Happy Thursday, traders. It’s Bryce here.
I hope you’ve been crushing it this week. There have been some crazy good breakouts.
I told you last week that penny stocks were running again. And by penny stocks, I meant the real deal — sub-dollar listed stocks. Electric Last Mile Solutions Inc. (NASDAQ: ELMS) and Acorda Therapeutics Inc. (NASDAQ: ACOR).
This week, the savvy folks at Breaking News Chat alerted users to a massive OTC penny stock breakout by Clubhouse Media Group Inc. (OTC: CMGR). It went on to gain well over 500% intraday before retracing its highs in the afternoon.
This is exciting. When opportunities arise, you want to make sure your game is in tip-top shape. Today, we’re going to talk about something that can get in the way of being at your best.
It’s something that most veteran traders know, but very few talk about…
How the Size of Your Trading Account Can Impact Your Trades
When you’re new to trading, the first thing you hear people talk about is the PDT (pattern day trader) rule. At least that was the case when I started trading.
It made me think that $25,000 was the magical number I needed to get to before I could become a full-time trader. It turns out the PDT only matters if you plan to trade on margin — that wasn’t my intention at all!
Learn the secret Tim used to turn a small investment into a fortune
I started out with a cash account of just about a couple of thousand dollars at first. And that’s all I needed. As long as I had settled funds, I could place a long trade. Simple enough.
For a while anyway…
Once you grow your account, you start to run into your inner blocks. What’s inside you gets reflected outside of you, and vice versa. That might sound a bit woo-woo but it’s true.
So imagine you’re used to trading with a small account, and then all of a sudden, it grows. You make bank on a few low float runners — maybe they’re even supernovas!
That’s when your inner self has to grow to match your outer reality. And that can be hard. For a lot of traders, once their account hits a certain number, it psyches them out. They start messing up…
At first, they might think it’s just a coincidence … but it happens again, and again, and again. If you keep getting stuck when you try to hit a certain number in your trading account, here’s what you can do.
Remember that everyone’s comfort zone is different
Matt and I talked about this before. There was a point when he withdrew the profits from his account, leaving $40,000 in his trading account. I discovered that I was comfortable with a $50,000 account in a hot market.
For you, it might be $5,000, $10,000, or $20,000. Wherever you’re at, accept it. And withdraw any profits you might make over your standard number at the end of each trading week.
Watch This BEFORE 9:30AM!
Have you seen what Tim Bohen has been up to EVERY morning between 9:29 and 9:30am?
Do NOT wait to see this.
Or, if you have an unusually big gain (if one trade makes more than you usually would in a week), withdraw the profits immediately. You don’t want to risk overtrading and giving back your hard-earned gains.
Accept that inner growth takes time
Like I said before, with the right play, your account can grow much faster than you intended it to in a short amount of time. But that doesn’t necessarily mean that your mind’s caught up to that level of success in a consistent way.
At the same time, you want to be able to scale up on your trades to get ahead. So what do you do? Keep testing the waters…
Let’s say your account is at $10,000, and you’ve been winning and withdrawing profits for six months … try scaling up your account size to $10,500 or $11,000 and see how that goes.
If you’re like me, you prefer to risk dollar amounts than percentages when you trade, so the account size isn’t necessarily the most important thing. If you’ve been risking $100 max on your trades, try upping the risk a little at a time for a few months at a time — while keeping the same account size.
For example, you can try $150 risk for three months, then $200. Or increase the risk by only $25 every three months to play it safer — go from $100 to $125 to $150 … you get the picture.
Day trading is truly an art form. You absolutely have to study the technical aspects of it to know what you’re doing, but once you do, there’s a whole other side to master that you can really only learn from trading in a community.
That’s what helped me get ahead. All of a sudden, I realized that the questions I had were in other traders’ minds too. And the mistakes I made were being made by other traders too.
And that wasn’t a bad thing. It was just a part of the process. Finding the right community of traders helped me escape the boom and bust cycle of overconfidence and despair. It helped me bounce back more quickly from losses and come up with creative solutions to come back stronger than before. I want you to find that level of support in our Small Cap Rockets community — hope to see you there!