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How to Start Day Trading (with ZERO experience)

Ross Cameron - Warrior Trading・52 minutes read

A trader shares a successful day trading strategy that led to significant account growth, focusing on specific patterns and criteria for selecting stocks. The speaker emphasizes the importance of trading discipline, strategy, and risk management to achieve consistent profits and avoid emotional trading pitfalls.

Insights

  • The speaker's successful day trading strategy involves finding specific stocks trending higher, with a 5% stop loss and selling half at a 10% increase, emphasizing the importance of volatility, relative volume, and limited float for profitable trades.
  • Utilizing stock scanners with specific criteria, sorting by percentage gap, and analyzing news headlines and chart patterns are crucial steps in identifying potential trades, with a focus on real-time recognition of patterns, tight stops, and quick loss-cutting strategies to maximize profits and minimize losses.

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Recent questions

  • How did the speaker grow their trading account significantly?

    The speaker started with $583.15 in their account and managed to grow it to $177,000 in just a month by implementing a specific day trading strategy. They focused on finding stocks trending higher, using a 5% stop loss and selling half of their position at a 10% increase. By taking an average of two trades per day with 87.8% accuracy, they were able to capitalize on volatile stocks within the $1 to $20 price range, emphasizing the importance of high relative volume and limited float stocks for increased profitability.

  • What criteria did the speaker use for their stock scanner?

    The speaker's stock scanner criteria included searching for stocks with five times relative volume, a stock price between $1 and $20, at least a 10% increase, a float of less than 20 million shares, and a news catalyst. By focusing on these specific parameters, the speaker was able to identify potential stocks with significant movement potential, allowing them to make informed trading decisions based on real-time data and market trends.

  • How did the speaker suggest traders handle profits in different market conditions?

    In a hot market, the speaker recommended considering holding the entire position and monitoring for exit indicators after a 10% profit. However, in a colder market, they advised selling half of the position at a 10% profit and using a trailing stop for the rest. By adapting their profit-taking strategies to market conditions, traders can optimize their gains and minimize potential losses, ensuring a more balanced and strategic approach to trading.

  • What trading psychology tips did the speaker provide?

    The speaker emphasized the importance of trading psychology, advising traders to avoid selling winners too soon and holding losers too long due to fear. They encouraged traders to capitalize on the fear of missing out (FOMO) without falling victim to it by being more aggressive during volatile market times. By distinguishing between gamblers who focus on profit and traders who prioritize risk management, the speaker highlighted the significance of having a statistical edge and maintaining discipline in trading practices.

  • What advice did the speaker offer for recovering from significant losses?

    After experiencing significant losses, the speaker recommended traders to return to basics by taking one or two trades a day to gradually rebuild confidence. They suggested tightening risk management, trading less frequently, and focusing on higher quality setups to recover from losses and avoid emotional trading. By emphasizing the need for discipline, setting rules to protect accounts and emotional states, traders can navigate challenging market conditions more effectively and work towards long-term success in trading.

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Summary

00:00

"Day Trading Success: Simple Strategy Revealed"

  • The speaker struggled as a trader until a significant loss forced them to analyze their metrics.
  • They discovered a specific trading pattern that transformed their account growth.
  • The pattern only works on a specific subset of stocks each day.
  • The speaker aims to simplify day trading and share their strategy with the class.
  • They started with $583.15 in their account and grew it to $177,000 in a month.
  • They took an average of two trades per day, with 87.8% accuracy.
  • The simple day trading strategy involves finding stocks trending higher, with a 5% stop loss and selling half at a 10% increase.
  • The speaker emphasizes the importance of trading stocks between $1 and $20 for higher volatility.
  • They stress the significance of stocks with high relative volume, up at least 10% on the day, and a limited float.
  • Market makers play a crucial role in creating spreads and can be exploited by retail traders for profit.

14:23

Developing Effective Stock Scanners for Trading

  • Scan on Finis is a service for scanning, but it provides delayed data, making it unsuitable for day trading.
  • The speaker hired a development team to create stock scanners for daily use.
  • Retail traders typically find stocks to trade using scanners that search the market for specific criteria.
  • Criteria for the speaker's scanner include five times relative volume, stock price between 1 and 20, at least 10% increase, float less than 20 million shares, and a news catalyst.
  • The first step is to find the top percentage gainers each day using the scanner.
  • The speaker sorts the scan by percentage gap to focus on leading gappers.
  • The speaker looks for stocks with lower floats as they are more likely to make significant moves.
  • After identifying potential stocks, the speaker checks news headlines to understand why the stock is moving.
  • The speaker then analyzes the chart for a favorite pattern, waiting for a pullback before entering a trade.
  • The speaker emphasizes recognizing and capitalizing on patterns in real-time trading, using tight stops and cutting losses quickly.

29:06

Maximize profits with strategic trading techniques.

  • Stop is set at 5%, profit target at 10%.
  • When up 10%, consider not selling entire position to avoid capping winners.
  • In a hot market, consider holding entire position and monitoring for exit indicators.
  • In a colder market, sell half at 10% profit and use trailing stop for the rest.
  • Different types of trailing stops available, including live trailing stop.
  • Focus on level two data when in a trade, looking for signs of strength like green on the tape.
  • Signs of strength include decreasing orders on level two, price moving up, hitting new highs, and being on high day scanner.
  • Signs of weakness include big sellers on level two, hidden sellers, bursts of red on tape, and reversals on candles.
  • Entry and exit points based on candle patterns and volume, aiming for significant moves.
  • Trading psychology crucial, avoid selling winners too soon and holding losers too long due to fear.

42:46

"Mastering FOMO: Trading Tips for Success"

  • Encourages traders to capitalize on FOMO without falling victim to it by being more aggressive during volatile market times.
  • Distinguishes between gamblers who focus on profit and traders who prioritize risk management, emphasizing the importance of having a statistical edge.
  • Advises traders to return to basics after significant losses, suggesting taking one or two trades a day to rebuild confidence gradually.
  • Recommends tightening risk management, trading less, and focusing on higher quality setups to recover from losses and avoid emotional trading.
  • Emphasizes the need for discipline in trading, highlighting the importance of setting rules to protect accounts and emotional states.
  • Suggests quitting day trading after making a profit to avoid overtrading and maintain consistency in earnings.
  • Provides insights into the minimum account size for trading and setting daily goals and maximum losses based on a percentage of the account size.
  • Outlines options for choosing a broker for day trading, including US and offshore broker dealers, detailing the advantages and limitations of each.
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