Is Your Account Under 25k? Here Are Some Adjustments To Consider…

September 26, 2023

A lot of new traders simply just don’t have the bankroll to get over PDT right at the start of their career. There is nothing wrong with that if you know how to safely manage risk and grow your account with less than 25k in the bank.

Trading a small account vs. a larger account requires you to make some crucial adjustments. These adjustments are super important for the longevity of your career, and stable growth of your account. Not only do you have to make changes to your sizing and risk management, but you also will have to make subtle changes to your strategy.

Your goal trading a small account should not be to leap past 25k in one week, but it should be to aim for consistency every day.

$200/day… $300/day… $500/day… Etc.

Today, I wanted to break down my top 3 tips for growing a small account PROPERLY to help you leap past that 25k mark as soon as possible.

  1. Have Clear Expectations From The Start

It’s a marathon, not a sprint. Wrap your head around that. Start small, get your confidence backing you, and learn to grow your account day by day. Like I said before, don’t try to extremely jump up in size to reach your goals quickly. You don’t need to cross the PDT threshold tomorrow. You have time! Shoot for a very reasonable and simple profit goal every day, stay consistent, and size up slowly. I have some other blogs that talk about how you should be sizing up in trading, so make sure to incorporate those concepts.

  1. NEVER Break The 1:3 Risk-To-Reward Rule

Your risk reward profile on a small account is your life-blood. You will live and die by it. If you aren’t building the habit from the start of your career while you’re trading on a small account, you will never trade a larger account properly. Every single trade should have the potential to make 3x more than what you risk. That will always keep you on the right side of the growth of your equity curve.

Very simple concept, but it is hard to stick to it. You may want to bend the rules sometimes because a setup may ‘look good’ to you, but sticking to this 1:3 rule will always keep you on the right side of the trade.

  1. Focus On Stock Selection & Trade Less

Less is more in trading…

With a small account, you must be selective with the setups you take. You have a limited amount of money every day to deploy into the market and a limited amount of money you can risk, so taking A+ setups is the key. Make sure you are only taking high- probable setups that fit your risk-reward criteria perfectly. Don't get creative. Stick to what works. You can’t afford a string of losses or one large loss due to being careless on stock selection.

Your small account is your precious resource. Protecting it at all costs is crucial. So, if you are trying to protect your capital wisely, another thing that fits this stock selection category is picking stocks that trade much more stable.

Low float stocks have extremely erratic behavior on the long and short side. Look to avoid micro-float stocks when just starting out, be aware of their ranges, and slowly progress into trading more volatile stocks as your account grows.

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