Small Account Challenge Recap

Warrior Trading

What’s up everyone, it’s Ross Cameron here, and today I want to talk more about the progress with my small account challenge. As you may know, I recently funded a small account with $600 to see how fast I could grow the account, and in just twenty days, I’ve managed to lock in an astonishing $16,000 profit from an initial modest deposit of $600. Achieving such a feat is, without doubt, beyond the ordinary, especially when considering the unique challenges that come with managing a smaller account. I’d like to stress that my background, with over a decade of day trading experience, played a significant role in this achievement. However, the real gold lies in the process, strategy, and discipline, aspects that we’ll explore meticulously. Today, I want to talk more about the strategies I use for my small account challenge. Let’s dive in!

The Significance of a Solid Strategy in Small Account Trading

Day trading, especially with a small account, isn’t a walk in the park. The initial stages are typically the hardest. Despite this, understanding and implementing a solid trading strategy can significantly tilt the odds in your favor. In my case, momentum trading was the strategy of choice, primarily due to its straightforwardness and proven effectiveness. Unlike the counter trend and range bound strategies which come with their own set of complexities and requirements, momentum trading’s appeal is in its simplicity—buying on the upswing and selling even higher.

But why momentum trading, you might ask? Simply put, it aligns perfectly with the dynamic nature of day trading, allowing traders to capitalize on stocks with upward movement potential. This strategy requires a keen eye on stock selection, an aspect we’ll dive into next.

Choosing the Right Battles: Stock Selection Criteria

Selecting the right stocks is paramount in momentum trading. To get this right, I follow a set of strict criteria:

Stocks must be up at least 10%: This indicates that the stock has already garnered some momentum.
High relative volume is non-negotiable: Volume acts as a fuel that propels stocks further.
News catalysts can significantly impact stock prices: Hence, keeping an eye out for stocks with recent news can provide an edge.
Prefer stocks under $20: They offer the best risk-reward ratio for small account trading.

Moreover, focusing on “obvious” stocks—those that are making substantial moves and grabbing traders’ attention—enhances the likelihood of a successful trade due to better liquidity and pattern recognition by a larger pool of traders.

Mastering Risk Management in Small Account Trading

Risk management isn’t just a part of the game; it is the game. For small account day trading, the “breakout or bailout” philosophy worked wonders for me. This approach underpins the importance of making calculated moves and knowing when to exit, minimizing potential losses. Additionally, leveraging buying power responsibly can significantly impact your trading outcomes, providing a pathway to scale your trades in alignment with your account’s growth.

Unlocking Patterns: The Essence of Chart Analysis

Successful day trading isn’t just about picking the right stocks; it’s also about knowing when to enter and exit trades. This is where analyzing daily and intraday charts comes into play. Identifying potential resistance levels on the daily chart offers a bird’s-eye view of what to expect. Intraday charts, particularly the 10-second and one-minute charts, are indispensable for pinpointing precise entry and exit points, ensuring trades are executed with precision.

The Roller Coaster of Trading Psychology

Interestingly, the psychological aspect of day trading, especially with a small account, often goes under-discussed. The pressure to perform, coupled with the emotional roller coaster of wins and losses, can test even seasoned traders. Recognizing and managing these emotions is crucial. Books like “Trade Mindfully” by Gary Dayton and “Thinking in Bets” by Annie Duke offered profound insights into navigating the psychological terrain of trading, emphasizing mindfulness and discipline as key components for success.

Tracking, Learning, and Growing

One of the most enlightening parts of this journey was tracking my progress. The gradual increment in profits, alongside maintaining an accuracy rate of over 80%, not only bolstered confidence but also reinforced the efficacy of my chosen strategy. More fascinating was witnessing how consistency in executing well-planned trades was able to lead to significant account growth for me.

Final Thoughts

Reflecting on the first month of trading with a small account, the astounding growth was a product of not just experience but a disciplined adherence to a well-thought-out strategy. Emphasizing stock selection, risk management, and psychological resilience paved the way for this success. For aspiring traders or those navigating the waters of day trading, remember, the journey to trading success is incremental. Focusing on developing a solid trading strategy and disciplined approach can significantly elevate your trading game. Thanks for reading, and happy trading!

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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross.