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what's up everyone all right so we're gonna get started here welcome to everyone joining here today the topic of today's episode is momentum day trading all right so this is something that of course I'm a momentum Trader so I can definitely speak to this uh topic and I'm going to share with you uh a couple of different components to momentum day trading we're going to talk about what it is what it is and how to find stocks for momentum trading and exact entries and exits and I'm going to share with you a case study of a recent stock that was just a great example of momentum trading now I do this for what it's worth every day this is the way I trade I am a momentum Trader and I've been doing this for a really long time as many of you know who aren't maybe the first to um this isn't the first video you've seen me do you know that I've made over 10 million dollars trading stocks I always tell you that my results are not typical and I share my profits with you because I want you to know the person you're learning from here actually knows what the heck they're talking about so let's get into it momentum day trading I'm going to go to full screen here and um I'm going to show you the topics that we're going to cover today so number one the definition of momentum day trading strategy number two a case study for momentum day trading strategy and number three I'm going to share with you some entries and exits and what I'm also going to do for all of you guys is I'm going to give you a link uh that's going to be posted in the top comments and in the description where you can download some resources so these five resources will help you in your journey as a Trader and one of the ones that I think you guys will really enjoy are the live trading archives so everything you're going to see today I'm going to show you a bunch of screenshots and things like that but the live trading archives is kind of where the rubber meets the road because it's putting the theory into actual practice where you can actually see my order execution you can actually see me getting in getting out the way the orders are placed what I saw in the moment where I pressed that buy button so please check those out they're free you guys will only benefit from them so I hope you do that and let's go ahead and jump in what is momentum Trading so the definition of momentum Trading a momentum stock is a stock that's moving quickly so this is it's kind of like crazy to me but there are so many people out there that are trying to predict what a stock is going to do tomorrow or next week and they're doing all this research they're trying to oh is this not going to have good earnings and they're taking these positions and they're getting in before the move starts they're hoping that they'll be able to be holding during the entire move and when it works it's phenomenal I mean it's great but nobody knows what a stock is going to do so you end up doing a lot of research and a lot of sitting and a lot of waiting and for me when I got started trading you know this whole strategy of momentum trading it's a reflection of my personality and so for some of you here today you're going to be like this is this is exactly what I'm looking for now for some of you who have a different personality a different risk profile you might say no this isn't for me and that's okay I'm happy to talk you out of it if it's not not for you but this is a reflection of my personality so when I got started I had a relatively small account I couldn't afford to well number one if I was holding overnight I I was feeling like I was risking losing half my account because we know that some of the stocks especially small cap stocks they can be so volatile that holding overnight it can be you could be risking 50 your account so I had a small account I couldn't afford to risk 50 of it and I couldn't afford to tie up that money by just parking it on a stock and hoping over the next couple weeks that it did something that wasn't going to work for me so what I needed to do and of course I learned all this through a lot of trial and error but what I eventually learned that I needed to do was focus on stocks that were moving so rather than trying to guess which stock might make a move tomorrow momentum Traders wait for a stock to start moving and then we jump in as early as possible and just like as a quick side example of that um just today you could see this is my p l from today 2 921.98 and the biggest contributor to that p l was GMS all right so gns this morning has breaking news right at 7 A.M and the stock squeezes up from five dollars to over eight dollars a share right there boom straight up so yes did I buy it high I certainly did because I got in around seven but I rode the momentum from Seven up to eight hit a high of 871. here's another stock that's hitting my scanner right now Lucy this stock has just gone from two dollars up to 380. all right so this is the type of thing that momentum Traders are looking for we're looking for stocks that are moving right now and I'll talk more about these scans um you know as we get further into into today's class all right so uh let me go back to full screen here all right uh presenter View and back to full screen so momentum Traders need to be constantly scanning the markets for stocks that are starting to break out of their standard range like the stock Lucy is right now and you know if I wasn't teaching this class right now maybe I'd be trading Lucy because it is a perfect example obviously the stock is is moving quickly this is what we look for it's it's rate of change it's moving and so that provides opportunities on this one that pullback right there would have been a good entry I always like pullback entries so I let it dip like that and then I'm getting in for that next wave up I like to think you know a little bit about trading in these kind of waves where you have stocks that they squeeze up but inevitably they'll pull back a little bit as you have some profit taking and you know maybe whatever just a little bit of consolidation and then they pull back they sort of reset and then I come in for the next wave up so momentum Traders use specialty tools for stock scanning and for searching for breaking news in real time and the scanners that you see in the background those are custom scans that I actually have a development team that works for me that built these scanners and this for me is like radar it is searching the market in real time for stocks moving higher I have my audio alerts muted right now but these put out audio alerts so you know I'm hearing beep beep you know if something's going on I'm gonna hear it and I'm gonna know about it and that's important and so as a beginner Trader what this allowed me to do was focus on and of course I didn't have these same tools when I was first getting started but by looking for stocks that were moving what it allowed me to do was not tie up my account in stocks that were going nowhere but basically take my account and put it into a stock that was moving even if it was only for a very short period of time so my trades can be very short as I'll show you um later this morning in some of the some of the examples okay so let's see um now this is a strategy that requires being willing to buy high and sell higher I'm gonna be honest with you that that's this is not Warren Buffett Buy Low sell High maybe on an intraday basis on a dip trade you could say you're getting in a little lower but if the stock is up 50 or whatever it is it's really not by high sell high or Buy Low sell high right so again we could look back at Lucy you know this pullback right here at that point it was still probably up oh gosh it's up right now 156 percent so when it was pulling back right there it was still probably up a pretty considerable amount maybe a hundred you know 20 or something like that so uh let's see here we go so this is a strategy that requires buying high and selling higher now when we buy something that's high momentum Traders have to use a combination of strategy and discipline to manage downside risk while allowing us at the same time to profit from upside potential there is downside risk on trading a stock that's already up 100 right it's up it's up high it's extended so we have to use strategy and discipline to keep ourselves in line so there will be times where you might look at a stock and you know maybe Lucy right now is that example where you'd say nah it's getting a little extended up here I have to mitigate my risk I'm trading a stock that's up 184 percent so do you mitigate your risk with smaller share size do you mitigate your risk by not taking the trade at all there's different steps you can take right and it's going to vary based on um you know where you're at on the day and and you know your go-to strategy and things like that your go-to strategy for trading momentum so now we could talk for a second about day trading momentum versus swing trading momentum so momentum can be both a day trading strategy and a swing trading or a short-term investing strategy if you own Tesla in 2020 and 2021 that was a momentum strategy because the stock kept going higher and there were people even you know big money investors that bought Tesla just to try to ride that momentum you know when you have a stock that's super strong and something like Tesla that's very liquid you know that allowed people with Deep Pockets to take you know tens of millions maybe 100 million plus dollar positions and just ride that momentum as it's moving higher so you know this is Tesla from 2020 through 2022 um you know you had a nice a really nice long run of momentum so on an intraday basis there were a handful of days where it was volatile enough the candles were green enough they were moving up enough that you could have tried to day trade it but I generally am going to avoid trying to day trade a 300 stock what I found is that I have a set of five criteria that I look at to evaluate whether or not I think a stock has the potential to go up you know not just five or ten percent in one day which is what maybe a good day for Tesla you know but something like Lucy that has the potential to go up you know 150 or 200 percent or something like that those the types of moves where even if you only capture a fraction of that move you you capture a tenth of a 150 move that's still a 15 trade right so that for me is what I really look for and again this was also based on you know when I got started trading with a relatively small account I didn't have the ability to um you know have a five cent a five percent winner on something like a Tesla really move the needle for me I needed stocks that were going up 20 30 40 in order to really make some good money so you can you can be a momentum Trader as a swing Trader and some people might find that more appealing because it's going to be a lot slower but it obviously is an opportunity cost because you're going to miss the intraday volatility so why momentum day trading why did I choose momentum day trading well as I said when I started I had the small account and I just wasn't able to afford the overnight holds so I taught myself to focus on the type of stocks I had the potential to offer the biggest intraday ranges and just try to capture as much as I could in in that range so if a stock has an intraday range of 50 and I captured only a little bit of that range there's still a lot of room for profit so that's the definition of momentum trading if you guys have questions who are watching on YouTube right now feel free to leave them in the comments because I can read the comments and uh and of course people watching this later after the fact I make a pretty good point of responding to just about every comment that's posted so feel free to leave a question and I'll try to get to it uh so now let's look at a case study of momentum well we've kind of looked at Lucy in the background there but uh but let's look at this example just from earlier this week this was a stock the ticker was msgm and it went up three thousand percent in two days all right this is crazy this is a a pretty Monumental move so it goes from about about two dollars to a high of over eighty dollars a share now you're probably not going to hear about a stock like this on CNBC or whatever uh MSNBC these are stocks that are small caps they're thinly traded this stock the the value of the company prior to the move gosh I mean it was probably less than 10 million dollars it really wasn't valued very highly because they didn't sell a lot of shares on the market and their share price was pretty low so it had a very small market cap but what happened well it starts with breaking news okay so now I'm going to kind of unwind this and really give you a good analysis of how do we find these kind of stocks so in order for a stock to start moving and of course as a momentum Trader we really only want to be trading stocks that are moving usually it's the result of news of course one of the challenges is that all day long and all night long there are news headlines that are coming out right so companies put out news headlines they hit the pr the newswire some of them are good some of them are bad some of them are neutral and you know they they don't really um they don't all result in a 150 move on a stock so the first thing that I look for to find the stock is for it to be hitting a scanner that's the first thing all right so that's the tool that I'm using and those are the scanners that I showed you back here so I'm using these scanners right here so sclx is hitting a scanner right now so I would have first found mgsm on a scanner as it was squeezing up and then the first thing I do is I check to see what's the news and in this case I see that there is news it's a debt to equity exchange agreement it's not always the strongest headline but in this case um it was more than enough as it turns out so the news comes out and the stock on light volume following the news climbs up about 73 that's pretty impressive but the news was dropped at like four o'clock so it was after hours usually after hours has very light volume and not I mean certainly people saw it because it it went up 73 percent but but not a ton the next morning at 4 a.m it's on the Gap scanner right here it ended up gapping up 182 percent it's on the Gap scanner and of course 4 AM that's very early for East Coast Traders it's even earlier for West Coast Traders but for day traders that are in Europe that's not so bad so they're getting up at you know whatever nine o'clock in the morning and then they sit down and they're you know 10 a.m they're looking at um you know they're looking at the Gap scans and they see uh here we go msgm popping up so it hit the Gap scanner at 4am up over 100 and between 4 AM and 7 A.M right at 4am it pops up because more Traders saw it and it has a period of sort of consolidation who knows what happens at 7am at 7am TD Ameritrade and Robinhood come online they don't trade they don't allow trading before 7 A.M a lot of Brokers don't but those are just two big Brokers that come online at 7am so at 7am this stock is already up over a hundred percent it's got news and there are people that just have their hands on the keyboard waiting to execute their first order and so what happens at 7 A.M boom it spikes from about six up to eight dollars and fifty cents that's a really nice move and I'll talk about the exact entries and exits on this in a second but we're just going to analyze the chart here for a second so it goes up to eight dollars right at seven a.m predictable predictable once you know these and learn these patterns then it pulls back it breaks out goes up to 850 it pulls back again mid-morning it squeezes through 8 50 and goes all the way up to over 28 a share hitting a high of 580 gain intraday all right by day two it breaks eighty dollars for a return of three thousand percent wow okay so let's talk about the entries and the exits and I did see the question about the five criteria for whether stock has the potential to make these kind of moves so I have a class that I teach specifically on that those you guys who download the five free tools the five resources that I've made available for you guys if you want you can opt in on that page to our um to our newsletter our our email um blast and we'll send you out a link where you can watch that lesson uh it was a it's about a 90 minute long maybe it's almost two hour long uh lesson and that one it talks about what we're going into here but it goes into it with a lot more depth so in that class I talk about risk management I talk about stock selection during the stock selection chapter I talk about the five criteria that I use to evaluate whether or not a stock has a potential to go up 100 200 300 percent or if I think it's just going to stall out at you know eight or ten or fifteen percent gain uh and then in that class I also show you a bunch of uh charts and on entries and exits so check that out if you're interested so all right so let's talk about entries and exits here so the first clean entry for most Traders would have been at 7am right here right at 7am with a long probably like 650. all right so an entry around 650 and it squeezes up to 8 57 or 854. basically right on that candle which is a solid 20 almost 30 percent return in less than five minutes so remember these are quick trades now this is exactly what I was looking for when I was getting started trading because you know I felt like I was Trading I I had a money in my account but every time I took a trade I was afraid of losing that money and so you know what I would do is I would just get in and get out as quick as I could because I was measuring my risk you know in a way by exposure risk of how long I was holding a stock so the the less time I was spending holding a stock the less risk I was exposing myself to right so 7am right here first entry right there that's a that's a nice trade and I'll show you my actual trades I took on this but I'm just going to show you the chart for um to begin with so that was a good entry right there 650 goes up to a high of um almost 850. and then it pulls back and it starts to form this resistance at about 772 that's the blue line here it Taps it once twice three times four times it can't break it but when it comes back up and breaks it there's two ways to trade this one is to get in based on what you're seeing on the level two so the level two um is a tool that Traders use it's right here so for instance if it came up to 72 and you saw these numbers represent the sellers so if you saw a ton of sellers stacked at 72 you probably wouldn't press the buy button because the sellers are right there but if those sellers were thinning out and there was only one left then it looks like the dam is about to break and that's when we could see that rip and that's exactly what happened the second way to trade it is to wait for it to break and then buy the retest of that 72 level so it broke which is the topping tail that candle it then came back down retested and then it went higher both are fine either it's it's and I I will do both depending on the setup of the stock all right so that ends up going to a high of about 850. and then it pulls back and and sells off so that was the second trade the break of 772. for a second test there of 850. all right now the third trade on this uh was a break of the pre-market high of 854. all right so I guess this must have been about 8 20 and that was 8.50 all right so this 854 level it squeezes up right here and Taps about 8.48 really close to Breaking that level it then pulls back and when it breaks through all of a sudden we get a lot of volume it's very common that we see a lot of volume around these breakout spots It's a combination of short sellers covering and long Traders adding to positions so really nice breakout here from 850 up to 950. that's a dollar a share you know with a thousand shares that's a thousand dollars of profit right in that kind of candle okay then we got a pullback so this was at 9 50. you get a one a five minute pullback right here under 9.50 and when it breaks through 950 from there it rips up to 16. and what do you see happening at 16. another pullback right there is 16. and then from there it rips up to 28. now one of the challenges with these stocks naturally is that as they get more expensive the spreads can get bigger and the whips can get bigger so you can have these big pop and drop kind of moves and those can be really hard to manage risk on I have consistently found in my career that I make more on stocks when they're under twenty dollars and when they start getting more expensive that's when I can catch some some pretty big losses at times so these were my trades on msgm you know I didn't murder it I didn't crush it uh I I did well uh I finished it five thousand three hundred seventy four dollars and 12 cents and what you can look at here is that my average winners were about two hundred dollars and my average losers were 75 dollars so that's a really good profit to loss ratio on that stock and and my accuracy was 75 percent in total I took 40 trades 40 relatively small trades the average hold time was only three minutes for winners and four minutes for losers so these are fairly quick trades getting in getting out getting in getting out the nice thing is that my biggest loss was only 150 but my biggest winner was 1200. now this right here is momentum Trading and I understand that some people are going to say wow this type of trading is too fast I don't think I could keep up with it and if that's the case then absolutely you should follow your gut and you should focus on a strategy that is a better fit for you and that could still be a momentum strategy but you could just use a slightly different strategy for entering and exiting the trades so you hold longer or you could focus more on swing trading if that's what you prefer so you know right now you've got Lucy doing this um this is what we would call a five minute setup so you have this squeeze here from two all the way up to a high of 460. it's at 169 percent right now you've got two red candles one of the problems that I sometimes see on this macd is crossed over against the trade uh one of the problems can be that you got such a big move that Traders are really just afraid to buy it this high so unless maybe some big short seller hits the buy button to cover and that triggers some more short covering it's probably going to be more of a fade from this point and that's okay you know the window is right here and look if you have a stock that goes up 200 or whatever it is in 15 20 minutes you can't ask for a lot more than that but I'm telling you you will see these setups again and again and again and again so it's true that you probably should have started learning trading sooner maybe you should have started a year ago two years ago five years ago and if you didn't start sooner there's nothing you can do about that but today especially after watching this episode on momentum trading you now have the opportunity and you have the knowledge of the strategy at least on the high level so I hope that you guys dig in and start learning more about it because this is the strategy that I've been trading really but since I turned the corner so my whole career as a profitable Trader has been trading this strategy prior to this I was Trading some some mid caps some large caps I was trading options I tried trading penny stocks I was doing reversals I was doing a little bit of everything I tried shorting I didn't find any consistency though so this is the area of the market where I've kind of um found my my bread and butter trading these types of stocks and I have traders to ask me about momentum trading all the time and I'm happy to share it with you I encourage you guys to check out the class or to check out the free resources I've made available to you because if you find this interesting you do not have to do it alone there are communities of traders that are trading momentum now there's some Community traders that are focused on shorting momentum shorting strong stocks seems kind of crazy but you know it's a strategy that some people like there's also communities of traders that are focused on the long side and then they're just communist traders that do a little bit of both we've got short side Traders and alongside Traders at Warrior but I'm primarily a long bias Trader so I encourage you guys uh to keep learning these are some of the candlesticks that we talk about in the classes that I teach for students over at Warrior trading you'll see examples of this in the live trading archives for those of you guys that download the free resources and um you'll see the examples of the micro pullback strategy and the small count strategy as well so I hope you guys check it out I want to thank you as always for tuning in I want to keep these little classes uh concise brief and to the point I think that we've done a good job of that today please post questions and comments that you have down below I will come back through and answer them and you if you want to keep learning make sure you get the free resources and then you'll get an email to register to one of my free classes that I teach periodically and those would be a good opportunity for you to learn more about the five criteria that I use to evaluate whether or not a stock really has some serious potential so thank you guys for being here as always I'll remind you that my results are not typical and there is no guarantee you'll find success whether you trade with me or you learn on your own so make sure you manage your risk and you're practicing a simulator before you put real money on the line and don't try to blindly follow me or anyone else take it slow alright we'll see you back here real soon