Legendary 8-Figure Trader Shares His COMPLETE DAY TRADING GUIDE (For Beginners)

if you're watching it's likely because you're brand new to the amazing world of trading we know how overwhelming it can be where to start who to trust what to learn that will help you grow a trading account let's face it there's just so much information and so many self-proclaimed gurus out there and you don't want to waste your time or slow your growth so who are the real Professionals of trading education with the name and the track record to prove it I'm Mike belafuri the co-founder of SME Capital One of the longest standing and most successful proprietary trading firms in the world located in the heart of Manhattan New York City with over 50 professional Traders on our proprietary trading desk we've produced numerous seven and even eight figure per year Traders and now we're giving you an opportunity that doesn't exist anywhere else on the web for the first time we're making public our own trading materials that we teach in our trading offices and having it taught to you by one of the Living Legends of the day trading World Lance brightstein Lance is a top Trader and a lead Trader with multiple trading years each with over 10 million in trading profits after over a decade trading running a proprietary trading office in Chicago and developing new Traders Lance is our Trader development advisor and will be your teacher for this course what also makes him special is he struggled at the start of his trading career sound familiar he struggled perhaps like many of you he struggled bad when he first began I remember how close he was to quitting almost a year into his trading career that same struggle is part of what makes him the incredible teacher he is today and why we collaborate with him to grow our Traders and now why he is here to teach you today congratulations on finding this potentially game changing opportunity for your trading now let's get started helping you learn what you need to start day trading in the most efficient and effective way possible foreign [Music] course on day trading you're definitely in the right place as this course can literally save you years of missteps and thousands of dollars of needless losses along with all the basics you'll need to get started the right way and not make the mistakes that will waste your time and money we'll be covering what it really takes to succeed at trading the normal timeline to progress the different order and execution types to make your trading the most efficient right out of the gate how to calculate whether you have a real trading Edge like the pros so you don't just throw away your money at bad strategies how to read charts properly the top brokers in trading software is to get started on and more so again if you have any interest in day trading and you want to avoid making career ending mistakes right out of the gate this course should be your number one priority we're going to be building a strong Foundation from scratch what even is day trading day trading is about capturing internet price moves to earn profits these trades might last hours minutes or sometimes even just second seconds long there are an assortment of trade strategies most of which are performed using stock charts some example strategies that you might have heard of before are momentum mean reversion or scalping but we're going to get deeper into those later much like poker day trading is about using pattern recognition to identify very specific spots where Traders might be able to bet on which way a stock will move in order to make a profit so here is a very typical basic example of what a day trade might look like this is Tesla on June 20th 2023 a Trader might buy it around 3 15 PM where the green circle is when the stock is going to new highs on the day and he might hold that trade into the close making about two dollars per share profit and the 45 minutes until market closes at 4 pm while you might be wondering how to read this chart or how someone would even know to buy there I promise you that by the end of this video you will be a whole different person with all the new trading knowledge you'll have and all this will make a lot more sense as with anything day trading has various pros and cons and we're going to start off by looking at the pros the first pro is that being a small independent Trader you all don't have huge overhead even making a few hundred bucks per day adds up with roughly 20 trading days per month 500 days are equivalent to making a 10K p l month the other cool part about day trading is that it's highly accessible because it doesn't require a huge amount of capital largely just the right software and a stable internet connection so while we might dream of becoming the next star Trader that Bella writes up in his book one day we can start out modestly and set our sights on consistently making a few hundred bucks per day there are dozens and dozens of places to scrape that buy out there in the market each day another huge Pro is that day trading offers the most Edge and least variance compared to other types of trading why is that so part of the reason why is you aren't taking overnight risk you largely also aren't opening yourself up to different types of big pictures risk like macro economic risk and oftentimes your trades are so short that you're making very very specific bets about what the stock is going to do in the next minute minutes or hours we don't care about what the stock is going to do a week a month or a year from now we're going to leave that to other people we're going to leave it to those TV pundits that never seem to be right the other beauty of trading though is we can be nimble and get in and out of smaller positions in the blink of an eye we can also trade whatever is moving the most or as we like to call it here at SMB and play stocks essentially we're like the Special Forces team we move to wherever the market is offering the best opportunities we get in for a very precise play and we get out with the very precise set of rules and exit ideally with that profit we're really just trying to ideally capture an intraday leg in the process finally day training offers self-discovery and if successful a high quality of life and freedom many say trading teaches you more about yourself than you'd ever imagine possible and I couldn't agree more plus once you've made it past the bulk of the learning curve yes trading can even offer freedom freedom of schedule freedom of location and even freedom of those jerk bosses that everybody hates as you can imagine though there are also cons one of the biggest kinds of day trading is the high failure rate but that isn't just day trading that's trading in general this is a hard business and only the best make the cut even it's some of the best proprietary trading firms that might only be about a quarter or a third per trading class I've seen it year after year after year now keep in mind there are a lot of BS artists out there and they're going to sell day trading to you as the ultimate Freedom they're going to show you images of working a few hours from the beach and it's just that easy it sounds appealing and at face value can theoretically be true but you need to treat this like a true career and profession you need to be all in if you stop watching this course because I just told you that you can't learn day trading from your iPhone off the beach while putting in a few hours per week so be it truth hurts this is a job where to build up that skill set you need to be putting the hours in behind the computer you need to eat breathe live and sleep trading once you build out your skills and are hitting your stride maybe then we can discuss the increased flexibility and freedom that the job does offer but only eventually one other con is that day trading is limited scalability versus other types of trading what does that really mean all that means is that in certain spots you might have limited ability to place huge bets the nice part about starting out is that this one shouldn't really worry you for a long long time in fact part of your competitive advantage in the beginning is you'll be able to take small trades that others might even have to overlook so liquidity isn't so big of a factor for you early on finally one of the toughest parts of being a day trader is that there is no guaranteed income some years will be better than others and even the best of Traders hit turbulent patches where there they might not make money for a period of time it could be days weeks months and sometimes I've even seen years so all these probably leave you asking yourself what is necessary to succeed at day trading you might have heard that the failure rate of day trading is exceptionally High maybe as high as 90 plus that is absolutely true this is a hard job not everyone is cut out for it but we're going to do everything possible to stack the odds in your favor for starters one of the most important things to succeed is you need proper education and mentorship and that's what we're here for our SMB Capital YouTube channel is full of credible Pro traders that are showing you the real way to operate and become a Trader not like all the silly Foods out there busy in their hyper cars and their flashy Jets we're the real deal in addition to mentorship we also find it necessary to have some combination of the following traits the first one is proficiency with mental math you really want to be able to do quick addition multiplication and estimation in your head stuff like what is 20 times 12 or 50 of 30 or 150 plus 3.50 there are tons of free online resources to drill this stuff like math Dash drills.com the other thing that's really important to success is growth mindset at SMB Capital we embody a mindset called one percent better what this mindset is about is focusing on the process rather than the outcome and getting that little bit better each day in trading there are a lot of things we can't control what we can control is how hard we work how smart we work and how long we're able to sustain that growth rather than getting caught up over a loss we ask ourselves what can we do to learn from it rather than beating ourselves up we collaborate with each other to see how can we overcome certain obstacles faster in other words our mindset is that with the right effort and environment we will just keep on getting better and better and in doing so there really are no limits this is a mindset embodied by my must-read favorite book of all time Atomic Habits by James clear a book that I often find myself referring to one of the final traits for Success that that we look for is a passion for markets and trading how do you build this passion like I said it starts by eating breathing and sleeping trading right we want to immerse ourselves in this world we want to be reading the news Bloomberg Wall Street Journal Reuters we want to be watching CNBC we want to be active on Twitter on the community of day Traders on there that post about their trading we want to be attending Trader networking events like those hosted by Traders for a cause and don't worry about keeping track of all these additional resources I've created an accompanying PDF document that we're going to link in the show notes this will consolidate all the extra info you need into one spot so make sure you download it with those basic traits and the rest of this video alone we are still going to refine your knowledge so you know how to read chart patterns handicap the expected value of a trade use pattern recognition to get involved in the right places and ideally work your way towards becoming that sought after CPT or as we refer to here at SMB consistently profitable Trader one of the most common questions we get is okay so Lance just how long does it take to become consistently profitable I'm not going to sugarcoat this the learning curve to success is a long journey in this game but the beautiful part is that we're going to break it down piece by piece so you all can see progress at every Point as you progress that said someone with the proper mentorship utilizing materials like the ones SMB Capital provides online we generally tell new hires to prepare for a two-year learning curve if all then working full-time in order to reach consistent profitability some people of course take more time and others take less and truthfully some people just might never reach it at all once that Milestone is reached the consistently profitable Trader you know her Milestone that everybody wants to do the journey doesn't stop trading is all about constant continual progress and refinement I know what you're thinking come on Lance I'm special you're going to be the exception and this learning curve doesn't apply to you well let me tell you I thought the same of course because that's just common human nature the first year of my career I then went on to have negative PML every single month a whole year straight of negative p l even though I thought like everyone else I'd succeed it wasn't until a full two years in for me to become consistently profitable and it wasn't until year four for me to really start hitting my stride and making the big money and this was what working all in Blood Sweat and sometimes very literal tears with the reality check over let's now finally dive into the real Basics trading lingo this is the type of material I assign all incoming trainees to know prior to their arrival on the desk and is also included in that same PDF in the show notes so if you didn't download it before download it now we're going to start off with ticker symbol ticker symbols are just an abbreviation to uniquely identify each stock of a company maybe one of the most common ones out there for for the home team dollar sign AAPL is equal to Apple Incorporated uh the dollar sign is also just a very common way to signify that we're talking about a stock ticker you'll see that a lot on Twitter as well so now the next word is long what is long mean it simply means buying a stock this is a bet that the stock will go up in price and then to close a long position you sell the position now a short is kind of like the opposite you're selling a stock you do not own that's essentially a bet that the price will decrease and to close a short you do what is called covering the position so along as a bet it goes higher and you sell it a short is a bet that the stock will decrease and you cover it to close it out so using this chart here that I drafted up of ticker XYZ just totally made up one could say that at 9 30 a.m I got long XYZ at four dollars the proper lingo would then be at 10 am I sold ticker XYZ at five dollars and for those counting I'll be a one dollar profit or you could say I got short ticker XYZ at five dollars at 10 A.M and I covered it at four dollars at 10 30 a.m that would mean I closed that short position for a one dollar profit five dollars minus four with more lingo here another common word you're gonna hear is Bid this is the price a buyer is willing to pay to buy a stock hit is a word you'll see and that's if you sell or get short by selling to the bid now an ask or an offer is the price a seller is willing to sell a stock and what happens is you use the word take if you cover or get long by buying on the offer and so those can be a little wonky but you'll want to definitely review those a couple times because they're so so important and what the two of them comprise is what we're going to call the bid ask spread aka the spread this is the difference between the ask and the bid essentially how far apart the lowest willing seller is from the highest willing buyer we're going to dive a little bit deeper into that but first let me tell you what a lot is lot this is a standard number of units traded on Exchange for stock trading one lot equals 100 shares that can be really confusing to a lot of people and we're going to really break that down even further but give me a little bit longer commissions are simply the fees for buying and trading a stock much like you might hear the commission on a house or the commission when buying or selling a car very very common then finally level two AKA The Box this is a window that displays all the bids for a stock on the left and the offers on the right this is what I'm going to use in a little bit for my example then we have venue the venue is a virtual Market where buyers and sellers are paired common names of trading venues are edgex ARCA NASDAQ and there's many more the way I kind of help people think about this is much like you can buy the same item at amazon.com walmart.com or bestbuy.com this isn't too different the same stock ticker has various bids and various offers on different venues much like I can buy the same uh TV on all those uh websites I can buy the same Apple stock on different venues and see all the bids and offers for each of them so now we have a simplification of what a basic level 2 Box looks like the bids will pretty much always be on the left side and the offers will pretty much always be on the right side bids will always be below in price than the offer and I like to think B forbid B below so B bids lower in price offers will always be higher in price than the bids and that makes sense right because if the prices were flipped right where the bid was higher than the offer then a transaction would occur right so what this might mean is someone might be willing to buy Ford stock at fifteen dollars and the nearest seller is willing to sell it at 15 and 10 cents so the offers or the higher price bids are the lower one in general the bids will always be sorted in descending order with the highest bid at the top offers will always be sorted in a sending order with the lowest offer at the top this is so that the top row of the level two box are always the most relevant prices keep in mind some softwares will sort these columns differently in the order they're in but often the venues are the first column on the left working to the right we then have the price on that venue and the number of shares available keep in mind that the number of shares is generally shown in terms of lots by default unless you change that in the settings on your platform meaning a three there really represents 300 shares so the bid is on edgex at five dollars for 300 shares meaning a person willing to buy a total of fifteen hundred dollars of ticker XYZ which is just the 300 shares for five dollars each because this is the highest bid it is often referred to as the best bid on the right side we have an offer on ARCA at five dollars and ten cents for one lot or 100 shares because this is the lowest priced offer it is often referred to as the best offer and it represents someone to willing to sell or get short 100 shares of XYZ at five dollars and ten cents for a total sale price of 510. we're now going to throw at you one last handful of other basic terms that'll help you build your foundation for now shares outstanding this is the amount of stock a company has held by stock owners market capitalization this is one measure of the value of a business and it's calculated by taking the total number of shares outstanding multiplied by the stock price then there's risk in day trading world this is the amount a Trader can lose in a trade then there's volatility which is how much a stock price is varying over an amount of time a biotech stock for example is overall more volatile than the price of a house position how much stock a Trader is long or short also known as their exposure for modern day Traders charts are the foundation of everything we do not only do they tell us the history of a stock and how it is traded in the past but day Traders use very specific chart patterns to interpret what those prices might say about the future direction of a stock in other words the charts themselves are an essential tool in helping a Trader make money but there's this one huge caveat chart patterns don't predict an outcome so much to provide a probability spectrum of possibilities in other words you can't ever predict what any single stock will do so much is develop a feel for what the rough likelihood of outcomes are the best analogy I can give goes back to Poker if I have pocket aces I can never predict what cards will come out on the Flop or how other players will react or bet based on those cards I might win or lose with pocket aces On Any Given hand but what I can say is in the long run pocket aces is a hand that will win much more frequently than a random hand let's leave it there for now while we get into the basics of charting stock charts display prices for each stock over various time frames longer term Traders might use a combination of daily weekly and even monthly charts day Traders however stick to much shorter intraday time frames like the one minute two minute five minute chart or even more than that my default setup that I teach all my trainees to use is a two minute intraday chart along with the daily chart spanning about three months and a daily spanning three years for the really big picture there's nothing magic about the two minute chart but it seemed like the right mix of signal versus noise from our trading and then the daily chart is a great addition to see the big picture context of where the stock has been over the prior months there are traditionally three types of stock charts there's line charts bar charts also known as open high low close and Candlestick charts we're going to dive into these further now the truth is day Traders pretty much exclusively use bar charts and Candlestick charts with most preferring candles allow me to explain the benefit of these charts is that they add granularity to the data by displaying the opening price the high of the bar the low price of the bar and the closing price of each bar unlike a line chart which does not do that so look at these three charts for the same trading day in Tesla the bar and candle chart provides so much more granularity and we're going to dive into this a little bit more as far as Barn candlesticks when using either of these charts you get four key pieces of data like I said you get the opening price the closing price and the high and low price for each bar with the high and low price of the bar you can calculate What's called the range which will become useful later on because very often as Traders we want to quickly know the range of a stock you might frequently hear Traders say a stock had a three dollar range or something like that all that means is that the difference between the high price and the low price was three dollars over that time period and these charts are critical and quickly identifying that besides the visual appearance there is generally only one key difference between bar and Candlestick charts if the close of a bar chart is higher than the prior bars close the bar will be green signifying an up bar if the closing price of a bar chart is lower than the prior bars closing price the bar will traditionally be read signifying a down bar candlesticks on the other hand reference the opening price of the current bar meaning if the closing price of the current bar is higher than the opening price of the current bar it'll be green or if the closing price of the current bar is lower than the opening price of the current bar it'll be red so now we're going to highlight these differences between the two on this superimposed daily chart of Tesla you can see what I mean certain bars on the bar chart are green when they might be red on the Candlestick chart and vice versa this really is all just a minor aesthetic difference the Practical implications are nearly non-existent because most Traders use candles though we're going to default to using those and dive into those a little bit deeper now given how important candlesticks are let's explore further with a few more terms always adding to that whole lingo dictionary of yours the body this is the rectangular section within the candle it represents price movement between the open and the closing price of the candles time interval then there's the wick sometimes referred to as the shadow it is the Thin Line extended from either side of the body the extremes of each Wick represent the price extremes of the candle and contain the high or low of the candle's range as I touched on earlier the range on a Candlestick bar is the high price minus the low price for that bar for candlesticks it is essentially the top of the upper Wick minus the low of the lower Wick now that we understand how each candle is constructed let's bring them to life and examine some of the ways we can use Candlestick charts to read price action we'll examine the range of the candle along with the length of the body and the Wicks and then take a look at what it means to use different time frames the range of the candle can tell us something about the volatility of that stock and the length of the body and the wick can tell us even more information about the price within each candle a candle with a long body signifies a strong directional price move within its time interval a series of consecutive large directional up or down candles can represent range expansion and a strong Trend a candle with a narrow range though signifies minimal price movement within its time interval a series of consecutive narrow range candles at similar prices or within the range of the previous candles can represent that volatility is Contracting and price is consolidating three more new patterns now a candle with long Wicks on both ends of a short body signifies large price movement with minimal net change between the open and close these candles often represent indecision by the market participants a very long bottom Wick and to close near the high of the candle tells us that price attempted to drop but was bought this is a term commonly called absorption rejection though is represented by a very long upper Wick and a close near the low of the candle that tells us that price attempted to Rally but was not ready yet to continue higher with those under our belt we're now going to briefly wade into chart patterns analyzing chart patterns is essentially the essence of day trading books couldn't have been written on every single Nuance of it for now though we're going to quickly Define the most basic of them in a whole other video we're going to dive deep into these because there isn't a limited amount of time we could give this subject a chart pattern is a series of visual price data that repeats often and has predictive significance to it again going back to that poker analogy that doesn't ever mean we know what will happen in any given situation but instead that over the long run our expectations are better than random once we now start studying chart patterns we're officially in the land of what's called technical analysis which is the study of chart patterns to predict stock price movements this stands in total contrast to what's called fundamental analysis which is the study of a Stock's business economics and financials to predict stock value think Warren Buffett for example and in case you're curious Charles Dao is considered the father of technical analysis which originated with his Dow Theory but that's a rabbit hole we're not going to go down today and it's far deep in stock trading history in the world of technical analysis there are two patterns to rule them all well more accurately these are the two most simple patterns that we're gonna start you off with the first of these is a support level a support level is a visual representation of a horizontal area where the price is not able to get below because the buying outweighs the selling at that price the opposite of this is a resistance level a resistance level is a visual representation of a horizontal area where the price is not able to get above because the selling outweighs the buying at that price sometimes a picture is worth a thousand words so let's look at this chart the Blue Line represents support and the red line represents resistance while we aren't going to go too deep into this yet in theory you want to buy close to support and sell that position as it's rising close to resistance then potentially you would buy back that position on the brake above the resistance or vice versa you want a short close to resistance close to that red line and cover that position if it's going down close to support then you might want to re-short on the break below that support if we get below that blue line if that's a little confusing don't sweat it for now just become familiar with some of the lingo and the basic concepts feel free to replay this section A couple times as well I know we're throwing a lot at you and I feel you with those Basics out of the way we've already covered a ton so let's take a breather and go to something extra fun figuring out how we profit as Traders unlike with investing Traders don't really think in percentage returns but instead we think in dollar returns the easiest way to calculate your gains are by using this formula the number of shares multiplied by the dollar amount gained or lost that's what equals your p l or your profit and loss so let's go back to our basic ticker XYZ on that chart I was using if you bought 500 shares at four dollars at 9 30 a.m and sold it at five dollars at 10 AM you would have made one dollar on 500 shares which is 500 in profit or if you shorted 200 shares at five dollars at 10 am and then covered those shares at four dollars at 10 30 am you would have made one dollar on 200 shares for a 200 profit now let's take a losing example what if we shorted 100 shares off the open meaning 9 30 a.m at four dollars and covered them at five dollars we would have lost one dollar on our 100 shares for a loss of a hundred dollars let's dive one level deeper now with our new knowledge and tie in a couple Concepts a Trader might buy one thousand shares on the break above resistance at five dollars where the green circle is and if he sold at six dollars he would have made one thousand dollars in profit now we're going to take the opposite scenario let's assume that the trader shorts the break below four dollar support signified by the red circle and covers it three dollars for one thousand shares that too would be a one thousand dollar gain in p l as day Traders we tend to be totally agnostic between shorting and making money that way or being long it's all the same concept to us now it's time to really go full circle and impress yourself at the beginning of this course you might have seen this Tesla chart maybe then you didn't know anything about stock charts or how Traders make money or maybe you didn't know anything about technical analysis or about buying brakes above resistance or how to calculate p l now look how far we've come in this example let's imagine a Trader buys 100 shares at around 272 why because that's where the green circle is due to the break above the resistance and then the trader let's assume held the stock into the close and sold around 274. that is two dollars gained and on 100 shares that would be a two hundred dollar win this was a real trade that Traders I know made so while trading can sometimes sound really complex you now know what a real world example is actually like in the trading World Turning now to expected value Basics this is the most important formula and math in all of trading and that is the expected value of formula which is our Focus here given we live in a world of probabilities expected value math allows us to calculate the average outcome of a bet over the long run simply put it takes the p l outcome of each possibility and weights it by the probability of it occurring so we're going to define a little bit more lingo for this reward this is a term used for how much you stand to gain if a trade goes right whereas risk is how much you lose if the trade goes wrong now below here we have the formula which is a ton of math speak for something that really isn't so complicated definitely way less complicated that it looks all this formula really is doing and saying is that you take the money gained or lost in each outcome and then you multiply it by the probability of that outcome occurring and you add them all together yes it looks scary but we're now going to use coin flips to really help simplify this coin flips are one of my favorite analogies to help make this expected value concept a little bit more understandable let's say for example if a coin flips heads you gain two dollars that would be your reward essentially the coin flips tails you lose a dollar that would be your risk negative one the expected value of this then is simply just the two dollars you gain as you reward if you're right times the probability of heads which is 0.5 then you add that to negative one which is your risk if wrong times the probability of Tails which is 50 again 0.5 and when you add that up you get 50 cents what does that really mean that means that over the long run you will on average make 50 cents per flip I can't predict what will happen on any given time but overall if I play enough times and flip enough coins that's what it's going to look like these calculations are essential to Poker investing and especially day trading in our world anything with an expected value greater than zero is deemed what we call positive expectancy all that means is theoretically it makes money in the long run while anything with an expected value less than zero is deemed negative expectancy which theoretically means it's going to lose money in that long run a super common term you hear in the trading world and one of my favorites is the word Edge all Edge really is is another common term for something that gives you or has positive expectancy simple as that now I'm going to help you spot a classic training fallacy which is more important I often ask your win rate or your risk reward so often in interviews I would challenge candidates with this you might hear a lot of Traders talking about how important it is to have a win rate over 50 percent do we really need a 50 win rate or you might hear a lot of Traders talking about wanting their reward to be 3x their risk is that all we need for a good trade these questions seem simple but they're really not and the truth is it isn't one or the other based on the math it is all about the interplay between the variables as I'll show you in this example let's take a strategy that only wins 20 of the time but when it does win it makes 10x what it loses so to simplify let's say that it wins one dollar when right but it loses 10 cents when wrong as you can see from the calculation it still has an expected value of 12 cents meaning that on average each time you take the trade you will make 12 cents per share that is a profitable strategy despite having only a 20 win rate so while many people might scoff at the win rate and say no way those people are wrong and they're making a big mistake because the 12 cent expected value per share is great now let's take this other example does three to one reward to risk mean it's a good trade what if we make three dollars for every time we lose one dollar but the win rate is only 20 percent when we run that expected value math using our formula you get an expected value of negative 20 cents that means that every time you take that trade on average you will lose 20 cents per share so it doesn't matter to me that the reward is three times the risk it's still a losing strategy these two examples are so so important all of this is to demonstrate the interplay between those variables sometimes a strategy might look mediocre but if you find some new criteria that increases the win rate it can really become a star or sometimes you might have a high win rate but you can't find a way to limit the really big losses when it does end up going bad so the strategy never goes anywhere when learning to trade you need to always consciously be asking yourself what are the long-term odds this trade works and not just what will I make if it works but also what will I lose in the times that it doesn't work and I know what you're thinking okay Lance but how do we get a sense for what those numbers actually are in the real world we're going to walk you through this more in future episodes but the short answer is through experience by observing cataloging collecting data on hundreds if not thousands of similar chart setups you'll eventually be able to begin calculating estimates of what the win rate and risk reward is what it tends to be for those starting chart patterns I need to pause here and continue to stress how important it is to think in long-term probabilities to be clear about this trading like many things in life isn't about being right on any given situation take those coin flip examples like I said I can't predict the outcome of any specific flip but expectancy dictates that in the long run meaning after hundreds or thousands of flips we will get fifty percent heads and fifty percent tails the same goes for batting averages for example for 0.400 or a 400 batting average is exceptional but that doesn't mean the batter won't strike out three times in a row it just means over the data set that batter has hit 4 four out of every 10 balls poker is the same way just because you get pocket aces if you lose with them or you need to fold them that doesn't necessarily mean you did anything wrong it just highlights that all of these activities function based on probabilities trading is the same way we can't judge ourselves on any one outcome but rather is our data going in the right direction over time and over a bunch of data points a good way to start training yourself to think in probabilities is starting to observe the world around you from this perspective the forecast said 20 chance of rain get it down poured does that mean the forecast was wrong not necessarily what is the probability your train runs on time or what's the expected value of the average grocery store purchase when you see people checking out at the checkout line if you're a bookworm that finds this subject interesting and you want to dive deeper on it I highly recommend thinking in bets by Annie Duke this is a cult classic in the poker and trading world and this will also be in my recommended resources list which again if you haven't subscribed download it below so again now just to solidify all this and time these Concepts where we're going to go back to that previous chart we used a few slides ago so what is the expected value if there is a sixty percent chance we go to six dollars and win one dollar but a forty percent chance we go to four dollars and fifty cents and head out for a 50 Cent loss this is a very simplified but classic trade many Traders might take and so if you run that math into that expected value formula what you get is one dollar reward times the probability of 0.6 plus 50 Cent loss times the probability of 0.4 that equals 40 cents per share that's a profitable great trade and while it sounds so so simple this is exactly what Traders are doing in the real world this is exactly how I try to handicap trades and think about markets so now we're really going to go full circle when you see that previous chart you're probably thinking two things okay I understand what I'm looking at now but still how do I find these opportunities with positive expected value where do these edges come from well there are many types of training strategies many Traders actually just simply use technical analysis to structure strategies that make them money over the long run many use patterns that are based upon the support and resistance Concepts I presented to you but they employ them in very very specific situations where everything aligns how can you find some of these situations that is where we come in here at the SMB Capital YouTube channel we're going to build a strong Foundation of knowledge for you all over these courses and in many of the advanced courses we present very specific chart patterns and situations where our professional Traders at SMB Capital are making real money doing exactly these strategies while we're almost done with the first intro video we need to cover just a little bit more ground so you can really hit the ground running so when starting out all Traders will want to start on a demo account also known as a paper account these accounts require no capital and allow you to place fake virtual trades the beauty of this is it allows you to get practice and Reps in all while risking none of your own hard-earned money the only downside to this is that the fills are simulated what that means is you automatically are able to buy or sell at prices that not that might not be quite realistic in the real world this is an important distinction and a big drawback but considering the advantages of being able to get reps in with no Capital at risk it is well worth it and demo accounts should be the only way you trade for many weeks maybe even many months a huge part of demo as well is that the PDT rule doesn't apply what is the PDT rule the pattern day trader rule is that you can't make four or more trades within five business days if you have an account under 25 000 in capital yes we know that is a lot of money the reason why this exists is to protect smaller retail Traders from excessively trading their account Regulators discourage amateurs from day trading due to the increased risk inherent to this job and how many people fail at it demo accounts allow you to trade as many times as you want and get many more reps in you'll only want to start using a funded account once you've proven competency in the demo account and paper profitability keep in mind real world execution prices will be worse so you need a significant paper Edge before going live you can theoretically start with any account size but probably a thousand bucks or more somewhere around there is a safe start and PDT the pattern day trader restrictions won't be lifted until 25k in capital so you'll need to be wary of how many day trades you make initial risk limits are critical some Brokers and software even allows you to hard code daily loss limits into your account so you can't continue to trade and lose more money than a certain amount there is no award in this game for starting out with the big loss limit it's not cool it isn't it isn't Macho and it isn't impressive there are only bad consequences by doing that be conservative the trainees I started out generally had a 100 to 150 daily loss limit and even that might have been too high for a really small account and just because you have a daily loss limit that doesn't mean you hit it every day in fact it's really just about getting those reps in similarly you can and should also restrict your position size and risk per trade there is nothing wrong with trading one share for many weeks or many months in fact the less Capital you risk while you were learning and arguably have the most negative expected value the better any money saved here is more Capital to use later on we couldn't call this a beginner's course without giving you all the tools to really get on your way so now we're going to discuss Brokers for trading live Brokers are the intermediary between you and the market these are the companies Who oversee your trading account and who electronically execute the trades on your behalf certain Brokers though specialize in catering to day Traders these Brokers offer professional level order types low commissions and fees High reliability very fast internet latency and a range of other services to help day Traders execute their trades in the most efficient manner possible many of these Brokers also offer their own trading platforms and software which I will get into in a second being on the proprietary and trading side of the business for compliance reasons I can't make specific recommendations about any specific broker but the internet and day trading space of Twitter can help you with recommendations or different information I would ask around and use this list of sample Brokers as a starting point for now it's just a totally unranked list and I'm going to do the same for the trading software keep in mind none of these are recommendations do your own research and there's a lot of great ones out there so regarding that software for trading live also known as trading platforms these are the applications that help you actually place the trade they might help you with charting scanning for stocks that meet specific criteria helping you filter for Market moving news viewing that level two box we previously talked about and a wide variety of other functions oftentimes Traders will use even a variety of software products to optimize their trading at the least we recommend having charting software and a trading platform most Brokers catering to day Traders will likely offer both of these many Traders also utilize software for scanning the markets for tickers that meet their criteria once you've found your software and your broker it's time to learn a few things about it first in the day trading realm nobody really uses their Mouse to point and click execute a trade anymore all decent day trading software tends to have hotkeys and often offer a huge custom configuration available for programming exactly what you want out of your keyboard entries hotkeys are keyboard shortcuts that allow you to shave seconds off your execution time as well as increase your accuracy which decreases the chance of fat fingering a trade as funny as it sounds what that means is entering in the wrong share size or limit price often with not uh really so wanted consequences so make sure to get familiar with the various hotkeys and fool around with your own but first we're going to need to dive into the different order types one of the final sections we tackle but also one of the most important and complex is diving into the different order types the first one we're going to address is Market orders a market order is in order to buy or sell a security immediately regardless of price this type of order guarantees that the order will be executed but it does not guarantee the execution price this is the most dangerous type of order and one that I practically never use so let me explain what this looks like in practice up on your screen now is the level 2 box for a pretty random ticker e d t x and as we discussed on the left you have the bids and on the right side you have the offers so I'm now going to queue up a 600 share market order and we're going to talk about how that order would interact with the level 2 Box all those sizes we see those are in Lots so when we see one that represents 100 shares when we see two that represents 200 shares so when we pull up this Market order for 600 shares this will take the best offer meaning the lowest price offer up at the top and it is going to fill them one by one by one right and very very quickly so if I have 600 shares that I want to buy now remember when you buy a stock what you do is you take the offer so I'm looking on the right hand side of the screen and the best offer is 2180 for 100 shares and there's two of those right so we have 200 shares available at 2180 we have a hundred shares available at 21.89 we have another 100 shares at 21.95 so that gives me 400 shares filled at those respective prices then my final 200 shares in that order is going to be filled at twenty two dollars and so in the real world when this order goes through the system this happens lightning quick and that's what can make this order so dangerous if you fat finger or press the wrong amount of shares like let's say for example if instead of 600 shares I put in an order for 6 000 shares I simply put on that extra zero what's going to happen if I look at that right hand side of the screen and I add up all those offers we don't even have six thousand shares there available so what's going to happen is I'm going to get my order executed all the way up to thirty four dollars and then because there's no offers on the book you can get some really egregious ridiculous prices that's why you need to be so so careful even 34 dollars is over 50 percent higher than the best offer so this is why it's such a word of precaution and in order I tend to almost never use next up we have a limit order a limit order is in order to buy or sell a security at a specific price or better it's essentially saying that limit price is if you're buying the maximum price you're willing to pay or if you're selling it's the minimum price you're willing to receive so a buy limit order can only be executed at the limit price or lower and the sell limit order can only be executed at the limit price or higher this guarantees any shares you get will be at the price you wanted or better but it does not guarantee that you will get all or even any of the shares let me explain this with another example using that same edtx level 2 Box what we have up now is a limit order a buy limit order for a thousand shares and my limit price is just 21.80 as we discussed at 2180 there are only 200 shares available so if I were to put this order in because it's a buy limit it will only give me 2180 or any price lower So based on what's available on the offer those 200 shares I'm going to get filled and receive 200 shares out of the thousand shares I put in so that's what I mean where it guarantees a maximum price I'm willing to pay but it does not guarantee I will get all the shares because it just is not available on the offer which is the people willing to sell at that price next up we have stop orders a stop order is in order to buy or sell a stock once the price of the stock reaches or touches a specified price known as the stop price when the specified price is reached your stop order becomes a market order because this uses a market order I again almost never use this instead opting for what I will discuss and call a stop limit but first let's pull up the stop order of twenty two dollars is the stock price the quantity is a thousand and it's a buy stop so again because it's a buy order we're going to be looking on the right hand side at the offers and so if I set the stop price to be 22 dollars this order won't be triggered it will just be sitting idle in the background until a transaction goes off at 22 dollars or higher so if this stock trades at 21.80 it's not going to trigger it if this stock trades at 21.95 it's not going to trigger it but the second a trade goes off at 22 or higher my order is then going to be active and go live as we call it and that thousand dollar stop order is then going to be triggered and go through the next thousand shares on the offer so assuming somebody buys say 200 shares at 22 bucks boom that triggers my stop offer and where that's going to be filled is 600 shares I'll get at 22.40. 100 shares at 22.76 another 100 shares at 22.76 then the final 200 shares will come at 22.94 and so I'll get the average price out of out of all those and so again the reason why this is so dangerous is If instead of say 1 000 shares I wanted to buy 10 000 shares and that buy stop order got triggered I would be clearing all the offers on the book all the way up to 34 again and risking getting some egregious prices so that's also why this stop is dangerous because of that market component so what do we do about that isn't there some better solution because that whole that whole concept of a trigger price to make the order Go Active is is pretty appealing sometimes what we have to help with that is what's called a stop limit a stop limit order allows you to specify a price upon which the order is triggered but set a limit as to what price you're willing to have the order filled at helps you guarantee a price but again does not guarantee that you will get any or all of the shares once again we're going to take a sample order to demonstrate this and the same edtx box let's now take a buy stop for a quantity of a thousand shares it's a stop limit order so the limit price that we're going to set is 22.50 and now this is where people can get really confused the limit price is in a buy order the maximum price you are willing to pay that is not the price that triggers it that stop price again that's the price that triggers and makes that order go live so if we were to use a stop price of 22 we're now going to go back to that similar analogy so if 2180 has a transaction this order still isn't live but let's now say somebody buys the 200 shares at 2180 somebody buys 100 shares at 21.89 the 100 shares at 21.95 then boom somebody buys 200 shares at 22 that now triggers that stop price of 22 and now my buy order goes live for a thousand shares with the limit price of 22.50 so now when we look at this offer book what we see is there's 600 shares at 22.40. so I'm going to be filled for those 600 shares so I'll receive those 600 shares but 400 shares will be unfilled which I'm going to dive into in a second but essentially I'm only going to get 600 out of a thousand shares because those other offers are above my limit price of 22.50 so this stop order allows me to have an order sitting there but only go live at a certain price but it still protects Me by giving me a guaranteed uh price or better and that's why these are so popular with Traders I know this was a lot of information so don't be shy to replay this part I really do think this is the most complicated part of the whole video and if you followed along great but I understand the struggle it takes a lot of time to get familiar with this stuff and it doesn't need to all make sense today just take your time take time to digest it and just keep on reviewing so in the last part you might have heard me use a couple terms that I now need to Define the first one is filled this means that the full number of shares you wanted were executed that would be a fully filled order a partial fill means some but not all of your requested size was executed and filled unfilled means none of the shares in your order were executed yet open is a word to describe an order that is still live and able to be filled live in the market that is immediate or cancel this is an order type that will fill whatever Shares are readily available and then immediately be canceled and not sit live in the market good till canceled often abbreviated as GTC is in order that will sit live and executable in the market until the user cancels that order you want to be careful of accidentally leaving this in the market unknowingly but these do have a lot of common uses and I would say most orders people use are good till canceled now we're really reaching the home stretch we're going to set you up with the daily routine and soon you're going to be off for those who don't know U.S market hours are 9 30 a.m Eastern Time to 4 P.M Eastern Time Monday through Friday 9 30 a.m is considered the market open 4 P.M the market close doing trading full-time I highly recommend trying for a daily schedule of roughly 8 AM to 5 PM I understand not everyone can commit full-time hours to this I recognize that some of you are pursuing this journey while holding down full-time jobs while attending college or parenting nevertheless I'm going to present to you all the ideal here is what a typical routine looks like for those that I train from 8 AM to 9 A.M is when my trainees normally do pre-market prep work essentially all the work before the Market opens this might mean reading through the overnight news finding what stocks are moving and why or identifying any economic events or earnings reports are going on that day from 9 A.M to 9 30 a.m I have my trainees finalize what we call their watch list or the list of stocks they might be focusing on that day they also might be preparing what we at SMB Capital call a daily report card which is how they're going to review and reflect on their day each day or they might also be focusing in on Our intention for what they really want to accomplish and be conscious of during Market hours from 9 30 a.m to 4pm this is where most Traders are trading per hour strategies and our game plan for the day if slow this is where I ask trainees to instead review charts and study study study just because the market is slow doesn't mean you can't do productive work so so often as a new trainee it isn't really about actively trading day in day out it's more about studying and doing the review a lot more of the trading comes later from 4 pm to 5 PM this is where I have Traders complete their daily report card or that kind of Daily Reflection for their day they write up any trades they might have took in detail and they study where they can improve and do better the next day while some of that might sound foreign right now we're going to be flashing all that out and More in future episodes for those pursuing this job part-time you need to find a schedule that you can commit to and sustain for the long run I understand that everybody is very unique and specific situations and constraints to them you're going to need to accommodate this routine to match your schedule and just make it realistic the key is you need to make your routine something you can stick to sustainably and happily that might just mean one or two hours of study each night before bed that might also just mean minimal study during the week but big chunks of time available for you on the weekends figure out now what's going to work best and most of all what you can sustain so now let me give you your homework first of all I want you to download that supplementary PDF document and master all the parts of it you should be memorized in the lingo you should be Googling any terms you might not fully understand or ones you care to read further on go above and beyond by reading Atomic Habits by James Clear read the market Wizard series by Jack schwager one of my favorites that really got me on to trading read one good trade by Mike Bellafiore the real Bible here at SMB capital and then finally thinking in beds by Annie Duke start to do your research on those Brokers and trading platforms there's resources all over the Internet that will help you make an informed decision on that then finally develop that sustainable daily routine specific to you how much time can you put in each week when can you put them in time and most important how can you block that time off and hard code it into your calendar what makes it into the calendar is what actually gets done now this is where we're going to call a wrap on part one of our ultimate day trading course if you found this useful hit that subscribe button and stay with us for the rest of the videos in this series thank you so much for watching so you're an active Trader not doing as well as you want not doing as well as you deserve and you just can't figure out why you can't become profitable no matter how hard you try well let me show you why this is your competition the traders in this room this room right here is full of elite Traders some of them are making seven and even eight figures a year in fact our top guys have made nearly 20 million each in net trading profits in a single year let's head to my office so I can share more so you're probably used to seeing videos of lavish Trader Lifestyles trading girls trading off of a laptop for an hour a day heck maybe even 15 minutes a day and then them relaxing on some secluded beach for the rest of the day well all I can tell you is that our Traders train like pro athletes they live and breathe the markets and are continually working on their trading skills because at our firm that's what we've found it really takes to make it in this game I'm Mike bellefiore co-founder and managing partner of SMB Capital One of the world's top proprietary trading firms located in Midtown Manhattan and we're always looking for trading talent to hire and develop and not just to trade in-house on our desks but also to trade from their own home entirely using our firm's capital and we have numerous Traders doing just that allowing them to make upwards of seven figures trading the firm's Capital without risking their own money but to even get a shot at something like that you need to have the right training that's why we're doing a new free online presentation in which we share how you can get an interview with SMB to become an in-house a remote Trader trading firm Capital without risking yours and getting access to to all of our firms coaching and resources and the best part you don't have to be a profitable Trader yet in fact we prefer to mold profitable Traders with our methods and our techniques that's why we have just three simple criteria that can earn anyone an interview we're looking for highly ambitious and determined traders who fit our culture first and foremost so if you believe that could be you sign up for the free one hour online presentation by clicking the link that's in your top right corner of your screen now

Channel: SMB Capital

Views: 143,183

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, day trading for beginners, trading for beginners, how to day trade, trading basics, basics of day trading, day trading basics, learn to day trade, the one lance b, lance b smb capital, lance trading, lance day trading

Id: oQMg3U-QNkU

Length: 66min 55sec (4015 seconds)

Published: Tue Aug 22 2023