What's up everyone? All right? So we're going to jump in here and we're going to talk about the action from today. and I also want to talk about what separates a hot Market from a cold Market because this is a question I've noticed a lot of people asking. All right. So right now this week was kind of a bust.

Not a lot of action, it was. it's a cold Market it's we're in a cold cycle. We started with well market holiday on Monday Tuesday ended up having some good action but you know I've been raing every day and uh, on a scale of 0 to 10 I don't know if I should do 1 to 10 or 0 to 10. but anyways, um, it'll become relevant.

uh in a minute. So Tuesday I gave a rating of a four or5. We had one stock that squeezed up 120% and I made like 3500 bucks on it. but if you missed that one trade, everything else for the rest of the day was pretty much garbage.

It was just choppy, low quality, not very good setups. Wednesday I gave a rating of a one or a two. The gaps were terrible. It was super slow but there were some penny stocks that were moving which some people like but I just don't like them.

And then we had Thursday yesterday again leading Gappers garbage. It was just like we didn't have any strong obvious leading gappers. We had agfy even though it made you know a big move. Then it just got so choppy and today same thing we had Spirit Airlines Save which I said from the very beginning I was like you know what? Unfortunately for me, this isn't something I'm going to trade and here's my reasoning for this.

It's the same reason: I didn't trade Sil Valley Bank and First Republic or whatever I Don't like to trade stocks that have the risk of getting halted pending news like a high risk and that's what I was worried about. So when you have a stock that's you know we've got this merger fail with JetBlue and Spirit Airlines and now Spirit Airlines is trying to figure out what they're going to do. There's just too much risk of a halt pending news and I just don't want to be in something regardless, long or short I just don't want to touch that type of stock. All right.

So if we jump on on uh to the charts here today, we can look at uh today in a little bit more detail. So uh so today I would so yesterday I guess I would say was a zero I took no trades, there was nothing that looked good. I Would say today is basically the same. If you look at the Gainer scanner you've got a 100% Gainer But this was a buyout All right.

So it's up. at this level. it's just trading sideways. There's no trades there.

Messa Meesa Well, it's up 58% but you know this one. again, it's a little too cheap for me. Phun You won't believe this. a second secondary offering.

They did it again. All right. So listen this thing. First of all, it goes a couple days ago from 10 cents all the way up to 45 cents.

and then they do an offering price to like 10 cents a share. Boom! It sells off hard, then over the next couple days it rallies back up. Not for any good reason, but just rallies back up. And then what do they do today? Boom! Another Offering two offerings back to back, they are just dumping sh shares, unloading, raising money, and Retail Traders Well, we're the dummies for buying it up and and losing.

Fool me once, you know, But here they they got you twice. So obviously this isn't something that I'd be interested in just because of the price range. I Don't trade these low low price stocks I I Really never have. The only time I trade them was at the very beginning of my career and I lost money on them and then after that I just focused on stocks that were more in the like you know, $2 to $10 range.

And as you know, for my small account challenge, my sweet spot is 5 to 10 cuz that's where I have leverage. That's where I can make the most money. So although I could trade something like this, my commissions are going to be higher because they're per share. So anyways, um so no trades on P hun in the small account or the big account.

not interested in it. So that one was off the radar. Um, there were a couple other lower price stocks I saw people talking about. it was like Crge or something like that.

Yeah, this one. this one was it. 12 cents 26 C So right now, this is kind of the theme. The theme right now is we're seeing these cheap penny stocks that are popping up.

but then they're failing. They're not holding up well. and I'm not interested in trading them. so I'm not touching any of those.

All right? Well, here's the problem. If that's what's hot right now, then that's what's obvious. It's my choice not to trade them. but I also have to recognize that that's what most people are focusing on.

So if I'm not going to trade it, well, then I'm going to miss. You know what's obvious and and it just means that what I might look at on the scans probably isn't going to get as much attention because people are focused on something else. Attention is a little bit more dispersed, But in any case, you know really. you'll get this scanned today and it's just awful by the way.

Uh, so I I Just uh. We just uploaded episode three of my Small Account Challenge, so if you haven't checked that out, um, make sure you check it out. And once we cross over 10,000 thumbs up on small count! Challenge Series You guys are going to help me unlock my newest piece of inventory which is going to be replacing this Monitor and I cannot wait because this has really been like intolerable trying to you know, right? like right now I can't see what the volume I can't even see the daily chart at all on this stock so you know I've I've made some progress without. um, you know, as as good of equipment as possible.

but I'm I'm looking forward to the upgrade all right. So anyways, it's hard for me to see The Gap scanner here. but but what I can tell very easily is that the top four leading gappers top five. There's nothing here.

None of this is interesting save 100 million share float. I mean you guys know this isn't something I would trade. so I didn't trade today in the small account I didn't trade in the big account. there is just nothing to trade.

Okay so now let's talk about sort of this. um, you know, differentiating hot cycles and cold Cycles So someone said Ross you know, how do you know it's a cold cycle and and and sort of what starts a cold cycle and I I said well let's flip that around I Think it's easier if we talk about hot cycles. So what is a hot cycle? A hot cycle is a period in the market where stocks are going up a lot. We're seeing big moves back to back to back to back.

There's a lot of enthusiasm. There's a lot of Fomo Traders are buying up anything that pops up because we've had four, five, six other stocks that made big moves so it's like this one could be the next one. Okay, so then in a cold Market we're not seeing stocks making big moves right. We're seeing basically these small little moves and the result is that Traders don't really feel fomo to jump into anything because the last few that popped up didn't really do much.

So then in addition to Long bias Traders not jumping in shorts are more aggressive. So now you sort of have this imbalance shift where in a hot Market the Bulls are are really dominating the price action. and then when it starts to get cold, the Bears start to take control and then they are really in full control. during sort of the the bottom of a cold cycle.

Anything that pops up, nobody has a confidence to buy it, it just Fades even if it has maybe what seems like good news, people just are like no, I'm not going to trade it and that's where we're at right now. Now on the one hand, you could say oh I should be shorting and you know you probably could make money shorting right now because you are seeing things that are popping up and they tracing. but I want to remind you that there is unlimited risk with shorting and we saw that with ZJ yl. Not that long ago, the stock that halted down and then halted back up and went from like I don't know it was like $20 a share to 500 and that.

But here's the thing that should never happen in the market. It should never happen that stock halts up at you know, $18 or $20 a share and opens at500. But it does happen. Sometimes it happen.

then it's I've seen things like that happen before and if you're the person who short 5,000 shares and it opens 500 points higher and you're down millions of dollars. Well it sucks to be you. That's the market I Hate to say it. but what's your recourse? There's nothing you can do.

What are you going to go call? There's nothing you can do. Literally, There's nothing you can do. Sue the company. It's not their fault, they don't even know what's going on.

Most of the time there's nothing you can do. you are out of luck and then you know of course if you buy it at 500 and then it comes all the way back down to $10 Similarly, well, there's nothing you can do. This is the market. So to me: I never, ever, ever ever want to empower one trade to give back half of what I've made in my entire career.

And the reality is, you know, a a relatively small position of 5,000 or 7,000 shares on a stock that caps up 500 points? Hello, this is a multi-million dollar loss I've done well in my career, but not enough to stomach losses like that. That's just it wouldn't I I couldn't do it I couldn't tolerate it. So for me, I'm all about managing my risk now. One of the things that I'll say is that my risk tolerance has changed Chang and by the way, I'm patting my dog over here.

She's going crazy. but I don't want to let her out right now. So I my risk tolerance has changed as I've gained more experience trading and as I've gained more profitability trading early in my career I was willing to take more risk because I felt like I had nothing to lose. You know what I mean like I I didn't have a lot of money and it was like, well, I might be giving up on this thing anyways.

who knows what's going to happen So I was comfortable taking at times really much more risk than I would take now. But now that built a track record, I've built profitability I have something to lose right? I don't want to lose everything that I've built everything that I've that I've grown I've grown an account from less than 600 bucks to over 10 million I don't want to lose half of that in one trade I couldn't possibly So I would say that as I've matured as a Trader my risk tolerance has gone down and now I'm really focusing on where I can make money, but without risking doing something really stupid. So anyways, while you could short right now cuz we're in a colder Market You still have to be careful about that. And for what it's worth shorting a stock at 10 or 25 cents, the most you could ever make is if this goes to zero, it's pretty darn close to zero.

So like your downside is feels like a lot more than your upside potential. If you bought a stock at 25 cents, your downside is that it goes to zero, but your upside is like some of these. Sometimes we see these things really take off and so usually a cold streak ends when everyone and their grandmother is shorting stocks because it's easy. Oh, this is easy.

You just short everything that goes up and if you keep adding, it'll just it's fine because it'll go down and that works and works and works until it doesn't and when it doesn't it blows out a ton of beginner short sellers. They literally blow up their accounts, they have margin calls, they're in debt to their broker, they're out of the market, and they're gone forever. And you have a stock that goes up from 40 to $10 or $11 one day. And I've seen it happen before and it's insane and that big move.

Sparks The next round of momentum where all of a sudden it's really hot. Now how long it top four can be? Days, weeks, months? We we never really know. It kind of depends on the price, action on the following days and there's there's a number of different factors, but my feeling is that in in my experience, about 80% of my profits on the year come from about 20% of the days. So my job is to show up here and be willing to trade.

Be willing to be aggressive because I just don't know what day is going to be the hot day, right? So I just have to show up every day and that's what I do I show up ready to trade, ready to be aggressive. And you know, with a short seller strategy. I Do see some short sellers who throw down some really good consistency. You know they're shorting everything that pops up, they're adding, adding, adding, and then covering.

and then you have the those Black Swan days where in one day you know they they get, they get short something at 50 cents and then it goes to a dollar and they've added the whole way up and now they're in a fullsize position. As something is going, you know, multiple dollars a share against them and just think about, you know where that'll land you. So anyways, um, you know there's a part of me that at times is tempted to trade more to the short side because look, you know when you see a lot of these stocks doing round trips and things like that, you feel like all right? I Want to try to participate in that, but my risk tolerance right now just will not allow me to do that. It is not worth it, You know? yes it's It would be nice to have you know 20 base hits in a row or whatever.

You know this. Nice steady progress, but this is why I See where these short seller counts. They go like this and then they lose it all in one day and they're in debt and then you know maybe they make it back, make it back and maybe they start getting better. They cut the loss faster, but you still have that kind of strategy.

It's a tough one. long biased Traders In contrast, um, tend to be a bit more. You know, like this and then like jumps up and then kind of like this and then sort of jumps up and and it's sort of like this stair stepping pattern of like being patient, grinding it out, showing up every day, collecting the small winds, and then being there. You know for the 20% of the time that we have big big opportunities and your account can really make a big jump.

So today, unfortunately there was nothing that I felt like is going to even give me a solid base hit, let alone you know, a really nice trade. So it just didn't make sense to take any risk. This Market wasn't deserving of my capital is how I felt. You know I'm not going to participate in this market.

So what also happens in colder markets is liquidity dries up. It gets very very like it's it's IL liquid and that's hard. Whether you're long or short because it's hard to get in, it's hard to get out. There's no one trading because you know people just sort of like nah I'm not participating so it's a lot of Alos and you know a few DieHard Traders But it's a lot less volume in total than during a hot market.

So naturally I'm looking forward to when the market heats up. It's pretty unusual for January to be as slow of a month as it's been, but uh, you know Market is cyclical, hot and cold. Cycles They don't always tie back to a season, so right now it's a little bit, uh, cold I Suppose The good news is that the overall Market has been quite strong. So for those of us who have been trading for quite a while like me, you know I've got $100,000 in my trading account and then the rest of that $10 million in profit I put away longterm into the market so that's been in the market growing this whole time.

In fact, I made more last year on that long-term account than I made on my day trading and I'm fine with that. Some years it's going to be like that, you know, and that I said early on. I I Say it in class one of my Warrior Starter Curriculum I Said the goal of trading is to essentially fast forward your retirement savings because with a relatively small account as I've proven, with $600 or with a th000, or 10,000 or even 25,000 I can trade and grow that money so fast. But you know someone's like Ross if you could turn $583 into a million, you know, in two years or whatever, why can't you turn 50,000 into 100 million or 500,000 into a billion or something like that? And it's because there is a limit to scalability in the market you cannot day trade with.

you know, 500 million shares every single day getting in and out. It's just it's just not possible and that's what you would have to do to be able to have that exponential growth in. in terms of the return on the $500 account that I had to have that with like a $500,000 account. It's just not possible.

But what I am really good at is producing profits relatively quickly with small accounts and that's base hit Bas hit base hit base hit. And I said the right thing to do is to take the money out of that short-term account and push it away to the long-term account. And that's why doing it in a retirement account a Roth IRA is so smart because if you just do standard contributions to a Roth even if you maxed it out at 6,000 a year over 10 years, you would contribute $60,000 $60,000 in 10 years. Okay, that's good and in 10 years, you would already be growing from the initial deposits you know, compound interest.

So maybe you'd be up to like 880,000 or 90 something like that so it would be growing. But that's 10 years of contributions. I did three years of contributions 6,000 once, twice, three times from there I started day trading in that account and obviously for the first like month I could only day trade three times a week because it was below 25k. but I just kept trading in it and I grew it to over a million dollars.

and then I kept trading and kept trading and then we had GameStop and we had all these big movers and I made $5 million in it and I just kept trading and I'm still trading in it. So you know it's one of these things where I was able to really turbocharge my retirement and all of those gains are tax free. you know I don't know anywhere else where you would be able to do that except for actively trading the market market. So for me, I right now have about $100,000 in my day trading account and then the rest of that profit.

I Put aside into my long-term account and look, there are going to be some years where that long-term account goes down because the market goes down and that's what happened in 2022 or 20. Yeah, 2022. And then they'll be some years where the market goes up and that account goes up. And I said eventually.

If you pay your dues at the beginning of your career, you know your first three years, your first four years, your first 5 years, and you take the excess profit that you have that you don't need to for cost of living to live on and you put it away until long-term retirement. You put it away. You put it away, put it away. You will get to a point where you're making more each month and each year on compound interest and on growth on that big account than you could possibly make day trading.

So you know for real though, let's think about this that $5 million that 6 million that I have in the Roth IRA So the rest of the 10 was in a taxable account. So I paid some tax on that. But the Roth IRA is like $6 million. All right.

So now that account just gets to grow and grow and grow and grow. So in 15 years it could be 12 million. In 30 years, it could be 25 million. In 40 years it could be, You know, 340 million.

That account could just keep growing and growing and growing. Tax-free Okay, compound interest is on your side if you start early. and this is a lesson that I learned. Certainly, you know from family a penny saved is a dollar earn, but from my neighbor.

Mr Reid Now I've told the story about Mr Reed a million times, but it doesn't hurt to say it to share it one more time. So Mr Reed Uh, let's see I'll find the article Brad Vermont Mr Reed grew up in Brad Vermont and oh, there's actually a um, that's interesting. There's a um, he has his own Wikipedia but we'll just we'll put this up here. Um, all right.

So after a life oh my. God So right. See no. I'm not gonna I'm not going to turn my ads on for you.

Um, I'll do I'll do Wikipedia It's not my favorite, but it's fine. All right. So uh, so there's Mr Reed So Mr Reed Born October 23rd, 1921 and passed away June 2nd 2014. he accumulated $8 million $8 million.

He gave it to the library and to the Memorial Hospital and he did that by investing in uh, dividend paying stocks and he started doing that at a very young age. He worked um, at uh, a gas station in Brador and then he was a janitor at JC Peny and so they call him uh, sometimes a janitor who made you know million but he had 90 years or whatever it is. Well, probably 70 years because he's probably started investing like in his 20s. So you know it's like 70 years of compound interest.

This guy never made big salary. He I don't think he probably ever made a six-figure salary. So how could someone who never made a six- figure salary make that much? He had the benefit of time, he invested in the market longterm, and he had the benefit of time compound interest and that's what it is. And so we have that opportunity as active.

Traders We really do. You know we can. We can trade every single day and when we have some excess profits, we can put it away and I really encourage you to do it because it's going to be saving that money for a rainy day. We will have slow months.

We will even have slow years and so the earlier you start putting that money away, you know the better off you'll be all right. So anyways, um, it's something I'm a big advocate of I teach you how to do it in in our classes because I think everyone should be doing it and there's a huge opportunity there for you. So anyways, today, um I felt confident saying no I'm not going to take any trades and hey you know what that money I made. um you know over the years that working hard today and um I'm sure if I logged in check the account it's going to be uh, in really good shape today now.

I don't log in and check it daily because I don't really want to. but um, but I'm sure you know there's a silver lining there. so I will be happy to come back on Monday morning. Hopefully we see a solid Gap scanner, but I'm going to be picky and I'm going to be picky in my small account too because being picky and focusing on a quality set sets is the right way to grow a small account.

And then once the account gets big, you can get a little sloppy and trade a little bit of everything. but in the cold Market you'll get punished for doing that so you know when it's hot, I'll start trading a little bit more of everything. that's moving because things are going to be more forgiving. but when it's cold, this is the time that teachers discipline and look I made a mistake this week I had a good day on Tuesday and then I gave it all back on Wednesday on those trades on Dwac.

So I'm finishing the week down 2500 bucks 2500 right? I was up 3500 and then I was down 6,000 so down 2500 on the week. All right, it's a red week I'm not happy about it, but I'm not going to spiral I'm not going to let it get worse I'm just going to sit here and now wait for an A quality setup. So nothing today was worthy of me. You know, taking on the risk and taking a trade.

so no trades today. but I'll be back at it first thing on Monday morning. and I hope you guys if you haven't already already checked out episode three of My Small Count Challenge. Check that out and I'll see you guys back here bright and early on.

Monday Enjoy the weekend.