Warrior
Trading
We Will Teach You…
1. What is Day Trading
2. How to setup a Day Trading Account 3. The Importance of Paper Trading
4. How to setup your Charts & Read Chart Patterns 5. How to Buy and Sell
6. How to Manage Risk
7. What stocks you should trade 8. How to Make a Watch List 9. How to Identify Safe Entries 10. Final Words of Wisdom
Why Is This Important?
In order to be a profitable trader:
You MUST find momentum stocks with home run
potential
You need to be able to find safe entries in
real-time, not just in hindsight
You have to be able to manage your risk and
understand risk to reward ratios
You need to create a strategy based on the best
time of day to trade, the best type of stocks, and the best patterns
What is Day Trading?
What is Day Trading?
Day Trading is the simple process of buying
shares of a stock and then selling those shares on the same day. That is considered a Day Trade.
A Day Trade can last anywhere from several
hours to a few seconds.
When you buy AND sell the same security
from the same account in the same day, it is called a round trip, and under the Pattern Day Trade Rule, you get 3 round trips in a rolling 5 day period.
Why Day Trade?
As a Day Trader our goal is to make money on
relatively small moves in a stock.
The only way to profit on smaller moves is to take
larger positions.
These positions sizes would typically be larger than
you would be comfortable holding as an
investment, but over the course of a few minutes or a few hours, the risk is acceptable because your monitoring the trade the entire time.
10k investment vs trade?
If you make a 10k investment in mutual funds, you
will expect a 5-7% return ANNUALLY. That means you would aim for $500-700 return over the course of the year. That is less than $50/month.
If you take a 10k position in a day trade we aim
for 5-7% in 1 DAY. That would be a $500-700 profit in just 1 day. This requires putting the entire
investment into 1 position which would be against safe risk management for investing, but is
Stocks that MOVE
Finding a 5-10% mover INTRADAY isn’t easy. It’s
what every day trader looks for. There are stocks every single day that make 5-10% moves.
These stocks move because they have a reason.
Whether they reported positive earnings, had a breaking news release, or something similar.
Our job as day traders is find stocks giving an early
Required Tools & Overhead
As a Day Trader you will need some tools Stock Charts - $99/month
Stock Scanning (finding trade ideas) $49/mo Stock News Services (optional - $89/mo)
Chat Room Subscription - $99/mo Stock Broker $4.95 per trade
Overhead can easily reach $300-400/month, but
Keep Costs Minimal
As a new trader you will want to papertrade
(trade in a demo account with pretend money) and use basic, free services. Keep your costs low and focus on education, developing your
strategies, and increasing your skills.
For some the learning curve is as short as a few
months, for others it’s much longer.
Like any career it takes dedication to become
A Day Traders Favorite Setup
We look for strong stocks that have just reported
news because these have the potential to make huge moves. We routinely see stocks run
anywhere from 10% to 100% in minutes.
The key to success is finding these setups in
real-time and taking a position while managing how much you are risking. This is what we teach!
The Hard Truth
90% of Day Traders will fail to make money in the first
year, and most will quit.
This is a result of poor risk management, poor stock
selection, and a lack of education.
Fortunately, we teach day trading AND swing trading!
There are very few day trading classes that offer the depth of education as Warrior Trading.
Our first tip is to stop trading with real money if you
aren’t making money. We will teach you a proven trading strategy that has been tested by time.
When you are starting out, swing trading allows you to
trade at a slower pace while practicing the more complex day trading strategies, but still learn about how the market works.
Our Students
When we ask our students how they are
performing, we see an average over 85% success rates. This impressive success rate is over 8x the average success rate of a Day Trader.
Warrior Trading teaches trading. We give you the
exact details of our trading strategies so you can trade successfully.
Opening a Trading Acct
How to Start?
To Start Day Trading you will need to open
a trading account.
We recommend starting with a Demo
Account ( a pretend money account) with Ameritrade.
This gives you the ability to simulate trades
and practice trading strategies without risking any money. This is extremely
Stock Brokers
For Live trading, there are many options
including Ameritrade, Etrade, &
Scottrade. These brokers cater to retail traders who also want to use their
accounts to pay bills, write checks, and need an ATM/Debt card.
These brokers are better for investors and
are not a good option for active day traders.
Best Brokers
As Day Traders we need access to the best
tools.
For Paper Trading we Recommend
TD Ameritrade (ThinkorSwim)
For Live Trading we Recommend
Speedtrader Lightspeed
Importance of Paper
Trading
My “Cost” of Learning
I lost over $30k trading untested strategies
In my eagerness to make money trading, I
bypassed a critical step.
I never had a written trading plan or a
strategy with historical data to support it.
The only way to get historical data is to
3 Big Questions
What is your Strategy
Setups, Stocks Traded, etc
Stats on the strategy (from papertrading) What time of day do you trade? Results?
How do you Manage Risk?
Risk Reward Ratio
Following the Volume
What is your max loss/trade
Education Comes First
What do I need to do? Just like any other profession, if you are
serious, you have to evaluate whether or not this is really a potential career path.
This isn’t a part-time hobby you do on the
side, learning to day trade requires a
tremendous amount of time and energy.
When trading, you are an entrepreneur. You
want your business to be profitable and you have to work hard.
Make your Plan and Trade
your Plan
In order to succeed as a trader you MUST
be organized and disciplined. This starts with tracking all your trade data on a
spread sheet and continues with writing a trading strategy and overall trading plan
Never Trade an Unproven
Strategy
You should only live trade a strategy that
is proven to be successful.
This is part of risk management. When you
know a strategy has a 65% success rate and 2:1 profit loss ratio, you have a full understanding of the risk.
First 3 months
Trade no more than10 times per day. Aim
for 50% success rate.
Use 2:1 profit loss ratio, expect a 1.5:1
profit loss ratio average.
We will build up from risking $50 per trade
1
st
Month - $50 Risk
You are risking $50 per trade with a target
of $125 / day profit.
If you lose $125 in 1 day you are done for
the day!
You want to have 4 days per week where
you hit your goal.
1 day can be your max loss.
This means your weekly goal is your Daily
Take 10 trades per day
Risk $50 per trade. Lose on 5 trades. You are down $250.
Make $75 on 5 trades, you make $375. You have a net profit of $125.
You may hit a winner that far exceeds $75
because all your trades had the 2:1 profit loss ratio, but expect 1.5:1 as your
Do this for 1 month
Do this every day for 1 month
Prove to yourself that you can choose the
right stocks, the right patterns, and consistently come out ahead.
Right now, it’s not about how much you
Set Realistic Goals
Don’t expect to be profitable in the first 3
months trading.
You should be paper trading. Trading is a process.
SURVIVE UNTIL YOU LEARN
Build your Foundation
The market will always be there
You need to focus first and foremost on
building your foundation as a trader.
Learning how to read charts, find stocks, and execute trades.
The learning curve for some is as short as a
few months, and for others (like myself) is much longer
END OF DAY 1
With questions please email me! ross@warriortrading.com
Setting Up Your Charts
Setting up your stock chartsHow to setup Charts
As Day Traders we rely heavily on Stock Charts. Stock Charts are a form of technical analysis.
We look for specific chart patterns to find areas of
support and resistance.
We use a minimum number of indicators to avoid
Candle Sticks
Stock Charts are comprised of candle sticks.
Each candle stick represents the price action
within a set period of time. If you are looking at a daily chart, each candle stick represents 1 day.
As Day Traders we use 1min and 5min charts.
Each candle represents 1min or 5min of price action
Some Traders use Bar Charts, or Line Charts, but
Candle Sticks
What does each Candle Stick Tell us
Open Close High Low
The shape of candle can also give us information about the market sentiment
The open on Green candles is always the low, opposite for Red Candles
Hammer & Inverted Hammer
Candles
My Charting Layout
I use 3 time frames. Daily chart
5min Chart 1min Chart
Remember to step back and look at the
Technical Indicators
Technical Indicators are simply designed
to give you a context for the current price action and sometimes gives you an
indication of future direction
You can never rely on Technical
Indicators. Instead use them to confirm what you already suspect in chart
Volume Bars
Volume Bars show us
visually how much volume occurred during a candle stick period.
We can look for patterns such as increasing or decreasing volume.
Moving Averages
Moving Averages are
simply averaging price over a set period of time. An exponential Moving
Average heavily weights recent price action vs older price action. A simple
Moving Average is just the average without any
weighting.
I use 9ema, 20ema, 200ema
VWAP
The VWAP is the Volume Weighted Average price. Like a moving average, this is an average price of a
stock. What is unique is that it takes into account the amount of volume at each price. Like exponential
moving averages, it gives us more information than a simple moving average.
MACD
MACD is a Moving Average Convergence / Divergence indicator. It tells us whether the moving averages are moving apart (indication strong price trend) or
moving together (indicating weakening price trend)
MACD are the Bands at the bottom of the chart
Bollinger Bands
Bollinger Bands are price averages offset to the top and bottom. 90% price action occurs INSIDE
Bollinger bands. When the price is outside Bollinger bands, it’s considered an extreme situation and a potential reversion indicator Bollinger Bands are the pink bands around the price.
Reversal
Example
Simple Chart Patterns
Bull Flags and Flat Top Breakouts are two
of the simplest chart patterns. These are both bullish chart patterns when they
occur in the context of a stock in a strong up trend. I use both patterns as potential buying opportunities.
Flat Top Breakout Pattern
Long period of
consolidation above moving averages.
Then a breakout about the resistance line.
These can flag like this for hours before
Flat Top Breakout Pattern
Flat Top Breakout Pattern
Flat Top
Breakout
Bull Flag Pattern
Bull Flags work best on high volume stocks
in the morning.
I look for these patterns and then trade
them on the Momentum Strategy I will review tomorrow
Bull Flag Pull Back/ Breakout
Pattern
Bull Flag Example
Pull Back in the form of a bull flag
How to Buy & Sell
The Bid and Ask
Level 1
Every stock has a Bid and Ask. This is considered
Level 1 of the Market (NBBO – National Bid & Best Offer).
The Bid is where buyers place offers and Ask is
where sellers place offers. As a buyer you can choose to wait on the bid to try to get the best price, or you can simply buy from a seller on the Ask instantly.
The Bid and Ask
Level 1
Level 1 will show you the Bid x Ask. In this case, 2.16 x 2.17 This Bid as a 1 cent Spread.
The Spread is the distance between the bid price and the ask price. Some stocks will have a larger spread. The
The Bid and Ask
Level 2
Level 2 provides more market depth than
Level 1.
Level 2 shows the current Bid and Ask and
shows you how many buyers and sellers are lined up behind the Bid and Ask.
This can give a Day Trader an indication
of the strength and potential direction of the market.
The Bid and Ask
Level 2
Order Types
Buying and Selling using Direct Access
Software by Speedtrader (A Direct Market Access broker). Other DMA brokers will
Order Types
Market Orders: This order will give you
shares at ANY price
Limit Orders: This order will give you shares
only up to a price limit you set when you create the order
What is a Stop Order
A Stop is an order that sells your position
when a certain price is hit.
This can be considered a type of safety
net.
It is possible for a stock to drop so quickly
your stop order will either not get filled, or get filled at a very bad price.
Preparing your Order
You will decide the Order Type (market or
limit) If you choose limit, you will choose a limit price, then you will send the order.
Once you have a position you can
prepare a stop order, or prepare a sell order. Sell orders can also be Limit or Market orders.
Know your Risk before you BUY
Most importantly, before you ever take a
trade, whether real money or paper
trade, you must know how much you are risking. Risk is present in every trade.
Learning to manage risk will make you a successful trader.
Risk Management is #1
What Separates Good trades from Bad
Traders? RISK MANAGEMENT
Why do 90% of Day Traders fail? They
don’t utilize RISK MANAGEMENT
Using Proper Risk Management Principals,
we can make money and be WRONG half the time!
Success in Trading
Success is not about being right 100% of
the time. In reality, its about learning to cut your losses when you are wrong.
Imagine if all your losses were only $10,
but your winners were $90.00. You
wouldn’t need to be right that often to
cover your losses. In fact, if you were right just 10% of the time you’d break even.
What is a Profit Loss ratio
2.00 average winner : 1.00 average loser is
a 2:1 profit loss ratio.
Successful Day Traders have a MIN profit
loss ratio of 1:1, and aim for 2:1, 3:1 and sometimes higher.
A high profit loss ratio means you can be
Profit Loss Ratio Stats
2:1 Profit Loss Ratio = 33% is Breakeven 1:1 Profit Loss ratio = 50% is Breakeven 1:2 Profit Loss ratio = 66% is Breakeven
Put Statistics in your Favor
KNOW YOUR STATS
Know your Average Winners and Losers Aim to always Improve this Ratio
Small Adjustments can amount to Big $ The only way to know what your statistics
END OF DAY 2
With questions please email me! ross@warriortrading.com
You should only Day Trade
certain stocks
What Stocks to Trade?
As a new trader the common approach is to
make a list of your favorite stocks and start trying to apply basic chart pattern principals to find entries.
This is WRONG.
We want to trade stocks that have the
potential to run 5-10% in a single push. This means we have to choose very carefully which stocks we can trade.
Big stocks like AAPL, TWTR, FB, will rarely make
big moves like that.
Instead, we focus on under the radar stocks
We are competing against
computers
High Frequency Traders are computer
systems. Just like playing chess against computers, trading against a computer is nearly impossible. It’s a losing battle.
HFT Traders dominate certain stocks, but
Day Traders hunt for News
Day Traders typically focus on trading
stocks that are trading on very high volume due to news. When tens of thousands of traders all trade a single stock, we overpower the HFT traders.
This means the stocks can be easier to
We Trade EXTREME Stocks
We Combat HFT’s by Trading High Volumestocks
Look at RELATIVE volume
Every Single Day there is a stock having an
extreme, once in a year event.
The Chart Patterns we trade only work on
Certain Stocks. On some stocks, they don’t work at all!
These are the days the when stocks have the
What Makes a stock Extreme?
High Relative Volume is the result of a
Catalyst
We look for the Catalyst!
Earnings, Breaking News, Activist Buying,
We MUST follow the Volume
Trading Low Volume stocks is asking for
trouble. Low volume stocks are more likely to be manipulated by a small number of traders or HFT traders.
The patterns you see on charts will rarely
Stock Selection as Risk
Management
Stock Selection is a 2nd level of Risk
Management
By avoiding penny stocks, low volume
stocks, illiquid stocks, we can focus our trades in safer areas of the market.
Use your Stock Selection as an
How to Make a Watch List
Every Trader needs to be able to make a
watch list each morning.
Your watch list will be the handful of
stocks that you think have the potential to make a big move.
The best way to look for these stocks is to
What is a Stock Scanner?
A stock scanner will automatically scan
the entire market of thousands of stocks to find the specific conditions you told it to look for.
We look for stocks that are trading up in
the pre-market session with heavy
volume. The only reason a stock will trade up with heavy pre-market volume is if
What is a Gap?
A stock that opens higher than it closed
yesterday, will form a Gap on the daily chart. We are always looking for stocks gapping up because this is typically due to breaking news.
Gap Scanners
We tell our scanners to look for stocks that
are trading higher in the pre-market
Watch List
I look at all of the gappers and review the
pre-market charts.
I make a list of the gappers that have the
strongest pre-market charts. These charts will have patterns including Bull Flags or Flat Tops.
For the stocks with the best patterns I review
the news and take note of other important details including earnings dates.
Typical Watch List
$ACUR – I’m watching it long over possibly 1.30
(pre-market highs)
ACUR: Acura Pharmaceuticals – The Company
announced it has entered into a license and
development agreement with Bayer Healthcare for Acura’s IMPEDE technology. Gapping up 30% with a 34M share float.
$GBSN – I’n watching it long over the pre-market
highs, or the high of the last pivot.
GBSN: Great Basin Scientific – The Company
announced receipt of a European Patent for the Company’s on-chip amplification technology, currently patented in the U.S. Gapping up 8% with 2.6M share float.
Typical Watch List
I usually have 4 stocks on watch each
day. As the day progresses I may remove some stocks that fail early on, and I may add stocks that become strong in the first hour of trading.
Finding an Entry
Once you have created a watch list, you
have done ½ the work! Simply creating your watch list is a HUGE accomplishment
Now it’s time to find a safe entry.
What constitutes a safe entry? You need
to be able to manage risk, in other words, risk $100 to make $200, and have that 2:1 profit loss ratio
Combine what you have
learned
You have your watch list, and you have your
charts setup.
Look for the chart patterns that you have
learned are pull back setups on strong stocks.
When I’m trading Momentum, I trade pull
backs (bull flags), and breakouts (flat top breakouts)
Momentum – The First Pullback
Momentum – The First Pullback
Recognize the Patterns
Recognize these simple patterns, they
occur again and again. But remember, they only work well on stocks with high volume. So make your watch list each day of the top 4 stocks, and then look for a pull back entry if they are showing
momentum.
Stocks that suddenly gain momentum
mid-day are also candidates, although they can be more difficult to find.
Finding Mid-Day Momentum
To find Mid-Day Momentum
Reviewing Stocks on Scanners
When a stock shows up on the
Momentum Scanner I look at the chart and review the level of volume and
attempt to identify the source of the volume (news, technical breakout, etc)
If everything looks good I will consider a
trade on the next Bull Flag or a Flat Top Breakout
Final Words of Wisdom
Day Trading requires a high level of discipline
and composure in order to make the right decisions under pressure.
The ability to maintain discipline and
composure are muscles that will become strengthened the longer you exercise them. Don’t be alarmed if at first you struggle! This is how every professional trader begins, hence why we say to start trading with a paper
trade/demo account!! Why practice or struggle with real money?
Final Words of Wisdom
We have taught you the basics of trading but
we have just scratched the surface.
In our trading courses we go in depth on
each of these topics and other topics to advanced to cover in this intro class.
The most important thing for a new trader to
focus on is educating yourself. We will teach you the skills to be a professional trader. If you are ready to learn we’re here to teach!
Coupon Code
Join Warrior Trading with a 15% discount – Coupon Code: 15percentoff
Join Warrior Trading Courses with 15% discount – Coupon Code: 15percentoff Email me with questions
