Trade the Best – Leave the Rest!
Hey everyone! We’re coming to the end of another fantastic month of trading! This month I locked up just over $32k in gains with a 75% accuracy rating. This comes in just under my $34k in gains from last month. Since last month was a record breaker, I was really trying to break records 2 months back to back. I was close, but trading slowed down a bit this week. In total, I finished the week with over $13k in gains but not thanks to my trades Thursday or Friday. Remember, every trade was called out in our Day Trading Chat Room. So how did I made over $30k 2 months in a row? It’s all about focusing on the best quality setups. I can’t say it enough times. You focus on the best, and leave the rest. I traded an average of only 5 trades/day this month. I know so many beginner traders who make a fraction of what I make but who trade 10x as much! Over trading results in more account blowups than almost anything else. The best thing you can do is focus on limiting the amount of time you spend trading the markets to only 2hrs/day.
Choosing Home Run Stocks
I don’t take for granted the fact that the gains I’m making now are the result of years of paying my dues learning to trade. One of the biggest struggles new trader face is learning how to even find stocks to trade. I talk to traders who are trading big companies like MSFT, S, FB, etc. On a day to day basis, these stocks usually aren’t in play for day trades. They may be worth trading a few times a quarter or even once a month, but not daily. I teach students to focus on stocks with high relative volume. This isn’t stocks with high volume, it’s high RELATIVE volume. That means if the average volume is usually 1mil shares/day, a stock trading on 10mil in vol is trading with a relative volume of 10. I only trade stocks trading with relative volume of at least 2. That means twice the average. The only thing that makes stocks trade on 2x average volume is news or a technical breakout. By focusing on these stocks each day I’ve dramatically increased my accuracy and my profits.
Manage Your Risk
Once you’ve found stocks to trade now it’s time to find your entries! One of my favorite setups is the Bull Flag pattern. I discuss this in our Free Trading Webinar, and in our full length Day Trading Courses. The beautiful thing about these patterns is that the resolution is exceptionally strong on small cap stocks squeezing up on news. When I see a stock surging up I often buy the first 1min bull flag, then wait for the first 5min bull flag. The 5min bull flags should consolidate above the 9ema. Once we have 2-3 red candles, I’ll buy the first green candle, or the first candle to make a new high vs the previous candles high. I set my stop at the low of the pullback or -20 cents, whichever is closer. I’ll hold these positions until I’m up 20-30 cents, then I sell half and adjust my stop to breakeven. I’ll scale out of the rest around 40-50 cents, or at breakeven. This is the strategy that’s given me 75% success with 17 cent average winners and 12 cent average losers. If you want to learn more, check out our webinar below!