Do you want to learn how to grow a small trading account the Good Kids Trading (GKT) way? Learning to trade options can feel intimidating. When you have limited capital it almost feels impossible! We created a Modest Money Mavericks discord channel to show how we would trade in a small account.
Today I'm covering the key points from my latest video, and encouraging you to get educated about how trading the GKT way can help you find some passive income and eventually find freedom from your W2.
I'm focusing on stock options, Chance is trading futures.
Most of my trading is in a larger account using portfolio margin, which gives me a lot of buying power. It's just a fact that the more money you have the 'easier' it is to make money. Don't be discouraged, I started out with a small account.
Modest Money Mavericks is not just a follow me type of challenge. I want to educate you on some of the key things I did to build my accounts. This is not financial advice, there are no guarantees, and best of all there is no charge in the information we're providing!
All my guidelines are scalable, meaning they work if you have $8000 or $800,000 in your trading account.
The Importance of Diversification:
Diversification is key because it minimizes risk. You want to spread your money across a few stocks to lessen the impact of one trade or sector. By trading different sectors you reduce your risk and if one trade is underperforming, another sector might be outperforming. With a small account, diversification is even more important for minimizing risk, boosting returns, and securing long-term success.
Strategies for Building a Small Account:
Trading a small account requires more careful planning. Understanding you want at least 3 positions means you need to pick stocks that do not use too much buying power.
The BEST strategy for growing a small account is regular cash injections! Consistently adding even small amounts of money can significantly grow your account over time.
Remember cash is a position. Keep some cash aside as a position to capitalize on buying opportunities. When everyone else is selling out of fear, you will have the dry powder to step in and grow your account!
Buy low and sell high. Use the charts and focus on buying stocks near support and sell at resistance levels. Use moving averages and support and resistance to decide when to buy and sell!
Understand what happens if the stock goes up, down or sideways BEFORE you enter a trade. Preserving your capital is your NUMBER 1 PRIORITY. You grow your account, by taking trades that have good risk to reward. Carefully managing risk and avoiding oversized risks is not the norm but this is key to become profitable consistently.
Regularly review and adjust your portfolio based on market changes to optimize growth, but setup alerts and have a plan in advance. Do not trade out of emotions, be mechanical and methodical in your decision. You do not have to buy at the bottom or sell at the very top.
Join us on our Modest Money Mavericks Discord channel to discuss trading strategies for small accounts further!
I hope you enjoyed this post and learned something new. If you did, please share it with your friends. And if you want to learn more about trading strategies and how to apply them in different market conditions, join our discord! Subscribe for our weekly newsletter. It's all free!
Happy Trading Good Kids!
Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!
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