What’s up, everyone? Ross here from Warrior Trading. In this episode, I’m going to walk you through the simplest day trading strategy for beginner traders.

 

Now, as a beginner trader, what’s your goal? Hopefully your goal is to take one or maybe two trades a day where you’re minimizing your risk while maximizing your potential for gain. That way, even if you’re only right 50% of the time, hopefully you can still walk away with a little bit of profit.

Now, we know that trading is risky, and we know the statistics that most traders lose money. And of course, my results are not typical. I have to say that. But as a beginner trader, I think you could do yourself a really big favor by focusing on keeping it simple. The simplest strategy is to focus on the leading percentage gainers each day. This is a big deal. The stock that I traded today, and this is a great case study, and I’ll show you examples of it as we get into the video, it went up 200%.

200% is a huge move. Now, I didn’t capture the whole move, but I captured small pieces of it. And small pieces of 200%, that’s 5% here, 7% there, 3% there, 10% there. Those are big pieces of profit. If you’re like most beginner traders and your trading stocks that are in a relatively narrow range, getting a small sliver of a 5% move, you’re not even getting enough profit to justify the risk.

You’re going to have most likely an inverted profit/loss ratio where your average losers are bigger than your winners, your accuracy’s going to be poor, because those types of stocks are choppy, and you’re not going to do well. The best thing you can do is start by focusing on the right type of stocks to trade, and those are percentage gainers and gappers. This is a gap strategy, focusing on the leading gappers and gainers each day.

And then as we get in the video, I’m going to show you not just how to find those stocks each day and how to understand whether or not they have the potential to make a big move, but also I’m going to talk a little bit about my entries. Now, this is a short video. I’m not going to have time to go through the entire strategy and all of its nuances. I do that, of course, for students who are part of our curriculum over at Warrior Trading.

But if you’re testing the water, you want to just learn more about my strategy and the way I trade, I encourage you to hit the thumbs up and subscribe to the channel. Every morning, I do a live audio video broadcast. It’s called The Morning Show, and I share with you my watch list for the day and a couple of the stocks that I’m thinking about trade. Sometimes I even take some live trades during The Morning Show.

It’s a great opportunity for you to learn a little bit more about the way I trade and to see whether or not you want to learn from me in our classes. Make sure you subscribe to the channel, hit the notifications button. That way, you’ll get the alert when I go live each morning. It’s usually sometime between 8:00 and 9:00 AM that I go live. All right? With that, let’s jump in. I’m going to get screen shared going. I’m going to show you my scanners.

I’m going to show you the tools I use to find these types of stocks. I’m going to break them down to more detail and we’ll go over this case study today of our 200% mover. All right, let’s get into it. All right, here we go. We’re going to jump in. This is a perfect case study. Today, you can see that I’m up over $12,000. I’m up 13,700 on PIK, which is the stock that you can see on my charts right here. This is a perfect example of the strategy that I’m going to share with you today.

Now, I want to remind you as always that my results are not typical. I have doing this for a very long time. I have over $10 million in gross profit that stands behind me as a trader. This is something that I’m really passionate about. I love trading, but I want to just remind you that most beginner traders do lose money. Please take it slow. Trade a simulator before you put real money on the line. As always, don’t try to blindly follow me or anyone else.

You have to learn to hunt for yourself, but I’m going to try to empower you. I’m going to try teach you this strategy. This is actually something that I cover extensively as part of our Warrior Pro curriculum. This is going to be a relatively short video, so I’m going to give you the cliff notes of it. If you want to learn more, come over to warriortrading.com/strategy. Check out that page and you can learn a little bit more about the way I trade. If you decide you’d like to join us, we’d love to have you.

You’d be able to watch over my shoulder while I trade every single day. And if you find that helpful, then that’d be awesome. PIK, what’s up with this stock? It’s up a staggering 180%. The percentage changed on the day. Impressive, right? It is indeed impressive. This stock, there’s something special about it. Now, what is it? Well, there is news. Stock is up 75% on partnership deal with Walt Disney. Okay. That’s a pretty a big deal.

And this news was out early this morning, and I’ve been trading it since early this morning. This strategy I call it the gap and go strategy. That’s the name of the strategy is the gap and go strategy, and gap and go means the stock needs to be gapping up. Gaping up means it’s opening higher than it closed the previous day. Why would a stock be opening higher today than it closed yesterday? There’s only a handful of reasons, but generally it’s because there’s some type of breaking news.

Yesterday, this stock was trading at approximately $1.84, and today it hit a high of over $6. I mean, that’s remarkable. That’s an incredible percentage gain. If you’re a beginner trader, it’s my opinion that these are the type of stocks that you want to be trading. If a stock is going up 100 or 200% in a day, even if you only get a sliver of that move, that could still be a 5% or 10% gain. Now, if you trade something like Facebook, here’s a day where Facebook is going to be green.

Let’s see how much it’s up. Facebook right now is up 2.24%. I mean, if you catch a sliver of 2.24%, a sliver of a sliver is nothing, right? Sorry, that’s FB. 1.5%, even worse. It’s just not enough. All right? There’s not enough meat on the bone to get good profit and to make money. As a beginner trader, you want to be focusing in my opinion on volatile stocks. Now, you’re trading them. You’re not investing in them for the long haul. You’re buying them. You’re selling them.

You’re buying them. You’re selling them. You’re a trader. If you’re a trader, you want to be trading things that are moving quickly. What are stocks that are going to be moving quickly? Typically, stocks that have some type of fundamental news. It can be an earnings announcement. It can be a partnership deal. It can be a clinical trial. There’s a million different types of catalysts that we can go over, and we do go over all of those as part of chapter four of the Warrior Pro courses when we’re talking about fundamental analysis.

But for right now, we’ll sort of gloss over all the different types of catalysts and just say this is a stock that clearly had a catalyst. Okay, great. Well, how do you find it? How do you find this stock in real time? How do you find stocks moving like this? Did you hear that? Did you hear that little alert? That’s this stock right here hitting my scanner. This is like radar. This is searching the entire market for stocks that are moving. We can pull up the stock HOUR and let’s see what the chart looks like.

You’ll see that this has just squeezed from $4.40 all the way up to just under $5. This is the type of stock that may be worth watching. Now, it’s a little later in the day, I’m not going to take a trade on it. TCAT was also on this scanner right here and PIK was on it as well. This is a tool that I’m using to help me find stocks to trade. I programmed this tool. I have a development team that built it out. I specked it and they built it. I programmed it to look for stocks that are moving up quickly right now.

I like to find stocks that have a catalyst, but that’s not exactly everything. In order for stocks to make a big move, there needs to be an imbalance between supply and demand. All right? This is very basic stuff, but it’s important to understand. That imbalance comes from a couple places. Number one, the demand. Let’s talk about demand. Partnership with Walt Disney, that creates demand, right?

A stock that is under $10 or under $20 a share inherently is going to have a higher level of demand among retail traders because it’s affordable. There’s an army of retail traders out there that are willing to buy up stocks up 25, 30% in hopes that they go up another 15, 20, 30% and they can capture half of the 50% move. We see these types of moves again and again and again. Just because the stock was extended at $2.50, by no means meant that was going to be the top.

It’s probably not so much institutional traders at Goldman Sachs or whatever that are buying stocks like this for pension funds and things like that. It’s more going to be retail traders that are saying, “This is a stock moving quickly that has a potential to make a big move.” And every now and then you’ll see a stock like this, and a week later, you’ll see that they got bought out, and they got bought out for 100% premium.

There’s a lot of speculation in the small cap market and that speculation can fuel demand. News fuels demand. The price being lower fuels demand. The market cap also being lower fuels demand, and that’s represented by the float, the number of shares of available to trade. A stock like this has a particularly low float. Now, we can go in here to the SEC filings on PIK. And if we go in here, we will see that… Let’s see, as of the last filing, December 22nd, the float was 7.6 million shares.

Now, this is the type of research that I do in the morning every single day as I’m building my watch list. Those of you guys who already tune into The Morning Show, one of the things that’s nice is you get my market commentary and you get it filtered with all of the knowledge that I have of trading and my ability to do quick research and figure out some of these important metrics. Here, 7.6 million share float. All of a sudden, this is a stock that has a very low level of supply.

The number of shares available is low. The demand is high, and that can create an explosive opportunity, and that’s exactly what we got today. The way I actually find these stocks is through the scanners. This stock right here, PIK, it was gaping up 84% this morning. And in the entire US market, the entire US market, this was the leading gapper. It was the leading gainer in the entire market today. That’s a pretty big deal. Actually we can scan top gainers.

It’s up 177% right now, which makes it officially, and it’s quarter to 4:00, the biggest gainer on Wall Street today. I made $13,700. Well, it’s the biggest gainer. Yeah, you’re darn right I did. It’s up 200%. And you know what? I only got a sliver, but I got a sliver of a 200% move and that was enough for me to pull about $13,000 of profit out of the stock. Your first step is understanding the right type of stock to trade. And in my opinion, it’s going to be a lower price stock, generally between $2 and $20.

It’s going to have an outstanding number of shares or a float typically less than 20 million shares. You can use 20-20 as sort of a rule, 20 million share float $20 price, 20-20. Now, again, if there’s a stock, that’s a little higher, that’s okay. GameStop was a little higher. The float on GameStop is in, oops, GME, 76 million shares. That’s a little higher, but that was okay, because it had a very unique, very special catalyst. And that was so strong that it was certainly fine.

But generally under 20, under 20 in price and in flow. I look at this scan each morning. When I log in over at Warrior Trading, I log into my dashboard and I load the dashboard, agree to the disclaimer and reminder that trading is risky, and I can see right here as early as 7:00… Well, you can log in as early as 4:00 AM. Pre-market starts at 4:00 AM, but I usually sit down between 7:00 and 8:00. I’ll sit down and I’ll see that that here we go, PI K leading gapper, up 84%.

This is the stock that I want to be focusing on. Now, I generally will look at the top five gappers. I’ll look at the top five and see which of these do I think presents the best opportunity. So which of these has the best combination of the imbalance between means supply and demand? There is some consideration for the daily chart. The daily chart tells me the history of the stock, how high it’s gone, the all time high, how high it could potentially go, where it might find some resistance.

I look at the daily chart and I do that for the top gappers, and then I start looking at the intraday opportunity. On this one right here, there were several. You can see my timeframe. I’ve got a daily, a five minute, a one minute, and even a 10 second chart right here. When I’m ready to start trading, that’s when I’m going to start looking for the setup. My opinion is that one of the simplest strategies is to focus on the leading percentage gainer each day, either the top two or three, and you can look at which one you think is the most obvious.

Now, which one is also the most popular, which one’s trending on social media, which one is the one that all the traders out there are saying, “This is the one that’s going to go.” One of the things that’s nice about being part of community is you can get kind of a sense. You can take the temperature of what other people are saying. Are people bullish on this, or are they bearish? What’s that social sentiment on the stock? Once you’ve decided on the stock, then it’s time to start looking for opportunities.

I’m sure there’s people that lost money on this today that bought it on one of these red candles up here and then sold as it broke down. They ended up being red on it, only to see it go all the way to $6 at the end of the day. It’s not enough just to find the right stock to trade. You do have to dial in your entries. As a beginner trader, one as safest entries is to find the first pullback. In this case, this is a five minute pullback right here.

We have a five minute pullback, and this is a pullback that is right at the volume weighted average price, which is our dotted line, and it’s right at the nine moving average, which is this grade line. This is a nice moving average pullback. That presents a really good opportunity for the first five minute candle to make a new high. Now, over in this area, this is also the first pullback, the first pullback following a fresh breakout, right? It pulls back down to that moving average.

First candle to make a new high is the entry, and that went from four all the way up to six bucks. This was the second pullback. It gave you a little continuation, but it was a bit extended. This area here is now getting into sort of third pullback and it’s getting pretty risky in that area. Similarly, this was a second pull back right there, but you’ve got a topping tail on this candle. That’s a little bit risky to be following a topping tail.

There are some nuances here, but if you’re focusing on the leading percentage gainers each day, you have done yourself a really big favor because you are focusing on the right type of stock to trade. Now it’s about dialing in the exact entries. You could trade on the five minute chart. You could trade on the one minute chart. I typically trade on the one minute and use the five minute for reference points. I’ll add on five minute setups. This was obviously the five minute breakout right there.

These were one minute trades in this area. You had a pullback right here around 2.60. You had another one in this area, another one in this area. These are all opportunities. There are some traders who might trade a stock like this 50 times in a day. Just actively trading it. Getting in, getting out. Getting in, getting out. You could trade it all day long, but one of the things that is important as a beginner trader is recognizing that less is more.

It’s not a good idea to over trade. It’s not a good idea to take a hundred trades a day. It’s a better idea to try to get one good trade a day. Because if you can get one trade, a thousand shares in and out 20 cents a share, that’s 200 bucks. If you could just build that track record of consistency, getting in, get green, and get out, and just do that for 10, 15, 20, 30 days in a row, start to build some confidence, start to build a cushion, then you can start trading more actively.

But until you’ve built that confidence and cushion, you want to focus on trading less, once a day, maybe twice a day. Of course, you should start in a simulator be before you put real money on the line, but this is a perfect example of a gap and go trade, gap up, go up. This one held up all day long, and then gave that afternoon squeeze as it broke through the high of $4.30, which was right around here. Again, this is just a really quick summary of what I think is one of the simple strategies.

It’s not to say that it’s easy. It’s not to say that trading is easy. But as far as trading goes, I think that focusing on the leading gainer every single day is going to point you in the direction of the right type of stock to trade. And then the question is finding your exact entries. If you want to see what my entries are, tune in for The Morning Show. Make sure you’re subscribe to the channel and you can always join us over at warriortrain.com if you want to be able to watch my live trading archives and tune in every day for my full trading session.

All right, I hope you guys have enjoyed the video. Make sure you hit the thumbs up and I’ll see you for the next one. And that right there was an entire video with no ads. I don’t monetize my YouTube channel with video ads, which means you guys get to enjoy the content. But do me a favor, please hit that subscribe button and give me a thumbs up and let YouTube know that this channel is the channel to watch if you want to learn about day trading.