade coming soon all right we'll find out what happens on trade number three but let's talk about what just happened on that trade okay so on that trade the stock had popped up it squeezed up we'll we'll jump on the Whiteboard here it squeezed up and then had pulled back and it was right under $7 okay so in that case the entry the high of this candle was $7 schmuck that I am I bought at $6.98 my God I bought to anticipate the break instead of waiting for the break to happen okay I got a little eager I got excited I am excited I'm amped up this is so exciting it's a new small account challenge so I jumped in to anticipate that it was going to break I thought it was going to break but you know what happened was we had a hidden seller right there at $7 and in this case rather than cut the loss quickly and just bail out I mean honestly at best I was looking at a 20 cent loss on it my target was 750 and it moved back up to 8 so the profit loss ratio was okay but instead of cutting it at 680 or 675 I held until the half dollar of 650 and I lost a full 50 cents on it that's that's a pretty big loss a little bit of emotion came in there I got stubborn but finally I capitulated which means I gave in and I cut the loss all right so now I'm down 23 bucks all right so the lesson here is confirmation is important I need to see it actually break this level and so what that means is that when I'm looking at the chart I want to see right there at 7even a lot of green on the tape and you you know what I I I'm I shouldn't fault myself too much for this trade cuz it really could have worked it just this one just didn't probably the only thing I did wrong was instead of cut it at um $6.80 I let it go an extra 30 cents against me and I got a little stubborn that's really the biggest mistake from that trade so but best case scenario is it breaks that level and it goes back up boom up through new highs and now we're looking really good okay so let's look back at the slides here all right so when we're talking about buying these pullbacks the entry and I'm going to read this to you um I I don't expect you to read it yourself because it's kind of small it'll be small print on your computer so the first candle to make a new high is the entry that's the Apex Point all right the Apex point of either a bull flag or a Flatt top pattern it's the break of that new high that first candle make a new high sometimes I will enter early to anticipate the breakout as I did on that last trade if I'm early what typically triggers that entry is either a break through psychological resistance like a whole dollar or a half dollar or I'm getting in just below the level cuz I think it's going to break cuz I'm seeing that surge on the level two we'll talk about level two more in just a moment I would always prefer to have an early entry because it it offsets the risk of a false breakout but this was an example of that early entry not paying off now almost immediately upon entry I want to see if the price is moving up okay that's where things went wrong on this trade I got in but the price did not move up it all out it dropped if the price moves down immediately my timing is wrong if I have a starter position I may hold with a stop at the low of the pattern or I should cut my loss in this case I had my full position and I was not emotionally prepared to sell it and I held it too long emotions run higher when you're in with full size so if I go right on a trade almost immediately I do start to change perspective from this being a winner to just mitigating the loss can I get out out Break Even or for only a 10cent loss but in this case I just I had to bail so this is the type of trade that when it works it works pretty much immediately like the first trade did I'm just immediately green and when it doesn't work well it stalls for a second and then flushes this one installed for a second and then it flushed so it was not it wasn't it just unfortunately wasn't perfect now the target for this type of trade is a retest of high a day so in the case of the example right here we're looking at a move back up to the high in the case of the example that I took on um the stock today I was looking for a retest of $8 back to $8 would have been awesome 750 is the first Target that's 50 cents away but $8 is what I was hoping for um sometimes when a stock is really extended we've had um a really big move what we'll end up happening is we'll have the candles going up we'll have the pullback it'll come back up but it's not able to Surge through the high and it'll pull back a second time here and then it'll go on this final attempt and this is called an ABCD pattern it kind of looks like a w there um but this is this is called an ABCD pattern and and the the breakout is is still right about at this level for that move higher so that's a little bit of a more complex pattern I I may trade that during this um small account challenge I probably will at some point but um but that that just wasn't what to set up on that trade um today so when we're talking about the first pullback I think that this is in grand scheme of things a lower risk uh setup as far as all the setups are concerned the stops are usually pretty tight the patterns are pretty obvious they're well respected uh a false breakout can create a dramatic uh what I would call a little bit of a jack knife where it pops up like this but then immediately reverses back down and you get that big whip that's not fun um that tends to happen when the stock has been going sideways for a while you know the longer they go sideways they start to do these drops and pops and pops and drops so it's really better to be focusing on trading these when they're moving up quickly when they start kind of going sideways that's when I find more of the chop happens of the of the false breakouts uh stop losses for this trade and this pullback pattern is going to be the low of the last pullback so the essentially the low of the last wave and that's why if I get in this type of trade when the stock first starts squeezing up here if I get in like right up here the low of the last wave is like way down here it's really far away so like I need a little bit of a pullback here so when I'm getting in here my new stop is the low of this last wave that's a much better way to manage risk than to be buying at the very top of an extension obviously there are situ situations where I'll buy a stock that's more extended that's going to be a higher risk setup it's one that I'm going to have to be more careful about during this small account challenge for the first pullback pattern and this this is the strategy I'll be trading during this challenge my profit Target is going to be 10 to 20 cents 40 cents 50 cents is going to be phenomenal um I I may not get that I was considering setting actual profit targets where I would take everything off the table if I hit 20 cents I decided not to do that and the reason is because I don't want to cap my winners I'd like to cap my losers but I don't want to cap my winners and today is a good example I had a a trade that went far higher than I expected and I was able to make much more on it as a result of holding it until I sort of saw an exit indicator and we're going to talk about exit indicators in a moment um so and again this is all documented in in detail in my small account worksheet which you guys can download it'll be pinned to the uh top comment down in the comments and it'll also be linked in the description so I do encourage you guys to download that worksheet so you can print it out you could have it next to your desk while you're trading and my goal ultimately is always to help beginner Traders so by giving you this portion of my trading plan and sort of my strategy if it helps you in any way in your trading that's phenomenal I'm super happy for that so I hope you comment below if you find it helpful and uh of course I hope you do hit the Thumbs Up And subscribe because I really am looking to replace this monitor ASAP and if you subscribe well you're going to force me to reset my account back to $1,000 and that's certainly going to keep things interesting okay so um a note here in a particularly strong Market rather than sell a partial position like sell half I may actually add to the position now I couldn't do that today because I was using my basically all of my buying power on the trades um and and I'm going to talk about that component of my strategy a little bit more it's also documented in that worksheet in terms of buying power but um but I I wasn't able to do that today okay so once I have executed the trade I have pressed the buy button now I'm in the position what am I focusing on obviously I still am looking at the chart but my eye moves to something else my eye starts focusing on the level two the level two to me is the road in front of me the stock chart is historical price action that's what's already happened it's it's already over it's helpful because it gives us context and we can see indicators in that uh previous price action of you know a Candlestick that indicates indecisiveness or a possible reversal is coming so there are messages that we can receive but at the same time I like to keep my eyes looking forward and that means I'm going to be focusing on the level two okay so um the level two is also called the depth of the market and this is where every single single order that is coming to the public market is going to be displayed now I say Public Market because today the markets are very segregated we have dark pools the orders on dark pools do not go into the lit Market a lit Market is uh transparent you can see the orders a dark pool is hidden you can't see the orders the alternative trading systems that are used by a lot of these big wholesalers do not route their orders out to the main Market they sometimes do but often times they don't so level two is um it's it's the it's it's a depth of the market of the publicly traded markets or or the publicly visible uh routes in the market and I kind of think of level two as an island where the orders come and where they the the trade actually happens and so when I'm looking at the level two my eye is looking at the ask price so the ask is on the right I'm looking at the ask price I look at the bid and I'm looking at the the spread so the spread is a difference between the bid and the offer okay so when we have a stock for instance like the stock that I was trading today and we have um $690 on the bid and we have $7 on the ask we have a 10cent spread so this is the ask this is the bid and I'm looking at the ask and then I'm also looking down here 705 715 725 I'm looking to see how far away the next orders are I'm looking to see how far apart they are oh they're about 5 cents apart okay that that tells me that if the stock starts to move we could go up to 705 715 725 fairly quickly If instead I saw it was like 701 02 03 I'd be like man this thing is it's going to take a a bit of buying to get it to there and one of the other things that we'll see on the level two is the number of shares for sale so if we see 10,000 10,000 20,000 50,000 I'm I'm telling you this Stock's not going to budge that thing's not moving so by looking at the level two I can see the orders that are stacked up and that gives me a sense of how quickly this stock may or may not move up to maybe the next uh the my next profit Target and I I see the same thing on the bid so if I see on the bid 690 but a let's just say 500,000 share order I'm going to be like holy smokes there's a huge buyer here that's a huge level of support so someone is supporting this stock at that price I could feel pretty confident buying this at seven the inverse would be true if it was a seller on the ask so I look very closely at the level two and what I like to see is that once I've gotten in I want to see signs of strength so what does strength look like I see the strength in the level two I see it in the form of green on the tape green on the tape is the time in sales so the time in sales is showing every single order that's going through the book and when I see green on the tape that tells me that a lot of people are buying green means the order is going through at or above the ask price an order in red is going through at or below the bid and an order in white is going through between the spread so I don't care much for white I do not like red and green I love so what I want to see after I've initiated the trade and press the buy button so when I got in at 6 98 we saw some green at seven and then it stalled out I want to see green on the tape I want to see the number of shares on the ass getting smaller which tells me that the buyers are accumulating that seller and that the price is going to break and go up to the next level so the price should be moving up hopefully fairly quickly and obviously I want to see if the stock is pretty soon going to be hitting new highs because if it's hitting new highs that means the stock is going to be back on high of day momentum scanners and high frequency trading algorithm they're looking for stocks that hitting these scanners and when stocks start moving quickly these high frequency trading algorithms react there's quite a bit of complexity that I could get into about how they work I'm going to save that for another episode so just for right now the things that I look for green on the tape the stock moving higher ideally hitting the high day momentum scanner and I would like to see that the price it really is jumping pretty quickly and what I don't want to see is that uh all of a sudden everything stalls so if these are signs of strength then what I would say um ultimately would be signs of weakness or exit indicator would be if suddenly a big seller appears on the level two the 50,000 share seller that's a sign of weakness that's not good if I see all of a sudden a burst of red going through the time in sales someone's selling I don't like that if all of a sudden the the stock just sort of stalls out in fact the absence of strength strength by itself can be an exit indicator and I should have I I should have taken that uh to heart today on my second trade on my second trade I really did hold that uh for for much longer than I should have I should have bailed faster but I'm telling you it's even though that position th shares is like such a small position for me normally in this context my adrenaline was pumping I was like uhoh here we go this is either Make It or Break It Do or Die hero or zero and after trade number two I feel like a little bit of a zero all right so let me show you a few more examples of this pattern of trading the first pullback and then I'm going to show you trade number three for today okay so the first and second pullback here this is another example where you see a stock that's made a nice move and look this stock went from $4 to 6 to8 it just keeps going high higher this is great this is what we love to see the best place to be buying these types of stocks is on a pullback if you're buying in the middle of the move up it's going to be higher risk again I'm not going to say I won't sometimes do that I have a high degree of educated intuition so I can feel comfortable taking that risk um by the way just um for the sake of it so I took my first trades when I was a teenager uh this is my book how to day trade the plain Truth uh thank you guys who have already gotten a copy you you helped make it a best seller on Amazon um you're all welcome to get copies if you'd like it's um so this is a picture of me this was when look at look at me I'm just a little fella that's when I took my first trades I was in Middle School I was in Middle School when I started paper trading I was in high school when I executed my first trades with real money and when I started trading uh full-time I actually did it as a New Year's resolution I made a commitment to myself that I was going to start getting up early sitting down and watching the markets oops because I knew there was potential I knew there was potential in the market I and I felt like I had I had to take it seriously so for me with all of this educated intuition I do sometimes take trades that are higher risk and even during this small account challenge I'll tell you right now my results they're not going to be typical they're not going to be typical of what you should expect if you start an account with $1,000 let's get real I've made millions and millions of dollars trading I've been doing this for a long time so I have a special skill set but I like doing these small account challenges because even for me it's still a challenge and it's a great way to get you guys excited to inspire you to motivate you because you know what the best time to start learning how to trade was 5 years ago the next best time is right now today so dig in let's keep going all right so this is the pullback pattern right here buying the dip and then looking for that move higher this is another example of a stock that made a really nice move we're looking for those pullbacks those are the spots that I'm going to be searching for I'm going to find the stock initially on my scanners and then once I've identified the stock is one of the most obvious stocks today that's when I'm going to be waiting for that first pullback so I can take my entry when I'm trading the right stocks everything else is easier if I try trading the wrong stocks the first pullbacks are not going to work it's not going to respond well so I have to focus on the right stocks now this is an example here asst of a stock that went from about a dollar up to $3.50 unfortunately this stock I wouldn't be able to trade it during this challenge at least right now because my account is too small and I'm not allowed to use leverage on stocks under $5 that's just the rule with this broker different Brokers are different there's tons of international Brokers you know the thing with us Traders is that we're so accustomed to using us Brokers but us Brokers uh enforce a certain set of rules that are very specific to the United States but you can trade with International Brokers any us Trader can go to an international broker and say hey I'd like to open an account now not all International Brokers will accept us resident but a lot of them will and you can say yeah I'd like to open an account and they say okay well you know we're an international broker so these are the rules that we have here this is the minimum account size this is how much money you need to day trade this is our the amount of Leverage that we'll give you so for me the account that I have the minimum account size is 500 bucks I set it up with a th000 I was like I'm going to give myself a little bit of a cushion and The Leverage is six times but it's only on stocks over $5 so anyways now so this is a stock that unfortunately I would not have been able to trade all right this is one that I also would not have been able to trade so this is going to be a little bit of a shame there are going to be stocks where it's like gosh darn it I am just not going to be able to trade it now during this period that I'm doing the small account challenge if I see opportunities like this and I can't trade in my small account I'll probably just trade them in my regular account and that's fine but for the small account on those days it'll just have to sit on the sidelines this is an example again of a stock that would have been perfect for the small account it's priced over $5 that meant I would have been able to buy a full thousand shares of it today I could have gotten in you know right well actually the first pullback was about 650 so I would have been able to buy about 900 shares of it getting in at 650 it goes up to 7 to 750 to 8 so that was a trade very similar to today it pulls back it pops up it does a little bit of that ABCD pattern before going higher up to 9 a share that's solid now something that I'm going to um tell you is that I will not be in the habit of buying and just holding for a long time and hoping for a bigger move I'm going to be aggressive I have to pay myself I have to take the profit out of the market so while it's true that there are some stocks that I could say gosh I could have held this and it kept going up and up and up and up yes could have would have should have but at the end of the day my job is to pull profit out of the market and if I can pull out consistently a couple hundred a day from a $1,000 starting balance that is awesome today I definitely exceeded it on the first trade but I gave it back on the second trade should we look at the third trade let's do it okay so watching resumption here on gmbl currently halted up 755 showing a 778 resumption I'm looking for the break of 8 I'm not going to just buy at eight I've got my order there I can only afford 660 shares but what I want is a dip and then the rip so I'm looking for a dip all right 820 High good that's great can we get a dip okay 796 750 okay I'm looking for a little bit of a bigger [Music] dip 756 there we go okay okay um could this false halt I'm in at seven I think I just made a terrible mistake well it appears that I got a dip I got a much bigger dip than I was expecting so this is called a false halt setup this is a false halt gone wrong because a false halt is supposed to be a false halt this is a real halt day one small account challenge I am in a halt going down this is not a good thing so for those of you who are new Traders stocks can get Hal if they go up more than 10% in less than 10 minutes uh so it's actually 5 minutes in less than 5 minutes if a stock goes up 10% in less than 5 minutes it can get halted but it's the true it's also true going back down and so what happened in this case is the stock was halted going up it opened it did a dip I was looking to buy the dip for a squeeze back up but it actually dipped all the way down to the circuit breaker halt going down and I bought it seven now the reason I bought was because the order start to thin out and what usually happens is it'll spring back up and we can get a good 50 c spring sometimes even all the way back to the highs so I am a big fan of doing dip trades I do think dip trades are going to be a solid strategy for the small account uh challenge because I can be getting in sort of on pullbacks where I've got a better profit loss ratio however in this case I ended up getting in a halt down which is one of the risks of trading false halts so the good news and there's not a lot of good news here the good news is the stock wasn't insanely extended before the the the first halt down in fact it's it's back at what was somewhat of a psychological support level of seven so now what I'm doing is I'm going to be I I end up watching the resumption price very closely because a a halt lasts for 5 minutes now sometimes they're longer but typically it's 5 minutes so I'm now in the circuit breaker Halt and I'm watching the resumption price the resumption price is pretty steady between 680 and 7 which is more or less flat or down 20 cents not great I don't want to be down $200 on day one of my small account challenge but at the end at the end of the day it's not the end of the world okay so what ends up happening is it resumes and I still have this target of the spring bounce back up to 750 okay so let's see what happens okay I was not expecting to be in a halt down on day one of the small count challenge currently showing 655 however we had uh some resistance at 7 I'm hoping that s is going to be support I would like to see us open around 7 opening a little low like 680 is all right but I don't want to open too low all right so we're showing 682 right now I'm going to watch resumption on this and my goal on this was a dip at 7 and a bounce back up to 750 I'm still looking for a bounce back up to 750 I just am stuck holding during this circuit breaker halt okay so we're open and there's seven looking for that bounce back up to 725 725 is the first Target then I want to see 750 okay there's 725 seven on the bid still looking for that curl I'm I'm in here right off of support so this is entry off support There's 7 24 740 good 742 can we get 750 750 great 777 I'm taking it off the table from zero back to hero okay taking it all off now up $412 21 I should have stopped after the first trade but you know what green is good I'm going to stop right here this is still as of right now the best day one I've ever had for a small count challenge I'm taking it off the table I'm done so there it is day one in the books $412 that was wild seriously today was a roller coaster the adrenaline was pumping the blood pressure was high the beard was looking great and everything magically came together $400 that's that's an amazing day now the only thing is I do have commissions with this broker I pay commissions for every ticket that I place so every trade so to buy and to sell so I had a total of three trades which is uh six tickets three buy orders and three sell orders okay so I've got six tickets and I'm also going to have um some routing fees now the thing is I don't know exactly what those are going to be until end of day so it's actually when I log in tomorrow I'll see how it's settled so I am going to have some commissions I'm not exactly sure how much they're going to be but although I took six trades I didn't trade with a lot of share size so I don't think it's going to be too bad we'll find out in the next episode all right so for right now what we know is that I made $400 $412 before fees and commissions on day one of the small account challenge so day one the account is growing and let's look at the uh the slides here just to get you a little bit inspired so this is a day we're trading this same exact setup of buying the first pullback I locked up $1,390 uh this is a day where I locked up $85,000 this was a pullback pattern right down here where the stock went from 8 to 9 to 10 11 12 all the way up to $24 a share oh my gosh if I could get a trade like that during this small account challenge I would just be uh ecstatic here's a day where I locked up $77,000 again taking this Breakout trade over 1286 right here so this is the strategy that I trade every single day I trade it with my large account but I can trade it all the same with my small account and I will be trading it in this small account for the foreseeable future now what I am really looking forward to is upgrading this monitor right here so I hope you've hit the thumbs up once we get 10,000 thumbs up on the videos that are in this challenge it'll unlock my first piece of inventory every time we get another 10,000 thumbs up you'll help me unlock a new piece of inventory and once we get 10,000 new subscribers I'm going to reset my account back to 1,000 bucks all right I'm going to keep the inventory that I've earned but I'm going to reset to 1,000 bucks so you can help me get some new inventory you can help me reset the account and you can join me for the next episode coming real soon I'm looking forward to seeing you there and I hope you're as excited as I am about this new small account challenge
