🧵The Right Way to Build a Small Account
"Full-porting" and "YOLOing" might look cool on FinTwit, but thats simply not a viable long term strategy. You must be methodical in order to build your small account. Here's how it can be done:
"Full-porting" and "YOLOing" might look cool on FinTwit, but thats simply not a viable long term strategy. You must be methodical in order to build your small account. Here's how it can be done:
1. Uniform position sizing
Determine your position sizing for certain scenarios and stick to it. Example: "My position size will be $100 when trading 0DTE, $500 with 3+ DTE etc."
Determine your position sizing for certain scenarios and stick to it. Example: "My position size will be $100 when trading 0DTE, $500 with 3+ DTE etc."
2. Define risk via $ amount, not by %
You should define a max loss amount before entering any trade. Do not base your max loss off of account %. Example: "On any given trade the max I will lose is $100". Now you can set your stop loss accordingly based on position size
You should define a max loss amount before entering any trade. Do not base your max loss off of account %. Example: "On any given trade the max I will lose is $100". Now you can set your stop loss accordingly based on position size
3. Only take a trade if you can buy 2 or more contracts
Trading only one contract can be difficult because you cannot scale out. Trade names with cheaper premiums such as: $AAPL $BAC $F $NIO $PFE $SPY $QQQ
Trading only one contract can be difficult because you cannot scale out. Trade names with cheaper premiums such as: $AAPL $BAC $F $NIO $PFE $SPY $QQQ
4. Learn to scale out
Piggybacking off of #3, you must learn to scale out as you see profit. When trading with a small account it is easy to fall into the trap of "if this goes 100% I will 2x my account". This is only creating terrible habits for the future.
Piggybacking off of #3, you must learn to scale out as you see profit. When trading with a small account it is easy to fall into the trap of "if this goes 100% I will 2x my account". This is only creating terrible habits for the future.
5. Define a "worst case scenario" daily max loss
It happens to even the best traders, but can be more frequent if you are new to trading. On a day where everything is going wrong you MUST have a max daily loss. This will keep you from blowing up your account.
It happens to even the best traders, but can be more frequent if you are new to trading. On a day where everything is going wrong you MUST have a max daily loss. This will keep you from blowing up your account.
6. Take 3 trades max, win 2 of them
Do not focus on the amount of $ you are making. Focus on WINNING. Try to win 2 trades a day & do not take more than 3 total. If you can win 67% of the time you account will grower quicker than you think.
Do not focus on the amount of $ you are making. Focus on WINNING. Try to win 2 trades a day & do not take more than 3 total. If you can win 67% of the time you account will grower quicker than you think.
7. Do NOT size up
New traders will size up as their account grows, which often results in big losses wiping out hard earned gains. Sizing up is a privilege. If you are winning keep the same sizing. It is working for a reason.
New traders will size up as their account grows, which often results in big losses wiping out hard earned gains. Sizing up is a privilege. If you are winning keep the same sizing. It is working for a reason.
8. Your trading should be boring
If you are ripping earnings lottos and chasing the hot stock of the day, you are going to blow up your account. Create a system, and do the same thing every. single. day.. Treat your trading like a business.
If you are ripping earnings lottos and chasing the hot stock of the day, you are going to blow up your account. Create a system, and do the same thing every. single. day.. Treat your trading like a business.
9. Focus on the long game
You have to ask yourself how serious you are about your trading. During your early stages it is important to focus on perfecting your craft vs trying to make money. Your PnL today or tomorrow doesn't matter. Focus on building a system!
You have to ask yourself how serious you are about your trading. During your early stages it is important to focus on perfecting your craft vs trying to make money. Your PnL today or tomorrow doesn't matter. Focus on building a system!
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