Warrior Trading Blog

Day 3 of the Small Account Challenge | Ep. #3

Day 3 of the Small Account Challenge | Ep. #3

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On Day 3 of the Small Account Challenge I locked up another $150 or 16% account growth and I’m crossing over $1k in total equity.  I’m nearing 100% growth in 3 days as I started the week with $583.15.  Tomorrow I’ll open right around $1,050, which exceeds my target of $1k equity by the end of the week.  My focus right now is all about taking the highest probability trades.  I really can’t afford to lose, so even if I only trade once a day, it’s better to have a winner than a loser.

 

The pressure is real!  In yesterday’s podcast and video recap I talked about my dream of blowing up the account.  It’s a scary thought that I have every time I sit own in the morning to trade this tiny account.  I know how quickly I can lose $500.  In fact today in my regular account I took a $450 loss.  When I took that loss I realized it wasn’t a big deal, and I actually would have been more upset about a $45 loss in my Suretrader account than the $450 loss in my regular account.  But what I know about trading is that losses are inevitable.  I will have a loss in this account at some point.  The key will be to cut the loss quickly and not hold onto it.  I may get slippage, and that may make any loss a little bit bigger.  Right now I’m setting max loss at -$100.  I can’t drop down more than $100 on any trade.

Leverage Increases Gains, AND Losses

For every dollar I max, my buying power increased by 6 dollars.  This is the joy of trading an account with 6x leverage.  So for every $100 I make, I’m adding $600 in buying power.  On Tuesday I started with just over $3k in buying power, meaning on a $6 stock I could only take 500 shares.  Tomorrow by buying power will be over $6000, which means I can start taking 1000 and 2000 share positions.  Of course with those larger positions comes the risk that if I lose 20 cents with 2k shares, I’ll drop right back to where I started on Tuesday.  I can’t afford a $400 loss right now.  It would literally send me back to square one and take back all the hard work from this week.

D for Discipline

That means I need to be extremely disciplined.  As much as I want to take 2k shares and rip a quick 20 cent winner +$400, if I can’t handle the risk, I can’t take the trade.  Tomorrow and for most of next week I need to focus on small winners, $50-150 winners vs tight stops and max loss of -50 or -100.  Once I can build up my account to even $2-3k, I’ll have 12k-18k buying power and I’ll be positioned to be more aggressive and not get setback as much with a 200-300 loss.  My time will come when I can be aggressive!  Right now I need to trade smart.  That’s my plan 🙂