The Perfect Course for Experienced Traders
Our mission is to help 50,000 passionate, freedom driven traders in our private community on their journey for trading success by 2020. Will you be the one?
Part 1: Day Trading Case Study
Part 4: Advanced Day Trading Strategies
Part 6: Access to Better Trading Tools
Advanced Day Trading Case Study
Hey everyone! When I started 2016 I had no idea it would be such an incredible year. The year actually started off fairly slowly with small gains in January, February, and March. April and May continued to be choppy with May being my worst month of the year. At the end of may I decided to make a decision. I told myself that I would only trade A Quality setups and I would take 2x regular position sizes on those trade. Those rules went into effect on June 1st, and over the next three months I made over $94k in fully verified profits.
At the end of the summer I was interviewed and that interview appeared on the Huffington Post, titled, “Day Trader Makes $93,119.54 in 3 months”. This represented a significant turning point in my career as a trader. I had finally achieved a level of success that industry leaders, fellow traders, and even the press, found note worthy.
Through the rest of 2016 I continued to generate a consistent $20-25k per month, finishing the year with over $222k in total profits. I did all of this trading for 2hrs each morning. I start the day at 9am with my pre-market analysis and I’m usually done trading by 11am. When I first started trading I had no idea I’d be able to make over 200k/year trading just 2hrs a day. I thought to make that type of money I’d have to trade from 9:30-4pm, and I’d have to take dozens of trades everyday.
In 2016 I took a total of 777 trades, which is just about 3 trades per day. I proved that you don’t need to trade a lot, you just need to look for A quality setups, then take a large enough position to give yourself a $400-500 winner. If you can do that 2x a day, you’ll hit $1k/day easily. I always say, Trade the Best, Leave the Rest. Keep reading and I’ll show you the details of my strategy.
Register for my Next Live Training Webinar on How I made $222,244.91 in 12 months
1) How to pick the right stocks: (out of the thousands of stocks you could trade, there are only 5-10 that are worth trading each day). We cover this extensively in our Day Trading Courses, but we also offer daily watch list building from 9am-9:30 each morning.
2) How to Manage Risk: Do you know what profit loss ratio and what % of success you need to be profitable?
3) How to Identify charts with home run potential: Finding the gaps & the triggers. This all comes back to the Daily Chart, the News Catalyst, and the Float of the stock.
4) Trading Bull Flags: How to find intraday chart patterns like Bull Flags & Flat Top Breakouts in REALTIME.
5) How to use Level 2: Using Level 2 you can gain an advantage over other traders. We spend hours covering this in the day trading course. Just by watching the Level 2 and reading the tape you can begin to anticipate which direction a stock will go.
Account Reports & Trade List
Advanced Day Trading Strategies
Almost all traders will agree that Momentum is one of the best trading strategies. Momentum is what day trading is all about. One of the most important things I realized as a beginner trader is that the only way to generate consistent profits is by finding stocks that are moving. If stocks aren’t moving, we can’t make money. As day traders we buy stocks with the intention of selling them at a higher price. The good news is that almost every single day there is a stock that will move 20-30%. This is a fact. The question is how do we find those stocks before they make the big move. The biggest realization I made that has led to my success is that the stocks that make the 20-30% moves all share a few technical indicators in common. By understanding the anatomy of a stock with home run potential you increase the likelihood you’ll be able to find them in real-time.
Anatomy of a Momentum Stock
Momentum Stocks all have a few things in common. If we scan 5000 stocks asking for only the following criteria to be true, we’ll often have a list of less than 10 stocks each day. These are the stocks that have the potential to move 20-30%. These are the stocks I trade to make a living as a trader.
Criteria #1: Float of under 100mil shares (see Float definition)
Criteria #2: Strong Daily Charts (above the Moving Averages and with no nearby resistance).
Criteria #3: High Relative Volume of at least 2x above average. (This compares the current volume for today to the average volume for this time of day. These all refer to the standard volume numbers, which are reset every night at midnight.)
Criteria #4 is Optional: A fundamental catalyst such as a PR, Earnings, FDA Announcement, Activist Investors, etc. Stocks can also experience momentum without a fundamental catalyst. When this happens, it’s called a technical breakout.
Warrior Trading Case Study
My Favorite Day Trading Chart Patterns
Bull Flags are my absolute favorite charting pattern, in fact I like them so much I made an entire page dedicated to the Bull Flag Pattern. This pattern is something we see almost every single day in the market, and it offers low risk entries in strong stocks. The hard part for many beginner traders is finding these patterns in real-time. These stocks are easy to find using the stock scanners I have developed with Trade-Ideas. My Surging Up scanners immediately shows me where the highest relative volume in the market is. I simply review scanners alerts to identify the strong stocks at any given time of the day. As a pattern based trader, I look for patterns that support continued momentum. Scanners alone cannot find patterns on charts. This is where the trader must use their skill to justify each trade.
Day Trading Strategies Pattern #1: Bull Flags
With the Bull Flag Pattern, my entry is the first candle to make a new high after the breakout. So we can scan for the stocks squeezing up, forming the tall green candles of the Bull Flag, then wait for 2-3 red candles to form a pullback. The first green candle to make a new high after the pullback is my entry, with my stop at the low of the pullback. Typically we’ll see volume spike at the moment the first candle makes a new high. That is the tens of thousands of retail traders taking positions and sending their buying orders.
One of the Best Trading Strategies
The Trading Strategies can be used from 9:30-4pm but I find the mornings are almost always the best time to trade. I focus my trading from 9:30am – 11:30am. However, at any time during the day we can get a news spike that will suddenly bring a tremendous amount of volume into a stock. This stock which was of no interest earlier in the day is now a good candidate to trade on the first pull back. The first pull back will typically take the form of a bull flag. After 11:30am I prefer to only trade off the 5min chart. The 1min chart becomes too choppy in the mid-day and afternoon trading hours.
Entry Checklist Summary
Entry Criteria #1: Momentum Day Trading Chart Pattern (Bull Flag or Flat Top Breakout)
Entry Criteria #2: You have a tight stop that supports a 2:1 profit loss ratio
Entry Criteria #3: You have high relative volume (2x or higher) and ideally associated with a catalyst. Heavier volume means more people are watching.
Exit Indicator #1: I will sell 1/2 when I hit my first profit target. If I’m risking $100 to make $200, once I’m up $200 I’ll sell 1/2. I then adjust my stop to my entry price on the balance of my position
Exit Indicator #2: If I haven’t already sold 1/2, the first candle to close red is an exit indicator. If I’ve already sold 1/2, I’ll hold through red candles as long as my breakeven stop doesn’t hit.
Exit Indicator #3: Extension bar forces me to begin locking in my profits before the inevitable reversal begins. An extension bar is a candle that spikes up and instantly put my up $200,400 or more. When I’m lucky enough to have a stock spike up while I’m holding, I sell into the spike.
Analyze Your Results
All successful traders will have positive trading metrics. Trading is a career of statistics. You either have statistics that generate returns or losses. When I work with students I review their profit loss ratios (average winners vs average losers), and their percentage of success. This will tell me if they have the potential to be profitable, without even looking at their total P/L. Once you finish each week you have to analyze your results to understand your current trading metrics. The best traders keep meticulous trading records because they know they’ll be able to data mine these records in order to understand what they should to to improve their trading.
Every day trader needs to be able to build a daily watch list. This is a critical step in becoming an independent trader. Out of the thousands of stocks you could trade on any given day, how will you choose stocks to trade? The first step, before you even build a watch list, is learning a strategy. It’s impossible to build a watch list if you don’t know what type of stocks to look for. And you can’t know what you are looking for until you’ve adopted a trading strategy. If you have started trading the Momentum Day Trading Strategy that I trade (I have about 68% accuracy on this strategy with over $200k profits in the last 12mo) then you are ready to looking for stocks each morning. I’m going to walk you through the process of finding stocks with home run potential each morning. If you follow these three steps each day you will be able to build a stronger watch list each day.
Step 1: Scan the Market for stocks gapping up more than 5%. Even if there are 20 gappers, focus on the top 10 bigger percentage gainers, and prioritize low float stocks (float under 20mil shares) higher on the list.
Step 2: Review the Daily Chart & Pre-Market Charts. The best momentum setups will be opening above the 9ema and 20ema on the daily chart. Additionally, there will be lots of room before any nearby resistance. The pre-market chart should have a well-defined flag pattern.
Step 3: If the Daily Chart checks out, it’s time to research the catalyst. I check MarketWatch, Benzinga, and StockTwits for the headlines. Essentially I want to see that stocks have some type of press release today. If there isn’t any news, it’s hard to justify why the stock has managed to gap up 5% or more.
Step 4: Now that you’ve found the gapper, mapped out the chart, and identified the news, this stock is ready to be on the watch list! When I put a stock on my watch list I start by making note of the critical factors such as Float, Catalyst, and my desired entry point. Based on the Momentum Strategy, I will be buying the first pullback in the form of a bull flag, flat top breakout, or moving average pullback.
Step 5: As soon as the bell rings it’s time to trade! I take trades only when I can maintain a 2:1 profit loss ratio. That means 10 cent stop vs 20 cent profit target. With 10k shares that $1,000 risk vs $2,000 profit potential.
Every experienced trader needs trading tools, and just like brand loyalty, traders are pretty particular about which tools they like. Are you a Ford or a Chevy guy/gal? It’s the same with trading. I’m going to show you my favorite trading tools. These are tools I use literally every single day when I’m trading and they’ve each become integral to my trading strategies & my routine. While many of our students are utilizing free trading tools during their learning curve, once you start making money, you need to invest in the right tools. The career as a trader has very minimal overhead, but subscribing to the right trading tools and trading software is important. It will give you that extra advantage as you are trading the markets.
Trade Ideas is a multi-million dollar tech company founded by Dan Mirkin. Their software and technology is integrated into many large platforms including ETrade Pro. Trade Ideas provides software for stock scanning, to help traders find the type of stocks they like to trade. Over the years we have developed a great relationship with Trade-Ideas and I’ve produced a suite of customized scanners based on finding stocks with home run potential. I take trades directly off these scanners, and on my best days, I’ve made over $10k from these trade alerts.
Benzinga is a streaming news service that offers a squawk box feature. The squawk box is essentially a streaming internet radio that gives us breaking news straight off the news wire. When I turn on their audio feed I feel like I’m connected to the market and I know if there is major news, I’ll get it quickly. There are many days where I’ve taken trades based on headlines off the squawk box. These trades have more than paid for the cost of the service. If you want to know the news, Benzinga is a fantastic platform.
Early on in my trading career I realized that I wanted more advanced charting than what comes with regular broker platforms. Even well developed platforms like Etrade and TDAmeritrade leave some room for improvement. Because charting is so important, I decided to subscribe to eSignal. With eSignal I can simultaneously stream real-time charts on dozens of stocks, and I can see full Level 2 and Time & Sales data on each stock. The low latency program runs very quickly and is stable on my computer, even when streaming more than a 20 charts.