All right everyone. So I wanted to do a webinar here on the importance of paper trading. This is something that we talked about a lot of course in our trading courses and uh, and generally in the chat room. We do talk about this quite a bit, but I just want to touch on some of the important reasons why paper trading is just a critical aspect of building your foundation.

As a trader, you cannot start trading without paper trading. For me, when I started trading, I spent the first 12 months learning how to trade right. Like a lot of new traders, I spent the first 12 months learning how to trade and it cost me over 30 000. I was trading untested strategies.

I was trading a little bit of this and a little bit of that. So in my eagerness to make money, I was so eager to make money. And in that eagerness, I bypassed a critical step for any new trader. And that's paper trading in a demo or simulated account.

All right, if you cannot prove in a paper trade demo simulated account that you can make money, you have no business trading in a real money account. So when a student comes to me and says hey Ross, you know I've got two thousand dollars and I want a day trade, Is that enough to make a thousand dollars a day? Uh, what I always say is the short answer is, um, maybe you know The question of course is do you have the skill right? Because if you gave me two thousand dollars and I had to open a account with a prop firm, I have the skill to be able to trade that so I could trade that up to, uh, you know, a large amount of money. I could grow it pretty quickly, right? I'd be limited with my buying power and that sort of thing, but I have the skill to grow now when I was a new trader. If you gave me a hundred thousand dollar account which is basically what I had without the skills, that money just disappeared.

I mean, I just I was spending the money on you know, life and stuff like that and I was losing the money trading. So I went from having a hundred thousand dollars all the way down to having about twenty thousand. I was below the pattern day trader level and I was having to think, you know, I've been working at this for 18 months. I'm not profitable.

Where's the turning point At What point do I throw in the towel And I got more and more frustrated because of the fact that it felt like every trade I took was in the shadow of this thirty thousand dollar loss right that I had dug myself this big hole and it felt like, uh, now I was in so far. Because of that loss, I had this pressure that I had to be successful and I needed to start turning it around. and especially when I was below the Pdt level, I couldn't draw more money out of the count for living expenses. I had to.

I felt like I was really up against the ropes. I had to figure it out and you know in the end that pressure for me worked and I do work well under pressure and I was able to figure it out. But I spent the next six 12 months digging myself out of this hole and I always sort of felt like I was in the shadow. It took a long time for me and it took a lot of emotional conditioning for me to separate myself from those, uh, those horrible losses that I experienced as a new trader, right? So I I had two battles.

I had the battle of trying to learn how to trade, plus the emotional battle of trying to recover, uh, from these huge losses. right? So you can save yourself that second part of the battle by simply trading in a paper trade account. If you're new to this chat room or you're new to trading, you shouldn't be trading with real money until you've proven that you can trade successfully. The strategies that we teach right.

You shouldn't trade a strategy that doesn't have historical data to back it up, and that historical data shouldn't be my data because my performance may not be the same as your performance. We all have different risk tolerances. I may hold stocks that go down a little longer or I may sell winners a little sooner, right? So you need your own historical data and the only way you get that free of charge is by paper trading, right? My historical data cost me thirty thousand dollars. so you know you can get that same data by trading in a demo account.

All right. So you've got to ask yourself three big questions: What's your strategy? How do you manage risk and what's your goal for the next six months? All right. So your strategy. This is the setup that you trade, the setups that you trade, the combination of setups.

What type of stocks do you trade? All right. So in our course we we go over. starting first, with, uh, choosing the right stocks. You need to know which stocks are worth trading because out of the thousands on the market, most of them aren't worth trading on any given day, there's only a small handful of stocks that are good to trade.

As a new trader, I would trade often off a Master Watch list of some of my favorite companies like Caterpillar, Apple, Ibm, and Microsoft. and that does not work for day trading. I mean, it just doesn't and I learned the hard way, but it simply doesn't. Okay, you have to hone in on just a small handful of stocks.

Alright, so Jesse Livermore, the famous trader from the 1800s and 1900s, He said you should watch just a few stocks, not a ton of them. If you focus on a few stocks, you won't miss setups on those few. You cannot possibly watch a hundred stocks at once. But if you're watching three stocks, if there's a setup, you won't miss it.

All right. So every single day I have a routine and a pattern. This this routine, This pattern, this repetition. This is really important for trading.

Just like any other profession, you build by repetition by doing the same thing again and again. And every single day I get up, I look at the stocks. They're gapping up. I choose three, maybe four, that look the best.

Those are going to be for my Gap and Go trades. All right. So I do the same thing every single day. I only watch for usually three to four stocks each day, and I've been able to make a living doing that.

All right. So this strategy works for me. so you need to know what works for you. And of course, as you're learning to trade, you're putting together the pieces of the puzzle.

You're going to get a lot of information from me. You're going to get information from other places as well, and all that comes together to form your strategy, which is going to be unique to you. It's going to be unique to your risk tolerance, your account size, the type of stocks you like trading. All right.

What we want is to give you all the tools we possibly can to teach you everything that we know so you can take that as the starting point. All right, so you can run with it. And of course, a lot of students will try to follow trades that we take, but we recommend that you paper trade right? You're never going to make money mirror trading. The flaw with mirror trading is that you always buy behind the person that you're following and you always sell behind the person you're following.

Which means your winners are smaller and your losers are bigger. That's a spiral that goes down. that's not a sustainable way to trade, and there's no independence in simply following other traders. So I don't want you to follow me.

I want you to learn from me. And if you learn from me and you see that I'm about to buy Xyz at three dollars because it's a gap and go set up, it's a stock that's in play and it's a flat top breakout and you think, look, Ross is going to take that. He gave me the idea, but I'm looking at this and this fits into my strategy that I have historical data on that I know is successful. Then you're welcome of course to take the trade at the same time as me, but you don't need to wait for me to say I bought it or I sold it.

We want you to trade for yourself. We want you to be an independent trader. We don't want you to be dependent on Warrior trading. We want you to be part of the community.

As one of our you know, one of our traders here that throws out great ideas. We're all looking for the same setups. Okay now. Lastly, in terms of your strategy, it's really important.

uh, to understand what time of day you trade best. For me, I trade best from 9 30 until 11 30. I always have. I don't know if I always will, but I always have.

So statistically based on my historical data, I know that's when I have the best percentage of success. So that's when I trade the most, right? And it's not really risky for me to trade more in the morning, unless in the afternoon. I'm basing the decision to do that on data, right? It's just analyzing my statistics and just like any other profession, and this also goes into sports a lot. You need to know your statistics and then you focus on what you're good at And sure you want to focus on you know, fixing areas where you have a little bit of weakness.

but sometimes you can just say look, I'm not good at trading options. I don't need to be good at them, I can just not trade them and that would be better. All right. So now how do you manage risk on a day-to-day basis? Uh, per trade and also on a you know weekly and monthly basis.

So you need to trade every stock with a risk reward ratio. Every trade you take has a risk reward ratio. Whether you know it or not, your risk reward ratio is your average win versus your average loss. So if you make a hundred dollars on average and you lose 300 on average, you're in a death spiral.

You're going to go down. You want to be making 200 on average and losing 100.. So you want to have a positive profit loss ratio. Your winners should be bigger than your losers.

Okay, if you have a one-to-one ratio, if you win 100 on average and you lose 100 on average, then 50 success is your breakeven point, right? But of course you have to factor in commissions. So with fifty percent break even with commissions, you're gonna need to be right closer to sixty percent of the time if you have a two to one profit loss ratio. Meaning, you make two hundred dollars on average and you lose 100 on average, your break-even point not including commissions is 33. You've set the bar so low you only have to be right 33 of the time to break even.

and in your demo account, you probably won't have commissions factored in. so if you're right 33 of the time, you'll be breaking even. We can use these statistics to make trading easier for ourselves, or we can ignore them and just keep doing things that don't make sense and lose money, right? And that's your choice. I can't force you to paper trade.

I can't force you to make good decisions, but I want to encourage you to know your strategy, manage your risk, and to set goals for yourself. right? So um, with managing risk, you also have to have a shut off valve. You have to have a point where you say, you know what, I'm down 500 bucks, I'm done for the day. Okay, if you don't have a shut off valve, then what's to stop you from? Keep trading when you're down Fifteen hundred dollars or Two thousand dollars because you know your judgment is impaired.

When you get down that far, you start trading in the shadow of a loss, and you lose focus, right? You become emotional. and instead of being emotional and recognizing that, okay, I'm feeling a little emotional here. I need to slow down. You give in to that feeling.

You allow that feeling to hijack your behavior and allow you to take inappropriate levels of risk. So instead of just taking two thousand shares, you start taking eight thousand or ten thousand to get yourself out of the hole. And next thing you know, you're down Three grand. Four grand, Five grand.

I say this from experience because it's the cycle, the snowball effect that happened to me as a new trader all the time. All right. So you need to have a shutoff valve. You need to ask yourself what's your goal for the next six months? All right.

What are your statistics now? What is your profit looking like now? And where do you want it to be in six months? But focus not just on your profits, but more importantly on your percentage of success and your risk reward ratios, your average profits versus your average losses, and your your simple overall percentage of success. Those statistics are much more important than your total profit loss if you're trading 100 shares. but you have a great set of statistics. That's something you can really build on.

You know, if you're trading with three thousand shares and you scalp so you make three cents on average, we lose six cents on average. You know your success rate is maybe 72 percent. Maybe you'll make money, but you don't have a very good foundation to build on. Alright, so understand where you are right now.

Figure out where you want to be in three to six months, and what steps you need to take to get there. Education comes first. All right. What do you need to do in order to be a professional day trader? Just like any other profession, right? If you really want this to be your career, you need to have that moment where you evaluate.

Is this really for me? Am I willing to put in what it takes to be a day trader? Unfortunately, day trading is not really conducive for a part-time hobby, and the reason is that the skill level to make twenty dollars a day is the same skill level it takes to make two hundred dollars a day, or two thousand dollars a day. And that's the most frustrating thing for a new trader to realize that being consistently profitable, even just twenty dollars a day, that is. That is the hardest thing that when you achieve that, it's it's easy sailing. Okay, because you'll realize that.

Wow. I'm looking at my calendar for the last two months and I'm consistently making four out of five days. Uh, you know, a week. Twenty Thirty dollars.

So the only difference between making twenty thirty dollars a day when you have the right statistics, you have this, the strategy and the foundation is increasing your share size. All right. So for a trader that says well, look, I only want to make 50 a day. I don't.

I don't want to put a lot into this, I just kind of want to do it part time. This isn't This isn't going to work for most of them. not as not as a day trader, maybe casual investor or something like that. But day trading requires a tremendous amount of time and energy.

And for some, the learning curve takes um, months. And for me, it took years. All right now. our goal is to help you speed up that learning curve by giving you some of the really important pieces of information that myself, Jeff, Mike, and Corey were all lacking as beginner traders, right? We're trying to help feed you as much information on our strategies and how we trade as possible to help you learn faster.

Okay, but at the end of the day there is a learning curve and it will take a lot of time and a lot of dedication for you to be a successful trader. So you have to ask yourself, are you doing this because it really feels right? Is this really what you want to do? You never want to get into this to the situation For instance, that I was in where you've lost thirty thousand dollars, you're in the shadow and now you feel like you're You're in too deep to walk away right now now. I actually really wanted to trade, and so I, I was able to, um, you know, trade out of that loss and build my account back up. But for other traders, you can get your judgment really clouded by the fact that you've experienced that big loss.

It's much easier to walk away from something when you know you've tried it for a little while, but you're not so deeply invested financially. All right. So you know if you are in a demo account and you trade for six months and it's not working, then you might say, look, I don't like how it, I don't like it, it's not working. It's too stressful.

I can't manage my risk whatever it is, and you can walk away without feeling like you put in. you know, the amount of money equivalent to a college degree Only to find out this isn't what you want? All right. So to be a day trader, you must be organized, You must be disciplined, and you must be able to have a certain level of self-awareness you have to recognize when you're starting to feel emotional and impulsive. Okay, you're not going to fight those feelings.

You're not going to turn those feelings off. You just have to say hey, I'm starting to feel a little stressed and I need to step back because when we make a mistake, right? it can cost us tens of thousands of dollars. And let's just let's just make an example here. If you're a race car driver, right? You like to race cars and you get a little too aggressive and you crash your car.

Well, the car's crashed. It needs to go into the shop. So every time you crash your car because you got a little too carried away just by the nature of the sport, you have a built-in You have a you have a built-in kind of timeout where you have to step back. You cannot continue to race a car that's broken, right? You have to step back.

You have to stop, walk away for a few days, then you come back once the car is repaired. With trading, you can lose ten thousand dollars and then go do it three three more times in a row. There's nothing stopping you from continuing to make bad mistakes and having that snowball death spiral that self-control has to come from inside. All right.

So of course, in our trading classes, we talk about some of the ways that you can learn mindfulness techniques okay, to control those impulses and you'll find that this is something that will help you as a trader, but it'll probably also help you in real life. Uh, trading brings out and amplifies a lot of our uh, emotions and insecurities that we have and that we may not really be aware of the present problems in other aspects of our life. Okay, but as a trader, it all comes out. It's all on the line.

all right. So one of the things that are very important are learning techniques to relax to have me to maintain composure while you're trading. So you need to be mindful. You need to be focused.

You need to be very dedicated to being the best trader you can be every single day. And for me, I found that my window of focus is like two hours long. I can focus really well from 9 30 to 11 30, but then from lunch time in the afternoon my focus isn't as good. and that's probably why I don't trade as well in the afternoon, because I, just for whatever reason, I have a battery of, uh, you know, of mental strength and that battery right now is about two hours long.

It's like it's like an old iphone that's just kind of not working very well. My battery's like two hours long. Maybe it should be six hours or eight hours, but for whatever reason, it's two hours. Okay, now.

Uh, I obviously want to strengthen my ability to maintain composure until 4pm and be able to trade well through the afternoon, but I just have a really hard time with it and that's my thing. That's something that I'm working on all right, and everyone has those things in themselves that they need to recognize, be aware of, and work on all right. So we're going to come back to this concept of never trading an unproven strategy. This includes mirror trading.

If you join a chat room simply to follow the alerts of the leader. nine times out of ten, you're going to walk away from that chat room in a month or two feeling upset, resentment, and you're going to be out the money, right? You're going to lose. It's not the failure of the chat room, it's the failure of the the concept of mirror trading. It just doesn't work right.

So whether you're doing it here or anywhere else, you're going to be disappointed. If you're trying to mirror trade, what you need instead is to learn the skills to trade. So we'll teach you those skills both in the chat room and in our courses. I trade a Gap and Go strategy and I trade a Momentum Strategy and I trade a reversal strategy.

My strategies require trading stocks on very high volume, right? I trade Momentum. That is my favorite strategy. All right. It's hard it takes time to learn, but once you get it, it's so gratifying.

When you see a chart, you see the bull flag, and you buy on that pullback with a stop at the low, and then you sell through the highs for a 10, 15, 20. Winner. It's amazing, All right. I want everyone to experience that, but do it First in a Paper Trade account.

If you can do that in a paper trade account consistently over the course of three months, then you can start to think about switching to a real money account. So if you're one of the new traders that has come to me and said, hey, I've got you know, two thousand dollars and I want trade. Okay, you know what? Put the two thousand dollars on hold, Because if you're gonna start trading that right away, ninety percent, Six, ninety percent of the time, you're gonna lose all that money. You know it's a ten percent success rate among traders.

So put that money on hold. focus on your education, read some books, watch free youtube videos. We've got lots of free content. This, of course is going to be put out for free.

You don't need to jump in right away with both feet. If you do that, it's it's sinkers. You know, sink or swim. But you're gonna sink.

I mean, let's be honest. nine out of ten people are gonna sink. So knowing those are the odds. Do you really want to jump in with both feet with a hundred thousand dollar account? Whether it's a hundred thousand dollar account or two thousand dollar account.

If you're trading an unproven strategy, your odds of success are very, very low. You're better off putting that money into a mutual fund. Okay, so for your first three months with Warrior Trading or as a new trader, you want to aim to trade at least 10 times a day, and you want to aim for a 50 success rate. We're setting the bar low.

You only have to be right. half the time you're gonna aim for a two to one profit loss ratio. All right, But expect a 1.5 to one profit loss ratio at the end of the day. Once you've got your stats, you know, all lined up.

All right. So that means your target is to make 200 on every trade when you're going to risk a hundred. Okay, but realistically, you're going to come in with an average of 150 dollars profit. You know, per trade that you risked 100.

Okay, some trades are going to be better than the two to one, but often times they're going to be a little bit lighter than that. You get an exit indicator and you've got to get out. And that's just part of trading. So we're going to build up in these three months from risking 50 per trade up to 200 per trade.

Okay, so initially in the Paper Trade account, we're starting with low risk fifty dollars a trade. But when we're at the point of risking two hundred dollars a trade, you're going to be looking at if you're successful: seventy five thousand dollars a year of profit in that Paper Trade account. And if you can do that consistently, over the course of a few months, you can begin to transition into a live account during the time of day and during for the setups that you trade the best. So you know for me, that would be from 9, 30 to 11 30 on the first pullback on Momentum stocks.

Okay, so for your first month in your demo account with fifty dollars of risk, you're risking fifty dollars per trade with the target of a hundred and twenty five dollars per day profit. If you lose 125 dollars in one day, that's your shutoff valve. That's the point where you say I'm done. I'm turning off the computer.

I'm gonna go sit outside. I'm gonna do anything other than trading. You wanna be green? Four days of the week? You wanna have four days where you hit your goal and then one day where you hit your max loss. Okay, so if you have four days where you hit your goal and you have one day where you hit your max loss, your weekly goal is the daily goal times.

Three. All right. So 375 dollars. That's your daily goal in your pay-per-trade account.

For your first month, you're taking ten trades a day, risking fifty dollars per trade. So on the five losses, you'd be down 250 dollars. Now, you can't take five consecutive losses because of the odds of taking five consecutive losses. And then having five consecutive winners is very slim.

So if you have a couple losses and then you have a couple winners and then a couple more losses total 10 trades. five of them are losers. So you have 250 in losses. You have five winners, right? Your target was to make a hundred dollars on all of them.

But let's say your average profit was 75. Okay, that's the 1.5 to 1 ratio. You've got 375 dollars profit. You have a net profit of 125.

Now at 9.99 commission, you've got a net profit of 25 dollars. All right. So that's why we're in a demo account. You don't have commissions.

Forget about how much you're making. Focus on your statistics. the percentage of success in your risk reward ratios. That's the foundation that you're going to build on.

All right, you may hit winners that are more than 75 dollars. That's awesome. But you're going to have exit indicators where you're up only 30 bucks and you have to stop out and that's the right thing to do. Okay, you're going to do that for one month.

You're going to prove to yourself that you can choose the right stocks, that you can manage your risk, that you can find the patterns, and that you can consistently come out ahead. If you can do that, for one month, in the second month, you increase your risk to seventy five dollars a trade or a hundred dollars a trade. Whatever you feel comfortable with, but you always need to set realistic goals for yourself. Don't expect to be profitable in your first three months of paper trading.

Okay, expect that you will have some trades where you screw up really badly. That's part of learning that happened to me. It happened to every trader I've ever met. Okay, so let those mistakes happen in the demo account.

All right, You're gonna feel bummed out when you give back two weeks of profit in your demo account. but it's a lot better than giving back two weeks of profit in a real money account. Trading is a process and in a lot of ways. this is a career where you simply survive until you learn.

So we're trying to teach you some survival skills in the market. All right. Biggest survival skill is managing risk on every single trade. Okay, manage your risk.

Have those shut off valves where you walk away. That will save you so much money. All right. And then you need to, of course, learn at least one trading strategy.

If you have one strategy that you can fall back on, that is your foundation. Okay, so one trading strategy. That's what you need to get started, and then you can build from there. So my one trading strategy that I always would fall back on is trading momentum.

There's almost always a stock having a big day. Remember, the market will be here. All right. So if you've got a hundred thousand dollars and you really want to trade, that's awesome.

Put that money into a mutual fund for six months. Trade in a paper trade account, Trade in a demo account, Get practice, prove that you're worth investing in yourself, Prove that you have what it takes to manage that hundred thousand dollars better than just putting it in a mutual fund. And if you can do that, then you can graduate to trading with real money. And the transition from paper trade to live trading accounts can be a little rough for some people.

You start to get those emotions of, um, you know, experiencing real, real losses instead of just simulated losses. And so a lot of students that transition have to go back to trading with a hundred shares and rebuild that confidence. But you're building that confidence after already building a tremendous amount of skill. And that's the most important thing.

Skill is what's going to make you a successful trader. It's not about luck. It's not about blindly following people. It's about building your skills.

That's what we're here to do. Help you learn to trade anyone with questions. you can call me 802 585-1740 or you can email me Ross Warriortrading.com.