All right everyone. Well, we are gonna get started here. Thank you guys for tuning in. The topic of today's class is scaling strategies for averaging up and averaging down, This is a live broadcast.

Thank you guys for tuning in Live! And for those of you guys who are watching this: Days Later weeks later, maybe months later. Thank you as always for tuning in! I Love that you guys are motivated and wanting to learn about trading. One of these classes that I taught uh last year on timing, entries and exits now has over a million views. So thank you guys for tuning in.

especially your the loyal subscribers to the Channel All right. So uh, let's go ahead and dive in. I Know you guys, some of you have been tuned in here, uh, waiting for a few minutes. So this is a class that is certainly great for beginner.

Traders But I'm going to tell you right now that scaling is a little bit more advanced than your very simple strategy of one entry, one exit and I'm going to talk about the reasons why I would approach scan mailing and let's just go ahead and look at the topics for today's class. So number one, what is scaling? Some of you already know, so we'll go through that fairly quickly. I'm going to talk to you number two, about when to avoid scaling, when is scaling not appropriate, and then inversely when is scaling appropriate. Number three, Number four.

I'm going to share with you how to scale into trades and number five, how to scale out of Trades So those are the five topics that we're going to cover in this class and I'm excited because today you guys are going to get a chance to download a Live Trading Archive of me trading O-c-e-a This is a stock where I made a little over ten thousand dollars and during the whole trading session I was using a scaling technique to try to maximize on the opportunity. So write down in the link, there'll be a link right down in the description. We'll also pin it to the top of the comments. So if you guys and I'll show you this live Trading archive a little bit during this episode.

but if you want to download it to re-watch the whole thing on your own by all means, please do that and everyone who downloads that. Um, Ocea Live Trading Archive The Scaling, In and Out case study. You'll also get a copy of my Technical Analysis series. All right.

So those are a couple of cool things that we put together for you guys, especially for this class here today. So without any further delay, let's get into it and cover the topic of what the heck is scaling Scaling is a position management strategy designed to help maximize profits. A Trader Who does not Scale will have one entry and one exit for each trade. They take a Trader who scales will add several times until reaching full position and then when they sell they'll sell several times until they've closed the position now.

I Have my whiteboard here ready to go. So a beginner Trader is going to typically focus on a buy. and let's just say we've got a pattern here. Stock pops up, it pulls back, they're getting in right there.

That's the entry it goes up to here and they're taking one exit right there. All right. So that's their exit. That's going to be very typical a beginner strategy.

one entry, one exit more experienced. Traders What they're gonna do? What I'm going to show you on this is as the stock is pulling down. we might take what I would call a starter down here. Now you're going to be in at a little bit of a lower price before you have confirmation, which carries more risk, but it's a smaller position.

Then you add into confirmation and you might even add on the break through the high a day right there. So now you have a cost basis of let's just say approximately in the middle, But you're able to start with what was initially maybe 10 cents of risk, and now you've got a full position, a bigger position than the person who does one entry and one exit. and I'm going to show you exactly how that works. But this is a strategy where you can increase your position size without increasing the risk you were taking on the trade.

And then in terms of your exit, a scaling Trader might take a little off here. a little off here, a little off here, and a little off here as the stock keeps going up. So obviously some interesting stuff and in fact, um I'll show you here. Uh, just today.

Uh, we did have some opportunities. uh for scaling on a couple of different uh stocks that that we traded I Traded uh, Bfrg which was a nice Momentum stock. Today it was one of our leading percentage gappers and gainers in the market went up about 57 60 percent. CL Cdlx is uh, going up right now.

These are the types of stocks that if you're not scaling, you're going to be leaving a lot of money on the table. All right. So let's switch back here to the slides. So scaling is about increasing profit without increasing risk or Max loss on a trade.

Well, how is that even possible? I Don't believe it. Okay, well let me show you this is how it works. A non-scaling Trader is going to take and this is just you know. As a as an example, an entry of let's say a thousand Shares at 9.50 with a stop at 9 40.

That means they're risking 100 bucks on that trade. If they get an exit at ten dollars, that's 50 cents a share, they're going to make 500. This is non-scaling now. A Trader Who is scaling? Let's just say we'll take an entry at 9.50 Same thousand shares stop is 940..

So they're still risking only a hundred dollars on the trade. But at Ten dollars, this is where we see a difference. Instead of selling, they're adding another thousand shares. This is when I'm already up 500 and this is going to highlight the risk here as well.

So now the cost basis moves up to 9.75. right? So your average price is 9.75 but you're holding 2 000 shares and at the current price of ten dollars, you're still up 25 cents. So now you can set a stop at break even. Which means now you're holding a 2 000 share position and your risk is back to break even.

That means you're actually not risking a loss. Now you know you have to be a little bit careful about this because as you obviously know, if you've been trading for a while, we do have the risk of, uh, you know, For instance, you know a stock that's that's pulls back like this starts to pop up and then does one of these dramatic candles like that and you know you were. You added at 10 and then it dropped below your 975 average and you've got slippage on the exit. So you did end up taking a a loss so there could still be some risk.

But the idea here is that you take your entry so let's say you're in at let's say this is 9.75 and this right here is Ten dollars. Uh, sorry, that's 950. That's ten dollars right there. So your average is right in the middle.

This is your cost basis. Now a conservative Trader a beginner Trader is doing the right thing by taking the whole thing off the table at 10 rather than adding but a more aggressive Trader who's trying to capture more potential is going to add at 10. new stop is 9.75 and now with 2 000 shares, if this thing goes up to not to 10.25 right here they're going to end up making a thousand dollars and what was the risk on the trade. Initially, they were still only risking a hundred based on the initial entry at 9.50 By the time they were adding to a 2000 share position, their risk was back to Flat Stop it, break even.

But the thing here that could be a little confusing is that you are risking giving up your unrealized profit because you're up 500 and you're choosing not to sell it and take that 500 off the table. So that's where the the risk comes in in a more significant way. And so I'm going to talk as we go through this class about the times when I think it's appropriate to scale and the times when it's not as appropriate to scale. So you could see here on this example and I'm going to let my my dog in.

This is this is a problem with sitting close to the door as she she knows I'm here so she goes in and out. So here in this example, Uh, you were able to increase your size to 2 000 shares and on a 50 Cent Winner! You made a thousand bucks instead of 500. so you're able to increase your profit without substantially increasing the total amount you're risking. When you first were taking the trade, you were still risking only a hundred dollars.

Okay now hey, by the way, for those of you guys who have been tuning in for a while I really do appreciate you hitting the thumbs up. We have, um, something that we do over at Warrior Trading. We ask our students to give us our test, their testimonials and things like that and we have over 2 200 of these testimonials. Uh, 92 percent are excellent.

five out of five. So for those of you tuning in, perhaps for the first time, I would um I I I Hope that this is a good intro to being a bit of a student of warrior trading even though it's on. YouTube I Hope it gives you a little bit of a sense of the way I teach my personality and I Hope maybe you guys make your way over to Warrior trading and check out one of our classes for your starter. Warrior Pro Over 2 200 testimonials 92 being five star, they've got to be on to something.

All right. So now let's talk for a second about when to avoid scaling. So during my small account challenges I Do Not scale when I'm doing a small account challenge. I Almost always take the approach of one entry and one exit, especially during the beginning of the challenge.

So why would this be the case with a small account? Taking one entry full size, then getting out with one exit is a more conservative way to trade. This is about being consistent, locking up lots of consecutive base hit winners. Small accounts are proof of concept and confidence builders. So let me say that again: a small account.

It's not about making a lot of money, it's about building a track record of success. A track record of consistency creates confidence. That's what gives you the motivation to keep studying, to keep trading, and to consider funding a larger account where you can make a little bit more trading with a 500 account. There's no six-figure trade or seven-figure Trader who resets their account to 500 at the beginning of each month.

So if you're trading at a 500 account, just consider it. Proof of concept. And as many of you know, my average trades right now and this is just giving you some context here. So my average winners are one thousand four hundred dollars.

Why don't you take a guess at my average winner in terms of number of cents per share? How much do you think I'm making on my average winners in terms of cents per share? and this is using a scaling strategy. My average winners are 14 cents per share. So you could do the math here. My average share size is 10 000 shares.

just like that. So if you're a beginner Trader and you're trading with a 100 account, you're trading with a 100 or sorry, uh with 100 share size. Let's say you're trading with 100 shares. Your average winner of 14 cents.

It's only going to be 14 bucks. You're trading with a thousand shares. Average winner: 14 cents is 140. you're trading with 10 000 shares.

Your average is going to be 1400. you're trading with 20 000 shares. your average is 2 800. you're trading with 40 000 shares, right? You can continue to scale up now.

at a certain point you're going to run into liquidity issues, but scaling from 100 to 1000 to 5 to 10 000 for stocks that I trade? That's not difficult. And that's because I Focus on stocks that have high relative volume. I'll talk a little bit more about that in a moment at the end of this class. I'll share with you my um, four or five tips for trading the right types of stocks each day.

All right, and that'll include a calculation on relative volume. So my Approach here and my belief is that as a beginner Trader uh If you're focused, if you're trading in a uh in a small account, you should avoid scaling. You should focus on one entry and one exit. One of the things I talk about a lot is uh and I actually have this built out as part of our trading plan for Warrior Pro students in chapter 14.

the trading plan focuses on one trade a day, focusing on trying to capture 10 to 15 cents per share. That's the same as what I'm trying to capture. Yes, you're doing it with only perhaps 100 shares, but it's about building consistency and a track record because if you could do it with a hundred shares, you should be able to do it with a thousand. If you do it with a thousand, should be able to do it with two thousand.

So many Traders Throw out that good advice and instead say no, no, no, no, no I'm trading with 100 shares Which means I want to make a hundred a day? So I've got to get a full dollar a share out of the market. That means you're trying to on average have your winners be almost 10 times bigger than my winners. I've been doing this for more than 10 years I Think that sounds like a good idea to try to be out trading me on the average winners by a multiple of 10. doesn't seem like a good idea to me.

In fact, it might even be a better idea to set your goal a little bit lower than what I'm doing. and yet that's not going to work for a lot of. Traders with a tiny account, which reiterate, tiny account proof of concept? That's all it is. So if you're someone out there with a three, four, five, six hundred thousand dollar account and you're actually trying to make six figures with it, I'm gonna tell you.

and I'm not going to tell you what you want to hear I'm going to tell you the truth. that's going to be darn near impossible. but you can do proof of concept. and I really did take a 583 account and I did turn it into over 100 Grand in 45 days and I did it by taking one entry, one exit.

So just for instance my first day and I could show you you could always check out the metrics if you want to. Um, but they're they're over on our website. but I'll just show you real quick. So my first my first trade for instance.

Um, on day one. Uh, I think I made something like eighty dollars, Eight dollars. So I had like five hundred, eighty three dollars and then plus the 80. So on day two, I had oops.

Um, I had about 660. right? So I was able to buy a little bit more stock. Then on the next day I think I made about a hundred dollars, which was pretty good. So then the next day I had about 750 and then again another 118 a day or whatever it is.

the next day I'm at 870 and then another 150 day now I'm at. you know, one thousand and twenty bucks, right? So just continuing to slowly add a little bit more, a little bit more. so by the end of the first week, all of a sudden I can buy twice the position that I was able to buy on day one, just focusing on one entry, one exit trying to grow the account, and then once the account was over I don't know five thousand dollars? Then for me, it was a lot easier to trade. So really a small account challenge.

It's really only challenging the first week, but if you're gonna try to take all that profit out and start again next week or next month with 500, it's going to be pretty difficult. So again, if you're a beginner Trader try to get dialed in with being consistent with one entry. one exit if you're not consistent yet with one entry, one exit I wouldn't over complicate it by scaling. Scaling is more advanced.

It requires different types of orders for selling, half selling, quarter sizing in using average cost basis, so it's a little bit more complicated so focus on first timing with one entry, one exit, getting consistency, getting confidence, and then add the scaling on top. So assuming you're in that position now where you're ready to start, you know, well, maybe you're a beginner and you just want to learn about scaling And that's fine too. But let's say you're at a place where you actually want to start trading and using scaling. So one of the things I have to look at are market conditions in a Hot Market I will scale much more aggressively in a cold Market I'm going to trade more conservatively and I'll scale less I Rarely won't scale at all even in a cold Market I Just scale a bit less than I would in a hot Market So in a cold Mark and I'm a bit more cautious about scaling because I don't want to bring my average cost too high.

What ends up happening? Um, quite a bit more during a cold. Market is you know we'll see a stock pop up, it'll pull back a little bit and then it'll pop up. but it'll do a double top and then it rejects, right? So adding here and taking profit here really is the right approach. Adding here and adding here cost basis is here.

You're going to keep getting stopped, out, break even and so after that happens a number of times he starts thinking, you know what markets feel a little cold I think instead of adding right there, I'm just going to go ahead and sell it and that's the right move. So you do have to adapt your scaling strategy to market conditions now. I Still try to scale out a little bit to capitalize, but I'm a bit more cautious. I suppose on scaling in because I don't want to bring that cost basis too high because then that's what I'm going to start finding myself getting stopped at break even.

Okay, so when is scaling appropriate? Well, if scaling is about maximizing profits, and There She Goes she's going back out again. If scaling is about maximizing profits, we know that that's not going to come without any risk. Instead of taking that small profit off the table, taking that small base hit, we're in a winning position. and I add more shares.

This is scaling in and it's also called averaging up because my cost basis is moving higher. If I keep adding higher, my cost basis moves higher. and I understand some beginner Traders are like this makes no sense at all. Why would you add higher? So I'll give you the simple, uh, simplest explanation I want to add to Winners not to Losers That means averaging in, averaging higher.

Averaging down a stock is dropping and you can continue adding adding adding that's averaging down. That's averaging to averaging into a losing position. You know we've seen this a lot. Um, you know with short sellers where a stock pops up and they add short.

Here it pops up a little bit more. They add short here. they're bringing their average up so they're averaging up, but they're short. so they're It's averaging down because they're in a losing position.

it goes up more. They add more, it goes up more, they add more. it goes up a little more, starts to slow down, they add more and more. and now their cost bases, which started here has moved all the way up to maybe right about here.

Now they've got a big position it comes down to here and they're hoping you know something like this. but when it suddenly goes like this like that now they're taking Max loss up here with full position and you could do I Mean the inverse would be something kind of like this. Um, where a stock is dropping and you're adding, adding, adding, adding, adding as it's going down and then finally it flushes and you capitulate and bail out with full size. So averaging period whether you're averaging long or short I think is.

uh, when you're averaging into a losing position I think is a dangerous strategy. What I would instead prefer to do is to add to a winner. so we have a stock that goes up, you know. I Take my starter down here I add more here I add more.

Here it goes higher. It pulls back a little bit. it goes higher I add more here. So yes, my initial cost basis was down here I Could have taken the whole thing off the table here, but I added I could have taken the whole thing off the table here.

but I added So now my average cost moves up to here. But let's just say in this instance, I started with I don't know 5 000 shares. That was my starter risking about 14 cents a share. That would be my Max loss.

so risking about 750 bucks. but I add 5 000 I add another five, add another five. Now I've got 20 000 shares of this position up here. It's trading at this level here.

My stop is break even and if it goes all the way up to here I end up potentially with a 10 to 15 maybe 20 000 winner. and it was still only based on an initial risk of 750 dollars. So now when you see me having a trade where I'm up 10 or 15 000, sometimes a Trader will say how much did you risk to take that trade? Well, my initial entry of five thousand shares had a 15 cent stop I was only risking 750 bucks. Now that's true on the one hand.

but of course on the other hand, uh, if I'm in a trade with twenty thousand shares and I'm up 30 cents, you know I'm up 6 000 Unrealized. So if it does go back to break even, it's kind of. It's not like losing six thousand because it wasn't money that you actually sold and then you took a loss. but on the other hand it is.

It's definitely giving back unrealized profit. I'm kind of okay with that in a hot Market because I have to use that unrealized profit as my cushion to give me the leverage to hold a big position or a bigger move. And that's the reason I've been able to have such huge green days because I keep adding and adding and adding and adding. so Alex says, please show how to turn 500 into 750 000 in three days.

It sounds like Alex owes someone 750 000 so I hate to say it, buddy, but um, that's not possible. that's not gonna happen I I can't teach you how to do that because I haven't been able to do that now. I've certainly been able to turn you know, 500 000 into 750 000 or something like that. and I did turn my 500 account into over a million dollars.

but it took two years almost uh, 2017 to May of 2019. it took about two years to do that. So three days that's not gonna work 700 days. Maybe I can.

Maybe I can help you there, All right. So so the long and the short of it here is that scaling does sacrifice a base hit. So you have to ask yourself and this is this has to be a very honest question with yourself is when are you comfortable risking giving up that unrealized profit you know. So like for me, if I'm in a cold market, then I'm going to be in this kind of approach of like I caught kind of.

Hit and Run trading like base hit. Get in, Get out, get in, get out. Do not overstay my welcome. Just get green.

Get out, Get green, get out and that's going to be a little bit more of like add starter, add to it once. So I start with three thousand I go to six thousand and then I'm up 20 cents I take the full 1200 off the table and I'm like that's good enough for me. All right, I'm not going to push it too long. That's going to be an approach that I'm going to use during a colder Market in a colder Market What gets me through is remaining consistent even if it's only on small green day.

It's just kind of grinding on small green days. But when the market starts to heat up and that's what I'm going to start to recognize. Look, we're seeing some really big Winners I'm not going to start with a 25 000 share position, but if I'm willing to risk some of the unrealized profit, I could scale into 25 000 shares and Heck if we end up getting a 50 Cent move into a halt and it gaps higher I could make 25 Grand on one trade, it's time to step up to the plate. That requires a pretty deep connection with Market sentiment and also a good understanding and self-awareness of your own confidence and kind of where you're at Because one of the things that's really important is that you're constantly trying to keep yourself at the top of your game whenever you're trading.

So even in a cold stretch, you're still trying to stay at the top of your game. so you're ready when things start to look better. So preserving your emotional mindset, keeping yourself feeling confident is very important. So building consistency.

But yeah, If so, if things are starting to, uh, to improve, then you want to start to step it up. So one of the things I talk about is trying to trade right at the edge of your comfort zone. Don't get too comfortable because then you're not pushing yourself hard enough. But if you push yourself too hard, you could fall and you could lose confidence.

So just trading kind of right at the edge of your comfort zone both in share size, in quantity and time of day. sort of. All of that, that's where you're going to experience the most growth. So um I want to show you I have a couple different episodes or little Clips I'm going to show you here as we go through this class.

I Asked some of my All-Star students about their favorite strategy because you know I have of course some of these students who have been doing quite well and um, why do you hear from from them about some of their techniques foreign Trader with the front side moves I'll look for diffs that kind of go into where shorts have been squeezed and look for the biggest moves of the day. My strategy I would say is momentum based strategy stocks going straight up essentially as Ross trains are like small cap stocks I'm a small Capital mental Trader hi short sell small caps equities and I tend to look for Momentum stocks that are making big intraday moves and I short sell them and scalp them for a mean reversion trade on the short-term tripod. My favorite strategy is going to be trading the theme in small caps so I could turn down the audio a little bit on the next one, but um, sorry, so that gives you just a little bit of a sense of some of the different traders that we have in the community. Generally though, I'm a Momentum Trader and so most of the students that I have at Warrior trading are also Momentum Traders So that means we're focusing on trading stocks that are moving quickly and that is a strategy of buy High sell higher looking for those continuation squeezes and in order to trade momentum effectively, you really have to scale.

However, requirements to start scaling. We do need bigger moves. I Mean if you're seeing a stock that's only going up, you know, 10 15 cents, you don't have enough room to scale in, right? I Mean it, just. you just don't.

It's a difficult Market to scale. Now if we're seeing stocks squeezing up 50 cents a dollar a share or more, that's where we're getting an opportunity to start scaling. So let me show you. um, just a a real life example here.

This was, uh, the well, this is, um, a Cdlx today, you know? So the range is from 450 up to six. so you've got more than enough range there to scale. If you wanted to bfrg Earlier this morning, this one presented some great opportunities. and you can see here.

we had this, uh, break of 750 that gave us a squeeze into a hall up to eight and then a dip in a rip up to nine. So here again, you've got a dollar, fifty a share. So when you're seeing bigger moves like that, that's where you're definitely going to have the opportunity to start scaling in and out a bit more. Um, you know.

on the other hand, I don't know if there's a good example. Well, maybe even Seco Today, this one was a little bit cheaper, so it didn't really. You know it didn't really give us quite an enough range. And so you know.

one of the things that I would point to here. My strategy is based. well, it's based on metrics, It's based on historical data. And the way I was able to accumulate all of that data was through a long period of trial and error.

And you guys have the benefit that when you learn from me or you learn from anyone who's proven profitable, you have the benefit of sort of piggybacking off of all of the experience that they've accumulated. So I'll just show you this here. This is. um, let's see: 23 000 trades 23 000 trades over 12 million dollars of gross profit.

So there's a lot of data in all of this, right here. This is going to tell you the day of the week: I Trade the best. It's going to tell you the price of the stocks I trade the best, right? So I know with a lot of certainty when I should be the most aggressive. This is based on historical data.

so if you're a Trader that's brand new, you know, and perhaps you're trying to trade on your own, you may simply find that, um, that you don't have the track record to really feel a lot of conviction in anyone's strategy. which is one of the benefits of being able to be part of a community of Traders and sort of piggyback off other people's experience. So requirements to scale probably first and foremost, um, is that we do need bigger moves in the market. If you're seeing really small moves, it's just it's going to be really.

it's going to be difficult. I Wouldn't say that hotkeys are necessarily a requirement for scaling. You could scale in and out just by point and click I Wouldn't say direct routing is a requirement I Would really just say volatility and maybe perhaps another one is liquidity. You know if you're in a market where you're scaling up to 20 000 shares.

If you have to panic out and sell the whole thing, you do want to make sure you could do that without getting a ton of slippage. So some of these stocks end up. You know they make big moves and you could scale in, but they don't have a lot of liquidity, so accumulating to a really big position, it could be difficult to unwind that position. you would have to just as you scaled in.

With 5000 share blocks and 10 orders, you'd have to scale out like that. so that makes it so you know when you start accumulating a bigger position, it's kind of like a big big boat in the harbor. You kind of have to be a little bit more careful how you move. You can't move in and out quite as quickly, and if you do, you're going to get slippage on your orders.

So that is something to be aware of when it comes to scaling. But naturally there are a lot of benefits to scaling if you ever want to trade larger positions. Scaling allows you to move into and out of the market with less slippage than one big block order. So like a 30 000 share order that's sent as a market order, that order needs to find a match the second you press the buy or sell button.

And if there are not buyers and sellers ready to absorb your order, you're going to get slippage. Now, if you scaled into that same 30 000 position with six orders of five thousand shares, it would allow you to move into the market a little bit more slowly. you would be able to find matches. It's easier to see a 5000 share match.

you wouldn't have the same level of slippage. And if there were a hidden seller, maybe there's a big big hidden seller an iceberg order. You'd be able to spot it faster with small size before you buy a big block of thirty thousand shares from them. Now, you might not have a problem selling to a hidden buyer, but on the other hand, if there's a hidden buyer there, why would you want to sell? Because maybe that hidden buyer's Gonna Keep Moving their price up and that's an indicator that there's some real strength in it.

So scaling has the sort of added benefit of helping you dip your toe into the market a little bit so you can visualize with your order whether or not you're buying from a hidden seller. So the way I look at Hidden sellers, you know we've got our level two here. So we've got the bid and we've got the ask. And let's just say this is six dollars and this is 605.

you know it might be showing only 1 000 shares and this might be showing you know 2 000 shares. but then all of a sudden you press the buy button. So you press a buy order for 5K shares and you see on the time and sales window right here. So you see your five thousand share block go through.

but it goes through right at 605. And that seller doesn't change. So that means there's a hidden seller right there. So you press the 5000 share buy button again.

it goes through again. Still doesn't budge. So now you know there's a big seller right there. On the flip side, if you hit the bid at six and that 2000 didn't change, you would know there's a hidden buyer there.

So scaling in and out allows you to kind of get a feel for the market and you can sense whether or not there are hidden buyers or hidden Sellers And you can sense it with five thousand. You know three thousand share positions just as easily as you could with thirty thousand. So you might as well try it with less size because once you know that there's a hidden buyer or seller that's gonna, you're gonna use that information to your advantage. So the share size for scaling? um I suppose.

It's also a requirement that you have a certain number of shares if you're trying to scale with less than a thousand shares. You know if you're with a broker that charges commission I don't think that that's going to be really efficient. Um, but if you're trading with more than 5 000 shares and certainly more than ten thousand, I think you will see a benefit from scaling both in the fact that you'll have less slippage and the fact that it gives you the chance to kind of take the temperature of the market. Now Uh, I think Jack asked a question about in terms of averaging in if I have a specific technique that I use to calculate how many shares I'm going to add and and sort of what prices and I'm going to talk about that in a minute when we're looking more in detail of uh, scaling, scaling in averaging in.

Now, what some Traders will do is trade around a core position. So this is a little bit of a different technique for scaling. The idea here is that let's say you buy 2 000 shares and you're holding it. But then while you're holding that 2000 share position, so you know we'll just go on the Whiteboard here again.

So let's say you know the stock squeezes up, it pulls back and you buy 2 000 shares right here. Okay, then it goes up and it pulls back again. So let's just say you haven't sold it at all and now you're like, well, shoot, this is another setup right here. So scaling around a core position could mean you buy and then as soon as it goes up here, you sell.

so you buy another 2000 and then you sell two thousand. So for a moment you had four thousand shares and then you drop it back down to two thousand and that's fine. The only problem with doing this is that as soon as you press the buy button here, your cost basis goes from here to here. All right.

and then when you sell 2 000 shares there, that's fine. You book some profit, but you've screwed up your cost basis a little bit so that's something to be aware of. You can't like hold one position and then sort of leave that to the side and then trade other positions unless you have two accounts which you could do in that instance. but that's not going to be as as common for most.

Traders So you can trade around a core position so you have a core position and then when you see certain areas you you do quick trades you add and then you take profit so you know you're You're kind of doing little trades there, but like I said, the downside is that it'll increase your cost basis. When I'm in what I'd call Flow State Trading I'm hitting the buy and sell buttons Really? Based on what I'm seeing on the level two and the time in sales, it's based on this volatility and this is high speed breakout trading. Scalp trading. It typically involves a lot of scaling in and scaling out.

so we'll reveal the live examples of this as we get into the Ocea Uh Live Trading Archive because that's going to show you that scaling kind of in real time and then you guys will also have a chance to download that if you want to download it and re-watch that. Full Live Trading Archive because that Full Live Trading Archive is about an hour long and I'm not going to show the whole thing. I'll just show little parts of it here in this episode very closely. Psychological price levels when trading a fast-moving stock including half dollars and whole dollars.

And that actually reminds me. Let me show you. um, let me show you an example. Uh, I'm going to switch actually to this screen I'm going to show you an example really quickly of what you could have taken as a scalp trade on.

Um, this was a let's see a trade just yesterday. so let's see. All right? So here. I'm going to pull up this live trading archive for you.

So this is a stock and just to help you get oriented. Uh, we're looking at the level two on this and you can see that there's a seller at 10. for some of you guys, this is like a little bit. This is gonna be a very quick example, but right here you've got a seller at ten dollars.

it's showing Thirty one thousand shares on the Ask three one zero and then you add um, you add the two zeros. That's the way the display level two. So there's 31 000 shares on the ask here and this could have been a trade where if you already had a core position, you could have said you know, if this seller breaks, it's probably gonna pop And let's let's just look at what happens when the seller breaks so it falls, you know it Taps it and then it pulls back, drops down to 983 by 990. then it comes back up to 98.

Back up there you go and look. someone just bought 5 000 shares. so see how that 5 000 share order went through. So someone bought 5 000 shares there and maybe what I'll do just to make this a little bit easier for you.

Um, let's see I'll just make this a smidge bit bigger. Um, just so you can see it? Well, All right. so screen capture. All right, how's that look? Is that easier for you guys to see? All right.

So let's watch this here. All right. So we're going to rewind 10 seconds. Okay, so what we're gonna see is 31 000 shares on the Ask 5 000 share order goes through.

It goes from 31 to 26. the math checks out all right, so it doesn't look like there's a hidden seller that someone is selling, but it doesn't look like a hidden hidden seller. and then another 5 000 share goes through and it goes to 21.. Okay now there's another cell another buy.

Order another 4 000 shares and it goes to 15.. here we go. Boom! So now some people are jumping in to anticipate the break and Watch What Happens Holy moly 70. that is a breakout.

There's 5 000 shares for sale at 10.70. So 1065 on the ask. So that could have been one of those times where you jumped in at 10 and you sell at 10.50 for 50 cents a share or 1060 60 cents a share. Whatever it is.

Maybe 10 40 40 cents a share and then you do that quick trade where you add to the position and then you get back out. Now one of the things that I like about using the level two is that it helps me see those little areas. So that little spot there that quick breakout or scalp trade at 10. that's a whole dollar level.

That's what we would call trading based around a psychological level. Ten dollars and we use the combination as a scalp. Trader as a as an aggressive day trader of looking at the level two, reading the tape and predicting what was going to happen. Now any of these predictions they come with um, you know, obviously.

Uh, you have to have a certain level of experience to accurately predict what's going to happen in these moments. Gaining that experience is a process of um, you know, continuing to trade every single day and be here. You know, getting in that screen time. So those psychological levels can be the type of places that I like to take a quick trade to add and I would call that flow State Trading Now I want to give you, um, another second here? Uh, and let's let me get my mouse here.

Uh, to hear about a couple of the favorite setups of, uh, some of our students. So listen to this real quick. My go-to setup would be essentially stock squeezing straight up I Like the wit Reclaim, That's my go-to setup. It provides a lot of opportunity and a lot of high risk.

High reward. It's essentially how I like to trade, thank you. My two favorite strategies are a washout long after a catalyst driving parabolic move and then sub the white trash. My favorite picture day setup would be a sock that is spiking up on momentum, making a strong extension on a short time frame and I'm looking short that extension back down to the trend line usually the 13 EMA on a two minute time frame.

I'll take partial profits there and if it continues to fade, taking profits at and below. viewing foreign setup as a Trader is an ABCD pattern for your all-time highs or at Hyundai where I can kind of take a dip in between the seat and D pattern. look for an add towards High day getting the squeeze some shorts one more time adding to the Fine power. Yep, there you go.

All right. Come on, let's see my go-to setups I could trade stocks is between five and twenty dollars that are shooting up on momentum and are also fogging up I Typically like to trade uh, breakouts dips within the context of strength and pulse. All right. So um, for those tuned in, you know, be happy to hear what your favorite setups are.

And for those that want to leave comments down below. Um, so now let's talk for a second about um, the actual process of scaling into a trade. All right. So this is where kind of the rubber meets the road a little bit.

Uh, and I think that this is probably what a lot of you are interested in. So how to scale in? Uh, into a trade? This is what I would call the starter position. How many of you have heard me say just took a starter right? Taking a starter position. You've seen it in the live trading archives.

You know this is the way I approach trading. So I often take a starter position. This is my first entry. This is the place where I'm anticipating a breakout now.

I'm getting in a little early. I'm getting in without confirmation. Takes a little bit of calmness to do that. It's a little riskier, but the nice thing about scaling in is that I can comfortably test the water with a smaller position if it works I can add if it doesn't I cut the loss with small size and the loss is smaller.

So the reason that I do this is because I found that if I wait for confirmation I pay a high price for it. In other words, by the time we get confirmation, the stock is going to be up quite a bit more. so. if you know we've got this pattern here and let's just say you know we get that bottoming tail and then the entry is right here.

That is maybe the official place to take an entry. that's what we call First Candle to make a new high and you can see it right here. That's this spot right here. That's the right place to take an entry.

but what if you could have taken a starter down here and what if? right down here was like six dollars. So now you've got psychological support and maybe you could have pressed the buy button at like 602 and the first cam will make a new highs not till 6.25. So now you're in this thing. you know, 23 cents lower.

And if you're getting in at 602 and your stop is right below psychological support right now, you've only got two cents. stop. So you're getting in without confirmation but with a starter position of let's say one quarter or one-fifth of whatever is your full size. Even if you do lose 10 cents on it, it's not going to be that bad.

So this is what gives me the conviction and the confidence to press the buy button is the fact that I'm doing it with a smaller order. If I was like only trading with blocks of 10 000 shares, I would trade less because I would be nervous I'd be like uh I don't know if I'm gonna punch it for 10 000 right here I don't have confirmation. it's too risky and the result is that I would miss a lot of good entries. and so what I decided to do is reduce my share size and start with starter positions.

So I take that starter position. So in the case of this drawing here, maybe the starter position is right down here. You know, right in this area is the starter. So let's just say that's 602 and the stop is you know six dollars.

So maybe I don't get it. exit at six. but maybe I get an exit at you know, five? You know, 592 at the worst. So minus 10 cents initial trade and then we come up here to 625 and I add so now I double my position and this is where you know the question from Jack is so sort of.

What ratio do you use? You know in terms of position management, you start with 3 000 shares and then you double to six thousand and then you go to nine thousand. Or do you start with 3 000 and then go straight to nine thousand? you know? or oh so so it's like what or do you start with six thousand and then add three thousand? So these would be three different ways that you could scale into a trade I don't have a sort of methodology that I use where I'm using at the same time every time. I'm sorry to say because I know that that might be more helpful, but what I do is I really? I base it just on what I'm seeing on the price action number one. Uh, and in terms of the total quantity, I'm basing that on how well I'm doing on the day and how well I'm doing on the weekend on the month.

If I'm feeling confident, I might take a starter down here with and I usually use three thousand share blocks three 3K is my sort of. that's my block that I usually use. so I might punch this you know, times two and have 6 000 shares right down here and then this. I might add three thousand but I could also go ahead and add another six thousand.

So I could do either. I could either double it or just increase to three thousand and then if it comes up here to the high of 650 now up there, I probably wouldn't add another six thousand because the problem is, that's 50 cents away from my initial entry. Probably wouldn't do that. but I would be willing to add up there.

so that may be where I'm adding. you know, just kind of the quarter position. So this might look like, you know, starting with six thousand, doubling to twelve thousand and then adding a little bit more and then selling half and then selling a quarter or another half of what I'm still holding and then another half and another half. So that might be kind of how my positions look on a more typical basis.

Now, yes, there are times where I'll really start with a tiny position, but if I'm starting with a tiny position, I'm usually not going to be able to get all the way to my full size. kind of How much I start with Will Will dictate how high I'm able to size. So you know if this first order here is 3 000 shares, I might be able to get up to, you know, 15 to 20. if this first order is 10 000 shares, I might be able to get up to 40 000.

right? So it really depends on and and whether I'm going to do three thousand or ten thousand is going to be based on factors such as: what are the spreads of the stock? what's the price? the stock? How much am I up on the day? Do I already have a profit cushion? you know, is the market really hot? So there's a lot of things that I factor in there which I suppose is probably the benefit of being able to listen to me trading in real time because you get to hear that market commentary that play by play and kind of my real-time assessment of you know how I'm looking at things so girls gotta go out again. This is just that. We this is, uh, this is like my typical day. a lot going inside and outside.

So um, now now for what it's worth. Um, there's a lot of different patterns that we can use. So like this pattern that I was showing you right here. This is a standard, uh, pullback pattern that I trade all the time, but that's not by any means the only pattern.

There are so many different variations of these patterns, but these are all I would say these are patterns of a momentum day trader. Someone who's trading momentum, we buy High we sell higher. We're looking for stocks that are moving quickly, right? You know that's that's what we're looking for. So if a stock is moving quickly the first time it starts to pull back, that presents an opportunity to add on the dip for the next leg higher.

One of the things I would also encourage. If you're out there and you've been, you know, trading for a while, I would encourage you to think a little bit just for a moment about um, you know what are Traders Maybe like me or others who are profitable, what exactly are we doing if you think about that because if you were doing everything that I was doing down to the most money, my new detail, you would presumably be trading very similarly to me. profits will be similar as well. So if there's a disconnect, then you're going to see a very different result.

So the question is, how what are you doing differently? What are you doing that's different from what I'm doing or someone else. And it's not to say that I'm not trying to give you some um, you know I I Want to be very careful and very clear to disclaim that trading is risky and my results are not typical. But I think if just on a very basic level. if you look to someone who's successful and you were doing everything they were doing, you should also find success.

And I think what a lot of beginner trade or struggle with is without perhaps being totally aware of it. They start doing little things differently, but all those little things are doing differently. they add up and that cumulatively can create a very big disconnect between the results you see in the result someone else has. So finding your Edge is important.

Uh, I think one of the edges that I have as a Trader is an ability just like we saw with this example. um of this trade from yesterday, an ability to see this type of price action and read the tape and having the hand-eye coordination to respond to it quickly. That may be an aptitude that I naturally you know came to this table with and I'm grateful for that. It doesn't mean you couldn't study and and get better at hand-eye coordination, get better at reading the tape.

I Think if you want to try to trade as aggressively as I do, you would probably want to improve that skill. but say that, uh, you know I think that that's an edge that I have, especially in a fast moving Market Being able to read the price action read the tape. but these patterns are are also a big portion of it. The patterns for me are the basis and then the level two.

That's the precise timing of when to actually press the buy button. So another example here could be talking about when to add. All right. So once I have my starter position I'm closely watching the tape in the level two time and sales and and what I want to see as I Like to see these sort of squeezes up and then a momentary pause.

That momentary pause can be the formation of a micro pullback. As you see right here pops up. it pulls back just for a second. That's an opportunity to add.

It tries to let shorts off the hook and then they're not off the hook. And off of off it goes. You know, pulling away. Sometimes they form almost.

It's almost hard to read. It's just in the bottoming candle, the bottoming tail. But this is something that we would be able to visualize on the level too. You know you notice that in this example, of course.

Uh, you know the chart. The chart is right there. You can see the chart, but what we're really focusing on is the level two. That's what gets so interesting there.

So the chart is the basis. but then the level two really helps with those precise entries and exits. So when to keep adding? All right. So this is this is.

probably. listen. The next slide are two pretty valuable ones. So these are about when to keep adding and when to start selling it.

If I have just taken a position now, I'm going to be very closely watching the level two for signs of consent. Continued strength. What does continued strength look like? Green on the tape? We want to see more buy orders coming through. This reflects strong buying volume.

It reflects the imbalance between supply and demand. There's a lot of demand. There's a lot of green on the tape. What does green on the tape look like? Let's go back to this video.

right here at the green on the tape is um, and we'll just rewind this here just for a second. So that's green on the tape right? There is green on the tape. Uh, and you know for what it's worth I have this ticker tape machine that's from like the 18 I think 1800 1880s or something 1890s, maybe 1900. it's an old-fashioned ticker tape machine.

Um, it would print out every execution that went through the tape. So tape reading is not new. This is something that Traders active Traders have been doing for a very long time reading the tape, seeing those orders going through. green on the tape.

That's what we like to see. So uh, number two I Like to see the number of shares on the level two decreasing as orders are coming through. In other words, not a hidden seller. So what we saw at 10 30 or ten dollars how it went from 31 to 25 to 21 to 14 to 10.

you know it dropped down. That's what we want to see. The price naturally should be moving up and hopefully fairly quickly. The stock should be hitting new highs and it should be on the high day scanner.

Being on the high day Moma scanner is good. That means other Traders are going to notice it. It continuing to hit new highs means it's continuing to put pressure on anyone who's short. So if I see all of that green on the tape, number of shares on level 2 is decreasing, the price is moving up, the stock is hitting new highs, then I'm going to be watching any of those momentary dips to continue adding.

I'm going to continue to average up to continue to scale into position at a certain point. Obviously I have to switch from adding to selling I can't just add indefinitely I Mean at a certain point, you have to switch. So when do you switch? when do you know when to start selling? All right? Well, uh, when to stop adding this is going to be very Market dependent in a hot Market We'll see stocks continue to go higher and higher and higher. I Mean it's I'm not even kidding.

You know you look at. look at some of the stocks, you know. Just as an example from Uh from last year that we had, we have you know, HKD and I'll just um, back this out for a second. So last year we had HKD a Chinese IPO stock.

This thing goes from I don't know, like 14 15 a share? Uh, all the way up to 100 a share. That's pretty crazy, right? One to two hundred to three hundred to four hundred to five hundred, six, seven, eight, nine, up to fifteen hundred two thousand. This hit a high of 2 500 a share? I'm not kidding. that's crazy Hudi.

This one made a pretty explosive move as well. not quite as big uh you could see in November there was this move there that was November So you know in a hot Market you don't want to underestimate how much a stock could go up. I mean we could definitely get more than 14 cents a share. Um, but you know.

Again, having said that, we also have cold markets where extensions can be a lot smaller. So if I see a sign of weakness, I can either sell the full position I could begin scaling out quickly or I could also sell slowly and wait to see if strength resumes. The decision will be based on my cost basis, my total profit both realized and unrealized and Market sentiment if it's a hot Market I'm going to try to hold it as long as I can if we're in a colder Market I'm going to be a bit more conservative and take the profit off sooner. So how to scale out of a trade? Well, if I've taken a position, I'm fully scaled in and then suddenly I don't see any of my signs of strength.

That's a problem. Breakout or bailout would tell me to exit, but you know it depends on whether I'm doing a scalp trade or I'm really scaling in for a bigger move. But even worse than not seeing a sign of strength would be seeing one of the following clear exit indicators. These are clear exit indicators when you're scalp trading, when you're taking trades with a five cent stop and you're looking for 10 15 cents a profit.

If you've had a trade and you're up 50 cents a share, these don't necessarily apply so it depends on how uh, you know how up, how much you're up versus your cost basis. But a big seller on the level two right where I got in? That's not great. Now a big seller on the level too. but I'm already up 50 cents I Can give it a chance to see if it breaks the obvious appearance of a hidden seller.

Well, a hidden seller. Regardless of how much I'm up, we just don't know how big that cell is. We don't know how big they are, so that can be an indicator to start to consider unwinding a position. a large burst of red on the tape indicating a surge of selling and a possible false breakout.

You know where the stock kind of continued and then topping tail and then that quick reversal. What that can do is it can form a really large topping tail on the chart, which creates an ugly chart pattern. A chart pattern that a lot of Traders are going to say ah, I don't think I can trust it and then they're not going to be likely to buy the first pullback. so that big burst of red that creates a false breakout candle.

That could be a problem. initially a pop, but then dramatic reversal again. same thing forming. topping tail, false breakout.

That's a problem. I Don't like entering on a red candle unless that's my starter and I'm buying a dip. So if I'm in with pretty good size and the candle turns red, while I'm in the trade, it's obviously an indicator of weakness. I should probably get out of the trade and seeing some signs of weakness or resistance around psychological levels.

It shouldn't be too surprising, necessarily like what we saw around 10 on that example, but it reiterates why an entry at 9.99 could be a little riskier if you haven't first seen how the stock is testing. you know, the half dollar or the whole dollar, so it's definitely something to be aware of now. I Want to talk for a moment about my criteria for being willing to trade a stock? What I would say are probably the four or five criteria that I use to decide whether or not something has the potential to make a 20, 30, 40 Cent move or it's just kind of choppy. Uh, before I do that.

Let's uh, check out the golden rules of some of our students at: Warrior My golden rules are to keep my red base to a minimum and to keep studying the markets. I Really put a really big emphasis on studying the markets every day to stay up to date, which in turn helps me keep my bread days down to a minute. My Golden Rule creating more of a mindset than I have to keep moving on to loss so that I can't dwell on it. Looking past, the only way that I can grow as a Creator is to look at it and learn from it before.

One of my golden rules is good habits will make you much more Rich than any single day p l Some of my golden rules are first and foremost that Excellence is not an action but a habit. So therefore it's not an act but a something that I do every single day. I Also believe that trading is 80 patients and 20 execution. So 80 of the time I'm sitting on my hands waiting for my setup and then 20 of the time I'm executing and managing that trade.

My golden rules would be not to have many rules I found it. Oftentimes my rules would really put in a box in trading and I would be afraid to bring these reports. We would also make me afraid to take some trades. all right.

So let me show you on the Whiteboard here. Um, what I would say are probably my uh, my top criteria for I Think considering a stock to be worthy of trading so what we're looking for and just to kind of give you some context I look for stocks that can move 20, 30, 40, 50 or more. One of the things that I have found in my career as a Trader and I learned a lot of this the hard way. So my first few years of trading, a lot of trial and error.

I was trading a little of this. a little of that, you know I just I wasn't finding consistency, but I was also trying to figure this out myself. I was kind of Reinventing the wheel I didn't have a mentor I didn't have someone I was learning from someone that had a proven strategy that I was trying to learn I was just testing the market I was trying to trade what was moving and that included trading options, penny stocks, large caps, mid cap, small caps, a little bit of everything. What I ended up discovering was that I had the most consistency on stocks that were lower priced and on stocks that had really high relative volume.

And so I kind of had to ask myself a little bit. what is it that creates high relative volume? What it, what is relative volume? So for those that don't know, relative volume is a measurement of today's volume compared to the average volume of stock experiences, and it's usually over a period of either 14 or maybe 30 days. Either is fine, It doesn't really matter. And what I found is that I do much better on stocks I have at least two times higher volume today than average, so you might ask? Well, okay, that's interesting.

How and why would a stock have two times higher volume today than on a typical day? Typically it's the result of breaking news. So what that breaking news does is it creates demand. It creates interest and as the stock starts moving up, it kind of becomes you know the Unicorn that everyone's excited about. today.

everyone's focusing on it and that there brings in even more volume, creates even more interest. And then those are the stocks that can make these really big moves. But it's not always true. There are times where stocks have news and they don't make big moves.

There are times when stocks have news and they drop. So how do you kind of figure out you know which from which and ultimately stock selection is an opportunity for you to further reduce your risk as a Trader Because if you're really trading the right stocks each day, you're going to find them to be a lot easier than trading the wrong stocks. So let's talk a little bit about some of the characteristics of these stocks that make you know. Plus, you know 20 to 30, you know, percent moves or or even higher.

It could even go up as much as 200 or 300 percent. So Number one, Relative Volume: I'm just going to say RV needs to be at least two or higher so that means twice the relative volume of a typical day. Number Two I would say the stock has to be up at least 10 percent for me to even consider it. Typically the process of going from up zero percent to up Five Six, seven, eight, nine percent, ten percent is what starts to create that early increase in volume.

that's going to give you a two times relative volume by the time you start taking the trade. Number Three prefer news. Now a news. PR Now this isn't a requirement.

Sometimes you'll have a stock that has that's up ten percent with two times relative volume because the sector is strong and that can still be worth trading. But I do prefer news because this usually gives Traders and the big Traders the whales out there more confidence. And we're little baby fishies, right? So we're we're just a little baby fish here. Um, that was a that's kind of a bad fish drawing.

anyways. it's a little fishy, smiling. But we're just in the kind of wake of these big whales. This is going to be one of these whales here.

That's his little tail right there. So oh, and he's like hungry. he's looking for something. So we're just little baby fish and we just feed o