Opening your OWN Business as a Day Trader & Why you should treat day trading like a business!

all right as soon as you guys get logged in those you guys who are live-streaming just give me a shout I've got my chat feed up here and I want to see that you guys are able to see me and hear me and then we're gonna start talking about why you should treat day trading like a business this is going to be sort of a intro to treating trading are looking at trading through the lens of someone who's a profitable trader and trying to adopt that mindset because success in trading is more than just skill and strategy not that those aren't very important because they are but it's also about the mindset it's about how you approach trading how you think about trading how you handle the ups and downs of trading and by thinking about it from the perspective of this is a business that I'm starting essentially it's not any different than starting a business opening a coffee shop or you know a a car dealership or automotive repair shop or whatever the case is and that helps in a lot of ways for you to be able to handle those losses a little bit better to become less attached to them to actually detach from them from an emotional perspective and that puts you in the mindset which is much more similar to those who are really really successful I think one of the hard things about getting started is that many of us don't know a lot of profitable traders we may not even know anyone at all that's a traitor and so we're in this place of trying to kind of just figure it out whereas if you were gonna open a coffee shop or something like that there are certainly lots of coffee shops out there that you can kind of base your business on and when you're starting the process of evaluating whether or not this is gonna work you would just naturally refer to okay what are the things you need to do before you start a small business you need a business plan you might need a loan you might need to invest in equipment or infrastructure or you know rent and all that stuff but when people approach day trading most people approach it in this very kind of nonchalant way of I'm just gonna you know open up my app on my phone and you know jump into Robin Hood or Weeble or whatever and I'm just gonna take a couple trades and see if I can make a little money and then of course they get further into it but they start it from this very kind of haphazard spot which ultimately because that's the way so many people start their career it starts them off on a bad note you can't relate like haphazardly or you know in a nonchalant way start a coffee shop you know any anything on that level takes a lot of planning which ultimately the more you plan you know the more likely you are to succeed it's measure twice cut once and for every I don't know what they say for every hour of planning you save yourself a day of time there's some ratio that people talk about especially on development projects like tech projects and so when we were building our our new day trading chat room at warrior we spent a lot of time planning it and a lot of time testing different things and we did have a couple of sort of false starts on it but we learned that the more you plan then when you actually sit down and start getting into it it just makes a lot faster but that's not how most people approach trading so I see you guys getting logged in here on Facebook in YouTube we've got about 500 live streaming on YouTube right now and about 180 on Facebook so thank you guys typically when I go live on a weekday this is a Saturday when I go live on the weekday right around 9:00 a.m. everyone knows that that's when I stream and so on YouTube I recently have five six thousand even seven thousand people live streaming which is amazing but when I jump on here to random time which is 1:30 on a Saturday I just catch those you guys who are hanging out or on your phone or on your computer or what have you so thank you guys who are live I will answer some questions from those who are live but for those that are watching this as a video on YouTube or watching the live stream on Facebook you guys can feel free to put comments down below and I am hoping that the content of this Facebook and YouTube live is timeless in the sense that what I'm going to talk about is relevant it was relevant three years ago it'll be relevant three years from now so regardless of when you might be watching this I think you'll probably still enjoy it so thank you guys for for tuning in here today and it looks like I've got a pretty good Wi-Fi signal which is also really nice because sometimes when I'm outside I my Wi-Fi gets a little shaky so one of the things I'm going to talk about a little bit during this live stream as well are the metrics of a profitable trader and so as a sort of comparison at one point I was looking at I was looking at buying a rental property like a a building where I would have commercial tenants and everything like that and so I as part of that process did some research about what are what are the good profit margins and what's what's a typical profit loss statement look like for a rental property to get a sense of you know basically does the cost of this property and the current rental rates justify this being a good investment or is it not a good investment and so you know through that process I found that there was a lot of them for me in out there about the ratio of the value of the property your monthly rent and then the value of the property versus what you should expect an overhead from property tax to insurance to maintenance upkeep and property management and so on and so forth so there's a pretty there's a pretty good set of data around what makes a really good rental property all right and so if you're thinking about getting into it it of course makes sense for you to research that you become educated on those those metrics and then when you're looking at a property you can kind of fill in that that sheet okay so this property let's just say is $500,000 okay that's good the monthly income from rent right now is five thousand dollars a month okay so that means over the whole year brings in sixty thousand bucks now that's actually really good from the perspective of that's 10 percent return each year but that's before cause you factor in okay what's the property tax on this building it's 15,000 a year what's the insurance it's another 15,000 all right so now you've gone from 60,000 and profit down to 30,000 in profit all right and then you know you've got to save some money for upkeep you've got plowing and you've got you know utility infrastructure boilers a/c units things like that and now the upkeep of those you're coming down to maybe netting only twenty thousand which is on a $500,000 investment you know you're you're looking at a return of about four percent a year so that same four percent you know there might be easier ways to make four percent now what's the appreciation of the property in that area and that's when you can start to kind of say alright well this might work if I could get the property for four hundred grand or if I could increase the the rent for the tenants and if they're commercial tenants and stuff like that and so you know these are the numbers that you play around with and we do essentially the exact same thing when it comes to trading so let's talk before we get into the metrics portion let's talk for a moment about treating day trading as if it is a small business alright so many of you guys know I'm hosting summer school this summer for the first time ever where right now for those watching this months from now or years from now whatever we're still dealing with kovat 19 and the market as many of us know dropped 35% is now coming back up off the low in fact the markets only down about 10% now off the high which is good for those of us that have long term investments 401ks etcetera but because a lot of things are still closed and a lot of people are unemployment is still very very high right now there are a lot of folks that are not gonna be hitting the beach this summer they're not going to be traveling this summer including me and so I decide to host the summer school program so during summer school we're going to talk quite a bit about setting up about approaching this as as a approaching day trading as a business okay so the first the first kind of layer the first step I would say is the discovery or the realization that this is actually a viable business opportunity right so for instance running a coffee shop owning and running a coffee shop is a viable business there are other people that do it there are coffee shops all around the world obviously and so day trading similarly is a viable business now the average success rate of a coffee shop it's hard to say I don't know the average success rate of a day trader also sort of hard to say because we don't have a lot of that data most of that data would have to come from brokers they'd have to release that data about active traders and although there have been a few studies that that have gotten into that data they've been they've been really small sets of data so that they're not really super conclusive about a population or a large amount of people but in any case we know that day trading is a career that many people in Barca and certainly can be profitable okay so first step is discovery now those of you guys live streaming up see now 720 and I would like to see half of you hit that thumbs up button I'd like to see 360 thumbs up for this live stream a little Saturday school for those of you guys tuning in now you may know this already but I don't monetize my youtube channel I don't run any ads on YouTube but what I ask you guys to do is to give me the those thumbs up and definitely subscribe to the channel if you haven't already because that tells YouTube that this is the place to be if you want to learn about day trading alright so thank you guys for doing that and then same with with Facebook alright so first step of learning the trade our first step of this business is discovering that it's a possibility and so share with a friend that you know it's maybe you might be someone that's interested in this now the second step is beginning to do a little bit of due diligence beginning to do a little bit of research and kind of understand how does this work and one of the best ways to do that in the example of a coffee shop is to look at a coffee shop okay so you know let's let's just let's take two coffee shops for instance let's say Starbucks which is a national chain right and let's take mocha Joe's which is a coffee shop in Brattleboro Vermont although it's also a coffee shop in LA on Curb Your Enthusiasm Larry David of course opened Larry's latte Larry's right next door the spice store so mocha Joe's in Brattleboro is a 1:1 shop coffee shop they have a coffee roaster and it's a one shop shop so coffee that coffee shop has been there for maybe thirty years maybe longer so they're clearly very successful so what is it about and so here's the question am i aspiring to be Starbucks or am i aspiring to run something like mocha Joe's now as it relates to trading I say this is kind of like looking at Goldman Sachs traders or a average trader just trading his or her own money and doing it on their own okay so I'm like the mocha Jose I'm trading my own money I'm trading I don't work for a big hedge fund I don't work at a big bank I'm doing this for myself so it's important when you're trying to get a sense of how this would work for you that you're using a more realistic example is what you're trying to measure against so I'm not gonna try to measure the coffee-shop against Starbucks because that's I'm never gonna own 25,000 coffee shops all around the world I really just want to have one all right so you know what is it that has made Moka Jose so successful what is it that's allowed them to be in business for as long as they have well probably a couple things one great location - great coffee three reasonable prices and for a really nice atmosphere where you can go and you can sit down you could get a cup of coffee and then you can just hang out and play chess with some friends for like six hours and when I was growing up in my teens kids you know adolescent teenagers we would you know go down to mocha Joe's and hang out downtown it could be a snowy day outside but you can hang out in the coffee shop with some friends and I could walk from my house down down downtown and brown a burro so you know it was a cool place to kind of hang out you do that when you're young in the teenager and then you know you're doing it in your late teens and early 20s and then you see some of the folks that have been in the coffee shop for 25 years and they're in the 30s or 40s and they're still there okay so if you were gonna try to model a coffee shop in your town you would probably be thinking about similar types of things location quality atmosphere price etc and then of course you would after you've kind of scope that out you actually have to look at the profit loss statement the balance sheet what what's the infrastructure to get started but let's hold on that for a second so from the day trading side I want to show you guys some of my metrics here so I'm gonna do let's say I'm actually go like this oops sorry like this alright I've got a couple different kind of layouts here so this right here these are my metrics from 2016 2017 2018 2019 and now where I'm at right now in 2020 and it's May 30th so I've I've made almost the same as when I made all of last year and I still have June July August September October November December I still have seven months left so you know that I'm I've got my eye set on breaking my 2018 at a record alright now this is this is gross profit so you know looking at the gross profit of a coffee shop is is is one thing but of course there's overhead so what I want to show you here are the metrics of a profitable trader who is essentially a retail trader trading his own money which is that's exactly what I'm doing I trade both in a retirement account and in a traditional margin account now one of the things that well I'll talk about taxes in a second and this isn't probably gonna be like a super short YouTube live I want to you know give you guys this is gonna be like a nice class so remind me if I don't get if I if I seem like I've forgotten let's come back to taxes but let's just kind of look at the metrics here so so what this is sort of on the surface is the this is the proof that I am a profitable trader and that I have a strategy that works so that's kind of like okay this is a coffee shop that's been around for a while so now let's look a little deeper at it now I I take an approach with trading which is probably not different from other businesses or potential careers which is that I have an itch I have a area of the market where I focus pretty exclusively for instance you could have people that trade Forex you could have peep any no course we do you could have people that trade futures you could have people that trade cryptocurrency and you people that invest long-term and then you have people that day trade stocks and the people that day trade stocks some day trade the sp500 some trade options some day trade large caps like Tesla Apple Netflix Google some day trade penny stocks there are 10 cents and 15 cents and what I focus on is day trading stocks generally between one and ten dollars so what I'm gonna kind of do here just to kind of keep keep us on on track and we've got we've got obviously we're not going to talk about the Goldman Sachs traders and the big institutional traders that are out there those are the ones that are buying huge positions of large cap companies they're not trading their own money they're of course therefore very detached from profits and losses because it doesn't really you know obviously it affects their bonuses but it's not their money so we're gonna keep focused on me being a retail trader trading my own money when I got started in this small business essentially of being a day trader what I was looking for essentially was I was I was starting my own self employment agency and so what I mean by that is this is a business where I do have to come in to work every day I have to trade the market I can't the business of being a day trader it's no business you could sell because you're of course such a critical part of the profitability so really what you've created is a stream of income that you still have to work for and so it's kind of like being self-employed and that's not from a tax perspective but just from a sort of mental perspective the problem though is that when you put your own money on the line you know you put $10,000 on the line into the market to start trading as many of you may have done what frequently happens as a beginner trader is that you will experience losses and of course you take those very personally and you feel like a failure you feel like you're a loser you feel like you're an idiot and you think about the the traders out there that are driving the Maseratis or the Aston Martin and they're incredibly successful they probably work at Goldman Sachs and they're getting you know 30 40 million-dollar bonuses and stuff like that and that would be the mocha joe's comparing himself to starbucks and being like man I'm never gonna I'm never gonna make it I'm never gonna get there and so what I realized was that for a long time in my career as I was getting started I was I was thinking about what those big traders were doing I was thinking about what people like Carl Icahn Warren Buffett and Bill Ackman were doing but the fact is both their mentality and the way they approach the market and the fact that in many of those instances they're trading other people's money and they're running trading as a large institution or a hedge fund makes it almost incomparable to what - what I was doing not only could they take positions and hold losses they could also do complex things like you know use options to hedge their trades or petition the board to sell the company so they could make money I mean it's they have such a different place in the market and so when I was trading stocks like Apple and I was buying options getting in and out trying to day trade them you know I was thinking there's obviously traders out there that are doing this but many of those traders would have been working at large large funds not trading their own money or small retail traders so it took me a period of time of experiencing a number of losses before I was able to make the realization that as you know the mocha Joe retail trader I needed to find my niche in the market and it actually was going to be very different from what a lot of the the big hedge funds and institutional traders are focusing on and so as many of you guys may be in the same situation I have a small account so give me a shout of what size account you're currently trading with or planning on trading with that knows you guys looks like we've got about almost a thousand live streaming on YouTube so I would love it if you guys who just got tuned in would give us the thumbs up here for a little Saturday school so Jonathan says he's trading with a thousand bucks Baker says a thousand Richard says five hundred Ron says thirty-eight thousand someone else says 650 thousand Pegeen said ten thousand six thousand four CJ twelve thousand for Russell five thousand for Quentin seventeen hundred twenty-five hundred for Omar so you know certainly we're seeing a little bit of a range 25 thousand for Fred 13 thousand for Mark over on Facebook we've got Brody who's paper trading Edwin's got thirty two thousand so so actually some of you guys have fairly large accounts but when I was getting started I was trading in a smaller account and this is kind of the problem when you have a small account you trade a stock like Facebook and on an average day Facebook might only go up two percent so you know let's say you've got a $10,000 account and let's say you put the entire account into Facebook at the very bottom of lo of day and you get out at the very top and you capture that full 2% how much is 2% on a $10,000 account it's 200 bucks but you're never going to capture the entire move at best at best you might capture a quarter of the move or maybe a third of the move even capturing half is difficult so let's say you captured a quarter of the move you made 50 bucks now as a retail trader we do have the advantage of trading if we want to with leverage so if you took that trade that $10,000 and you used four times leverage you could have bought $40,000 worth of Facebook in this scenario and if you got that you know quarter of a percent or a quarter of the 2% move you'd be able to book about $200 in profit but to get to the point where your that dial been on an institutionally traded stock like Facebook Apple or Netflix it's it's it's I can't remember a whole lot more frustrating than trying to get a really good feel for a large cap stock that will suddenly for seemingly no reason flush it down and tank in the middle of the day why would that happen a couple of institutional traders at one of the big firms it's the cell button and dumps a large position or all of a sudden you know it spikes up unexpectedly what happened while some institutional trade or some hedge fund some pension fund whatever it is decide to take a position all of Senate pops up and so those stocks on average days are very difficult to trade they don't respect the traditional patterns and it's not because it's partially because of algorithmic trading but to a much larger extent it's from just so many active institutional traders getting in and out so I realized that trading those types of stocks that I was kind of spinning my wheels I wasn't making a lot of progress and so to find my niche I pored through all of my trading data and what I discovered was that the stocks I was making the most money on were actually lower price stocks that were making big percentage moves so when you have a stock and we have one this week that went from $8 to 12 to 13 to 14 to 15 to 70 to 18 to 22 dollars in one day up over 300% now that's phenomenal that's probably not a stock that a lot of traders or investors that you know the big hedge funds or pension funds are going to be actively day trading they're not going to buy a stock that's up 300% if they're already holding it they'll sell it but that's not the type of risk profile that they're usually going to take because you know many of them are probably trading average position sizes of millions of dollars and you can't take millions of dollars of stock on an $8 stock it's just not really feasible in most cases and so what I found was that those types of stocks are really popular among retail traders like US retail traders look for stocks that are making big percentage moves because when you have a small account whether it's $1,000 it's 10,000 or maybe it's even $100,000 if you can capture 25% a quarter of a stock that has just gone up a hundred percent that's a 25% move now if it goes up four hundred percent you could potentially be capturing a 100 percent move buying a stock at $8 selling it at 16 and it still goes up to a high of 22 23 24 so those were the type of stocks that I really focus on so let's jump back and talk a little bit about the metrics here of a profitable trader so you can see my metrics right here this is where we're gonna kind of get into sort of like the balance sheet sort of like what I was talking about with a real estate property so my niche is focusing on lower priced stocks so let's go to detailed and we'll go to price and volume so you can see here that the majority and this is over 2 million dollars in gross profit so this is a fairly decent amount of profit here and a pretty good data set so you can see here that the bulk of my profit is actually on stocks between 2 and 5 dollars I have made a decent amount up to 10 and a decent amount up to 20 but above 20 dollars the profits decrease significantly and below $2 the prophets also taper off a little bit so I think that this is helpful in terms of if you're thinking about getting started trading you naturally you want to align yourself with the type of trader that you're more likely to become good thing about opening coffee you want to look at coffee shops that are more like the type that you think you're gonna open if you're gonna start a want to buy a rental property you need a look at the financials of a rental property that is similar to what you're looking at and then you start plugging in the numbers so this these right here are the high-level metrics you can hear June in the background so these are the high level metrics which which is helpful but I don't want to get too deep in the weeds on this just yet hey girl come on come on girl she's lost it so why don't we why don't we for a second step off step back off the metrics and let's talk a little bit about the kind of infrastructure startup costs and things like that for hang on please hold hey girl hey all right thank you sounds good come on girl girl alright alright sorry I'm step on my computer girl you know I talk to camera girl yeah okay my apologies I apologize on behalf of what is essentially a junkyard dog all right so once you've kind of figured out you know what style of trading you want to focus on and you found a traitor whether it's me or anyone else and that you want to kind of use as your as your template okay I want to model my strategy and you know my approach on what this guys doing which is there's nothing wrong with you know you you think mocha joes is not some coffee shop you can go open a coffee shop just like it you know in your own town mocha joes I mean I can't imagine that there they're gonna care obviously you can't name it the same thing but you know many of these coffee shops are all very similar oh this worked really well for this one okay I'm you know you see it that type of coffee shop is popular I'm gonna model mine after it I'm gonna take some tips from them so nothing wrong with that so this is I think this this what's going on right now these distractions is like is it's just so typical of this kind of coded 19 period that many of us are in which is like working from home under total very unusual kind of circumstances anyways so alright so so you've got so you know you want to model your strategy somewhat after me okay so in terms of the business plan and approaching this like it's a business all right so you've got you've got a description of the business I want to be a day trader and I want you know I want to trade my own money I'm not gonna I don't want to go work for a big bank I don't want a nine-to-five job like that even if you know maybe there's opportunity there you know an entry-level job even at a bank or a hedge fund that might not necessarily be too super glamorous so you know you've got your you want to be a retail trader you've got the sort of description of that business you're thinking okay I want to focus on trading you know small cap stocks etc etc okay so now what is the what's sort of the business plan that you put together so one of the things that that I really encourage is essentially building out a business plan for four day trading and that business plan should definitely include your your cost of equipment to get started which ultimately you know is a laptop and maybe one or two external USB my USB or HDMI monitors unlike opening a coffee shop or any type of brick or mortar business brick and mortar business you can get started with very limited financial resources a computer a couple monitors obviously an internet connection so you need an Internet service that you subscribe to and then you need a trading platform that you'll use now all brokers offer trading platforms as part of their as part of their service but sometimes they make you pay for it it could be anywhere from $50 to $100 a month so you've got some monthly overheads you know just starting and then essentially you have the cost of education and there's two different ways to approach this obviously I'm biased because not only am i a trainer but I'm also a teacher so I'll go the non-biased route first which is you can teach yourself how to trade and so the process of doing that essentially is through trial and error just getting into a trading account and preferably a simulator so you're not risking real money while you're doing trial and error and practicing and seeing what works now I can tell you from my own experience that I did that for almost two years before I actually started to make profit on a regular basis I would make money and then I would give it back and I make money I'd give it back because I didn't have a strategy I didn't have a system at end of a set of rules so you know two years of running a small business and having zero profit to show for it and incurring your operating cost the whole time that's a that's a little bit of a scary thought and so the alternative and this is obviously biased cuz I I'm a teacher and I'm we're hosting summer school starting on Monday is to join a program and to actually go through a curriculum and so you know if you think of wanting to start a small business as a you know a coffee shop owner a coffee roaster perhaps there's workshops that you could take if it teach you how to roast coffee obviously you can get on-the-job training if you go work at a coffee shop that may be appealing and maybe you already have done that and so you want to take it to the next level and learn about roasting coffee you maybe want to take a how to start a small business class at a it could even be a Community College just to learn some of the basics of accounting and you know the the finances and all that stuff so from a trading perspective going through a program like what we have what's essentially going to do for you is gave you all of that prerequisite information that you need it's gonna teach you all of the terminology around trading it's good teach you the ins and outs of all the different trading platforms this could teach you the ins and outs of how to read and do technical analysis reading charts reading level two and it's actually gonna provide you with the strategies that I use every single day so you walk away from the class with us as strategies now it's obviously not a guarantee that you know how to use them because you have to practice what you are learning but we help prepare you to do that by giving you access to a trading simulator so you know that's that's kind of the process if you go through our program so then as you come back to the business plan as you are putting it together you punch in what is my strategy how am I gonna trade the market and so you might say okay I'm gonna be trading the same strategy that Ross trades I'm gonna trade stocks between $2 and $10 right so back to over here I'm gonna trade stocks between $2 and $10 generally speaking I will and we could just go from like you know this month for instance so this is the month of May so two dollars to twenty dollars maybe that's an acceptable range I will focus on trading primarily between what times nine am nine thirty when the bell rings and 10:30 11:00 a.m. okay so you've got the price of stock you're gonna trade you've got the time of day you're gonna trade and then the day of week I'm gonna trade every day fine okay that's that's typical most of us do trade every day how long am I gonna hold my trades I'm not gonna hold my trade longer than ten minutes unless I happen to be in a circuit breaker Hall it's going really well if I have a trade that's not working I'm gonna manage my risk by cutting a loss quickly I'm gonna accept average losses of not more than five hundred dollars my profit target might be seven hundred to a thousand dollars and I'll take seven hundred if the stock is showing weakness so as part of your business plan you outline and allocate how much you're willing to risk what your profit targets are and what type of strategies you're going to have to mitigate risk in terms of you know just because you say you're only gonna risk five hundred doesn't mean you couldn't put yourself in a situation where you could risk you know five thousand so how are you going to mitigate risk and then you of course also have taking into account taxes which we'll talk about in a second and evaluating both your operating costs to be a trader which realistically for me where I'm at I subscribe to some is pretty nice charting software it's like a hundred seventy dollars a month it's not required but I really like it I have my real-time level two data fees I pay the Nasdaq most day traders will pay those those are like forty dollars a month or something like that so I'm at about two hundred and ten a month and and that's about it I feel like there might be something else but so let's just say three hundred a month so my operating cost is three hundred dollars a month now for every trade that I take I may incur a commission depending on what broker I use so feel free those of you guys live streaming to let me know which broker you're currently using and let's see where we at on you've got about a thousand on YouTube so thank you guys for tuning in I hope you guys and have given the video the thumbs up for our little Saturday school class if you haven't already hit that thumbs up button and same with those you guys on Facebook and feel free to share this with a couple your friends so I'm seeing thinkorswim cmeg Interactive Brokers cmeg TV think a thicker swim Lightspeed nice Schwab Robin Hood quest Trey from Canada Charles Schwab Weeble IB alright so good good nice alright you trade you up nice very good quest trade cmeg Interactive Brokers okay cool alright so a lot of you guys are using brokers that don't charge commissions which are which is great however there are brokers that do charge Commission and this would be I don't know what to have a draw the connection on that to the coffee shop but but the free commission brokers they just so you know they don't really cater to super active day traders like us not that they don't accept us as clients by any means because of course they do but what they really focus on are more like what we would call kind of passive investors who you know might take a couple of trades a corridor maybe a few trades a month they're just not super super active so trainers like that they don't demand a lot of the platform you know they're happy if it works they don't really you know they just have a lower standard of of what's acceptable which ultimately makes it easier for the brokers to please them so a traders like myself I use a broker called Lightspeed which is there in Manhattan and and they really cater to retail traders like us deep day traders like us so it's I don't know maybe it's like a point of maybe you think of it as like a point of sale software probably there's a lot different point of sale software that you can get you know to run credit cards and stuff like that but finding a service that's free but then is slow and you're sitting at the coffee shop and there's people in line and you can only process a credit card like once every like a minute and a half cuz it's like just a slow system it's free but then there's really a cost so nothing is truly probably free in that sense I don't know if that's really a good analogy but let's just let's just say that it is for now so so yeah so you've got your monthly operating costs and then you've got your initial startup capital the amount of money that you need to fund an account now this is you know again I can show you Jhin December 1st 2019 and I'm gonna use the tag of cmeg because this was the broker that I used and this right here these are actually the metrics from my small count challenge I'll do net profit here so this is fifty three thousand dollars but if we look at the overview and we look at the calendar what you'll see is that on day one I had five hundred and twenty dollars in the account five hundred and twenty bucks on day one and I made one hundred thirty nine dollars so from a starting balance of five hundred and twenty dollars I turned that account into fifty three thousand and seventeen days so you might think oh gosh I don't want to use my startup capital to pay for nice software or to pay for you know a good computer or to pay for high-speed Internet or to pay for education like one of our workshops or the warrior pro class for instance you might think I'm just gonna save all that money to trade with but what I'll tell you is that in a heartbeat without a strategy you can lose money in the market and for every small business out there there's probably I don't know five that have failed for one that succeeds I mean it's just we know that small businesses are hard to start and day trading isn't any different so you really want to equip yourself as much as possible and position yourself to be successful and so I think from that perspective startup capital is not it's not the most important piece of the equation for two reasons number one because I've known traders with a lot of let's start with a lot of money and then lost it because they didn't have a strategy and and then I've seen traders with small amounts of money including myself that have been able to grow it because they've got a proving strategy and number two because you shouldn't trade with real money until you have first proven you can be profitable trading in a sim trade would pretend money fake money or if you use a broker like a trader Ameritrade trade with one share you don't have any commissions so just traded one share and set your daily goal at you know 50 cents you know something like totally it doesn't matter it's a tiny amount of money but if you can make 50 cents a day with one share what's gonna happen when you go up to ten shares you're gonna make five dollars a day okay 200 shares you're gonna make 50 dollars a day what happens if you go up to a thousand shares would you make five hundred a day what happens if you go up to ten thousand shares right so now those are obviously going to be you know some kind of diminishing returns as you scale a strategy but I currently trade with anywhere from a low of six thousand shares to a high of twenty thousand sometimes a little bit more and I could trade with more size than that so but I probably wouldn't go a lot higher than thirty thousand shares you never know but I probably wouldn't so anyways that kind of gives you hopefully a little bit of perspective on how to approach the business plan you've got to think about obviously it begins with just discovering that this is a possible career and that it's one that you feel you have both the aptitude in interest to take on opening a small business whether it's a coffee shop or a you know day trading business for yourself is a you know it's gotta be something that you feel a passion for now I feel like every day when I'm trading I'm coming into the market to try to solve a puzzle and and if I solve it I make money and so it's very gratifying each day to see a market where it's a little - every day's a little different slightly different puzzle but I have a system of how I'm going to try to solve it and pull profit out of the market so you know it's the business plan starts with the discovery then it's an outline of general strategy what you're kind of modeling it after a case study of someone who has done this and is profitable that you aspire to be similar to whether that's me or someone else you know whatever relates to you then initial equipment and startup costs computer you know a thousand bucks your education with warrior trading you know the Warriors starter class or the warrior pro classes you're a couple of monitors your internet connection you know a couple of subscriptions to market data things like that so you know you're into it with you know a couple thousand dollars on the low side maybe four or five thousand on the high side depending on I mean you could obviously get a ten thousand dollar computer if you want to but you know it just within range and then you've got of course in addition of the initial startup costs for a coffee shop you've got your initial start cost and then you've got your ongoing monthly expenses those even right now for me are very minimal for the month of May I just finished the best month of my trading career as many of you guys know with two hundred and twenty five thousand dollars in gross profit oops five five five one two thousand twenty before like this alright so this is the month of May oops I gotta take my own cmeg tag away $225,000 gross profit best month of my career and you know what my my overhead was like 300 bucks now I had commissions and my Commission's were fifteen thousand dollars plus seven thousand which is twenty two thousand meaning my gross profit after commissions is about two hundred and five thousand which is still really good and as I said I'm willing to pay that Commission because I don't think I would have been able to make as much as I made if I was using a broker like a trade or TD Ameritrade not that I couldn't make money there but I don't think I'd be able to make as much because they don't provide me the tools that allow me to trade the market in the way that I trade it both with direct access routing hotkeys and a really good low latency trading platform so you know this is a month of two hundred five thousand dollars in gross profit alright so now let's talk about the taxes alright so the taxes this is kind of a tricky one because taxes are different for for everyone depending on where you live what state what couple a country than what state are you single are you married are you filing jointly are you filing individually so there's a lot of an infinite number of scenarios so having said let's just say for instance your goal was two hundred dollars a day how many of you guys right now would be totally happy with two hundred dollars a day two hundred a day if you're doing that consistently is fifty thousand a year alright so you know let's say fifty thousand dollars a year's is your net profit that's after commissions but not including your monthly overhead but since it's only three hundred dollars a month you still have a gross profit well let's I'll just I'll give you guys a second all right you guys you like the idea fifty thousand okay I like that idea too it's two hundred a day that was kind of my goal when I was getting started yeah two hundred today now obviously I'm averaging this year oops let's see so my average this year currently is four thousand one hundred and sixty one dollars a day and my gross profit is four hundred twenty thousand on the year right now so two hundred a day is making five percent of what I'm making so I'm not I'm trying in that in other words I'm trying to set the bar low for you guys but at the same time this is the blessing in the curse of the market you won't start making 200 a day consistently until you have a strategy that works because when you don't have a consistent strategy what will happen is you'll make $200 one day you'll make 400 the next and then you'll lose 800 bucks and then you'll make 200 and then you'll make 400 and then you'll lose 900 and so you'll have two steps forward five steps back three steps forward two steps back eight steps four or twelve steps back and you will generally be losing money until you you're able to minimize those losses but you're not gonna be able to minimize that until you've either gone through 12 18 24 months of trial and error which is what it took me or you basically have the roadmap and a template for a strategy like the one that I'm gonna give you guys who are part of my classes and you practice it a simulator and you prove that you understand it and then you know you're consistently trading a strategy that's already proven so try to reinvent the wheel or you know basically do what's already been done and and proven to be profitable so anyways 200 a day fifty thousand dollars a year alright so that's your that's your gross that's your net profit now let's say during that year you had ten thousand dollars in commissions so what that would mean is that you actually made sixty thousand but your net profit is fifty you don't pay tax on the gross profit you pay tax on the amount after commissions which is good all right so that dropped you from sixty thousand and gross profit to fifty thousand and net profit now as a small business owner just like a coffee shop what are some of your business expenses that three hundred dollars a month all right take that 300 a month that's times 12 months you've got 3,600 so you know you go from 50,000 you drop it down to forty six thousand four hundred I think that's right okay forty six thousand four hundred now you've got some equipment you can't always write-off equipment in one year some of it you have to depreciate over a period of years but let's say you've got enough equipment that you can depreciate another five hundred dollars all right so now you're down to about 46 thousand dollars and what what could be considered taxable income now in my opinion if your cost of living is let's say thirty thousand dollars a year let's say thirty six thousand dollars a year that's three thousand dollars a month then you've actually made fourteen thousand dollars more than you need it so wouldn't it have been smart if you had made that fourteen thousand dollars in a retirement account and so I trade in a retirement account so almost all of this profit this year not all of it but maybe maybe 70% of it is in a retirement account which means I have no income tax on it now of course that requires you inability to set up multiple accounts that takes time to grow multiple accounts so it may not be something that happens on year one but let's say it's something that definitely keep in mind for the future to take a little bit of that profit each year and put it aside into a retirement account where it can grow tax-free but let's say you didn't do that on your first year so you've got forty six thousand dollars in profit so now the question is you know what is your tax bracket so obviously there's the standard deductions and things like that do you have dependents again single married filing jointly filed separately so then you've got those different questions so let's say you're able to get yourself down to you know the 25% bracket right I mean if you were able to get yourself down to the two that bracket that would be I mean I would say that would be that would be preferable it's not gonna happen mosquito it's not gonna happen for everyone it depends on a number of different things but if you could do that what you could effectively do is bring your tax rate down substantially potentially to the point where you're looking at owing anywhere from five thousand six thousand to ten or eleven thousand dollars of tax on the year again you've got a range there and I'm sure there's things you could do to get it lower and there's other ways where it might be higher so you figure that you know for each each month you save anywhere from twelve to eighteen percent or so oh my battery died hang on let me switch back to my monitor now that's interesting because the browser also stopped all right hang on one second and I'm gonna switch this sometimes I have this problem with with OBS all right so video video then I'll just use my computer camera here for now deactivate let's see whether or not that works hmm that's funny that it just like shut off like that well this is not gonna be ideal to do it this way but that's fine hang on just move these around for a second all right so I've got my I'll just put this down over kind of in the corner so it's not walking too much so I've got my chat feed there I've got this one right here all right and thank you guys looks like we've got about 1,200 streaming which is great if you guys have not already hit that thumbs up button or subscribe at the channel you should really do yourself a favor and do me the favor of doing that so anyways long story short on the taxes you should obviously I'm not a CPA so I'm just sharing with you from my own experiences you should come too you should contact a CPA and you should get qualified advice I can't give you legal advice I can't give you a tax advice but generally speaking you should say beside anywhere from 12 to 18 percent your profits to cover the taxes because you will have taxes they are part of the deal I wish that we could get around paying taxes but the only way to really do that would be to trade exclusively in a retirement account which you totally can do but then you can't spend that money until you're at retirement age so that's not going to help you cover your cost of living and ultimately I know you guys most most of you are willing to trade to cover cost of living and then extra profit you'd consider and once you've already hit your cost of living goals looking into you know doing something with with long term you know of retirement so and legal entities LLC's s corpse in my experience they haven't made a huge difference from the the tax perspective but again you know you could you should use speak with a CPA on that just to you know get clarification on what's best for you so that's kind of you know in in total the business plan and now one of the reasons that I do think it's really important for you to approach trading as basically the same as running a small business is because of the fact that let me see okay half screen sorry I just wanna I want to see if I can get my camera back up here I'm gonna kill that one and I'm gonna kill this one one of them is the camera and it's using it up so take this opportunity show you guys my disclaimer my video capture with a little yes if here you already using the camera once sometimes it won't let it come up again so it's kind of annoying when it does that that's full face that's half display yep yep yep okay so I'm gonna go and add this here video capture okay there we go alright so copy that put that over here on this side and oh we're proud our browser stopped right so I'll put it right down here as well okay sorry about that guys so anyways yeah from the losses perspective one of the things that I think it's really important is as I said a lot traders get into this habit of taking the loss is super super personally and so you know you have a couple bad trades the next thing you know you're you know you're feeling terrible about yourself and you're getting really emotional and you start getting impulsive and reactive and all of that is what starts a downward spiral and it can funnel it like really fast where you're just spiraling down now if you can adopt the mindset of a profitable trader then you'll do a lot better and so one of the things that you guys probably know at this point is that when I'm trading I'm actually not looking at my my P&L I'm not looking at my total profit and loss so I actually don't now sometimes I'll check it but I usually don't know exactly where I sit on a stock while I'm trading it and that allows me to focus on trading the best quality setups maximizing the opportunity on the stock as much as possible without getting the hang up of the implication of a potential loss so from the coffee-shop perspective it's it's different with running a coffee shop cuz you don't have a big PNL you know up on the top of the wall every single moment telling you oh I just incurred a cost of running the business I just had to pay you know a utility bill oh that goes down or oh I just had a loss oh you know a trading mistake that you know something like that you don't have that direct kind of line to you know the ups and downs which is a good thing because you don't naturally get um the even ability to get so emotional about it but with trading you do and so you have to actively fight against that and and and that essentially means coming up with strategies of what you're gonna do to get yourself in the mindset of a profitable trader and so that can be you know looking at a trader like me and saying well okay what is Ross doing that's allowing him to be comfortable taking you know as much risk as he sometimes takes we're gonna feed the fish and this is going to give you guys a good little example greed now I want to show this to you because the market as you well know is a place where there's a lot of fear and a lot of greed those are the two big emotions that you know that drive the market know you should still have me let me just double check I'm still here so let's see whether or not let me see on my view how this looks by the way those of you guys who haven't already to check out the summer school program I'm gonna put this up here and let me just play this and I'm from Portland Oregon I spent my entire life you know working day to day 40 hours a week and you know my life has passed me by and my kids getting older and I experienced it so I started researching and I came up with with day trading when I came to warrior trading and I seen that platform and I heard Ross talked about you know retirement and what's your long-term goal and being that he was just a salt of the earth guy I had researched for about a month and I'd been to other sites and things I knew at that point that warrior trading was a place I wanted to be my name is Kim King and I go by Kim K in the large-cap room the warrior trading program and all the tools and the chat rooms has really helped me be able to focus in and get a good understanding and develop a solid strategy that's been really working for me if you're considering warrior trading what I would tell you is that it's fantastic I've gone on other websites with other trainers and I don't think anything is as good as what Ross and Mike and the whole chatroom and all the group does so it's a great program I would invest in it you save money in the long run in the long run and I convinced a friend to do it she's gonna start after the beginning of the year my name is Doug I've been a warrior pro student for almost a year now and I trade the small caps I've always wanted to do day trading and give it a shot I've known a couple people that have tried it saw a friend commenting on Ross's chatroom and I asked him about him like hey is this legit place to be and he said yeah the guy knows his stuff I highly recommend it and it's the first time I joined Ross's teaching style is great it's very easy I feel like I picked it up very quickly patterns and technical analysis of it all before I got started with warrior trading I wish I was known about a lot sooner five ten years ago all right so yeah I just wanted to show that to you so those you guys that do want to enroll in the summer school program summer school does start on Monday but and many of you guys have already registered but you can see we've got the special discounts right now for summer school some of you guys watching this you know a year from now this may not still be valid our prices we increase our prices usually at least once a year so you know you can you can see what we're currently offering but for those right now that are hanging out with me I do encourage you to check out the summer school program so I want to show you the pond which I promised I would show you in my video what was it yesterday so now of course my big camera has died but you can see the pond here so I was talking about how of course these fish throat you know a couple little pieces of food in there it takes and this so that right there is a momentum stock I just let's just pretend I just threw all momentum stock out there right now some you've got stock out there right now right there with great news nobody cares but what you find in the market is that when one person well I'm not it's probably not one person but when you know people start to notice then all of a sudden here comes the crowd and everyone wants to get a piece of the action these guys are still not quite noticing it yet see if they pick up on that okay looks like Goldie's coming in and there's Cindy Cindy's our whitefish you can see her over there is that Cindy short for Cinderella bromios over there with the little heart on his head and RJ is come oh I see RJ coming over there's Abe okay RJ is the first one to get some food and here comes Goldie here comes another Goldie and now it's on all right now the Momentum's hot okay I'm throwing I'm throwing the fit the food in and you know what here's a little piece of mulch I'm gonna toss this in you know what you're gonna go for it anyways because they're in such a feeding frenzy that they don't know they just they'll jump at anything and this is what we call a hot market when the markets hot where it is right now we've seen kovat 19 headlines so stocks are coming out left and right with breaking news and they're squeezing up one hundred two hundred three hundred percent and traders we're all hungry we're looking for opportunities and so we're jumping on everything that moves and then they'll come a time when all of a sudden things start to slow back down for whatever reason it just starts to kind of taper off the feeding frenzy ends fear starts to sink in a couple of those fish bit down on a piece of mulch ooh that didn't work out so well maybe I'm gonna be a little bit more cautious traders have a couple of losses we start to step back we get a little more careful and that can be the beginning of a slow period a little bit of a you know the ebb and flow in the market the pullback and then before you know it another feeding frenzy will start it's not realistic to expect that you'll make the same amount of money every single day you know 250 trading days out of the year you'll have some days where you crush it where it's a feeding frenzy and those are the days where you have to be aggressive you want to try to capture as much as you possibly can and then you know make sure you get enough to tide yourself over for one thing to slow down and that's that's an aspect of this business as a trader it's also probably an aspect of running a business let's say as a ice cream shop ice cream shop in New England you've got one season where you've got to make the most that you possibly can before things slow down right summer because when things slow down you know it's gonna be a long winter so we're trading it's not seasonal but it's cyclical and part of your trading plan should allocate when the market is really hot what do I do to maximise on the opportunity for me I increase my share size and I start trading more so I took more tray in the last month and I've taken and I think any other month and that was the right thing to do when the market goes through a slow period where things kind of ease off and we're not seeing that that sort of exuberance and those really those big moves then that will be a time where I will trade less I will ease off the throttle I'll slow down and I won't be as aggressive and that's that's part of the mindset of a trader and that can be really hard to accept at first because you'll sometimes feel like I want to be making money the same amount every single day you know this month making 225 thousand dollars yeah that would be pretty amazing to do that twelve months in a row but I think that that's an extremely unrealistic expectation you shouldn't expect that your best month can be replicated twelve months in a row you will have great months and then you will have slower months as a beginner trader one of the things that can be really hard is when you have your first slow months because I mean when you have those first slow months it can you can sometimes question whether or not your strategy even works but that wouldn't be the case with an ice cream shop in January in New England that's on the beach they're not gonna be surprised the business is slow why not well because through common sense they understand how it works but there isn't really a collective common sense when it comes to day trading because this is niche and it's not something enough people do that you can really learn a lot of common sense just through like through life the way you can with other careers so I hope this has been helpful for you talking a little bit about how to approach trading as a business and for those of you guys that do want to take the leap and start your own business as a trainer starting summer school on Monday so I would love for you guys to register I did host a a class about a week and a half ago which was essentially the first class of summer school and so those of you guys that want to watch a replay of that class you're welcome to watch the replay and during the class I talked about the summer school curriculum and I give you guys an opportunity to register with that special summer discount so if you want to watch that now you're welcome to do that it'll be happening let's see that class is gonna happen tomorrow at 1 o'clock and then summer school starts on Monday all right so check out all right so I'll post that for you guys on YouTube again those of you guys on YouTube and Facebook and throw out one last thumbs up looks like how many people do we have streaming right now on YouTube a little over a thousand thank you guys for being here on a Saturday and tune in tomorrow I'll probably jump on live again and I'll see you guys I'll try to charge this battery up a little bit longer so I can keep the big camera running but it's good have a backup all right have a great day everyone I'll see you guys right back at it tomorrow when I jump on and then Monday morning all right so I'm gonna put this back up here my disclaimer and I'll see you guys for the next episode bye everyone

Channel: Ross Cameron - Warrior Trading

Views: 317,444

Keywords: day trading, day trading strategies, trading strategies, how to day trade, beginner trading strategies, momentum day trading, stocks, trading, how to trade, stock trading, penny stocks, pdt rule, shares, float, volume, candles, profits, Wall St, finance, brokers, Ross Cameron, warrior trading, day trade warrior

Id: PC5iDYiP0jw

Length: 72min 50sec (4370 seconds)

Published: Sat May 30 2020