Trading Was HARD Until I Learned This… 💥 Small Account Challenge Days 10-15
Published: 2024-10-19
Status:
Available
|
Analyzed
Published: 2024-10-19
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker will outline their recommended day trading strategy for growing small accounts, which they are currently using in a live challenge.
"I'm going to share with you the trading strategy that I think is optimal for growing a small account and this is the strategy that I'm currently implementing in this Thinker Swim small account Challenge."
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The speaker aims to increase their current small trading account balance to $25,000, which is the threshold to bypass the Pattern Day Trader (PDT) rule.
"My goal has been to grow this account to $25,000 as quickly as I can because I know once I'm over $25,000 I'm above the PDT Rule and from there it's smooth sailing."
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The Pattern Day Trader (PDT) rule is perceived by the speaker as an obstacle that significantly hinders the growth of small trading accounts, making it harder to reach the $25,000 threshold.
"so it makes it even more difficult to get to $25,000 it doesn't feel fair"
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Before May 31, 2024, traders circumvented the PDT rule by using international brokers, which did not enforce this regulation. This practice continues to be true.
"prior to May 31st 2024 the way we got around the PDT rule was by using international Brokers so International broker dealers do not enforce the PDT Rule and this is true even today"
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International brokers offer 6x leverage, enabling traders with a $5,000 account to have $30,000 in buying power.
"number two they offer six times leverage not four times but six times so that means if you fund an account with $5,000 times six you've got $30,000 in buying power"
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In January 2017, the speaker generated $116,000 in profit from a small account challenge.
"I locked up $116,000 right there in the first month and that was January of 2017"
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By the end of 2017, the speaker's trading account, which started with less than $600, had generated $335,000 in profit.
"by the end of the year I was at $335,000 in profit from the account that started with less than $600"
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The implementation of T+1 settlement allows traders to reuse their full buying power the next day after a trade, as funds settle overnight, which is a significant change.
"what that means is you could trade all of your money today tomorrow your buying power is reset it's back to the profit and loss of today plus whatever you had from the day before so your buying power resets overnight that is a really big deal"
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The speaker proposes a three-tiered account system: a cash account (standard settlement), a settlement-only margin account (no T+1 delays), and a full margin account with leverage and shorting capabilities for experienced traders.
"I think there should be actually three types of accounts I think the first account should be a cash account... and then I think we should have a margin account which is settlement only... and then then you have margin plus leverage and shorting"
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For beginner traders, focusing on quality trades in a cash account is recommended, as it forces discipline. While the speaker achieves high accuracy with quality trades due to experience, beginners will likely have lower accuracy as they develop their intuition.
"for most beginner Traders the right approach is to start by focusing on quality because while I'm right 85 to8 9% of the time focusing on a quality my ability to judge what is a quality is going to be different from yours because I have years of educated intuition right so that puts me up here"
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The speaker advocates for beginners to prioritize the quality of their trades over the quantity, suggesting that a cash account naturally enforces this discipline, leading to slower but potentially more sustainable progress.
"for most beginner Traders the right approach is to start by focusing on quality... this is going to force discipline of quality over quantity"
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The first step in the speaker's small account strategy is to identify the strongest stocks of the day, focusing on momentum trading by buying stocks that are already moving upwards.
"step one is trying to find the strongest stock each day for my strategy now as a a Trader who's focusing on trading momentum I'm looking to buy things that are moving up so I buy high and sell higher"
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Momentum trading involves identifying an established trend and entering trades at low-risk points to capitalize on the next upward price movement.
"we trade with the Trend we look for an established Trend and we want to buy at lowrisk entry points and ride the next leg higher"
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The speaker shares their opinion on what constitutes the best type of stocks for day trading.
"these are in my opinion my humble opinion the best stocks for day trading"
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A key characteristic of demand for day trading is high relative volume, specifically at least five times the average daily volume.
"number one for demand is high relative volume... a stock has to be trading on at least five times higher volume today than is average for that stock"
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For a stock to be considered a strong candidate for day trading, there must be a significant news event or catalyst, such as earnings reports or FDA announcements, driving its upward movement.
"there should be a news event that's moving the stock higher it could be quarterly earnings it could be FDA announcements in the case of a biotech or pharmaceutical company but there should be some type of catalyst pushing the stock higher"
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Day traders typically favor stocks priced between $1 and $20 because this range allows small accounts to purchase a larger number of shares.
"most day Traders prefer stocks between $1 and $20 because with a small account you can afford to buy more shares"
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A desirable characteristic for day trading stocks is a float (number of shares available for trading) of less than 10 million.
"the number of shares available to trade should be less than 10 million this is the float"
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After identifying a stock's catalyst through fundamental analysis (reading news headlines), the speaker proceeds to technical analysis.
"I'm analyzing the actual true reason this stock is moving higher from that point forward I do my technical analysis"
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The speaker recommends that traders undertake a 'one trade per day' challenge to prove consistency with a minimal number of trades before attempting to scale up their trading activity.
"I always encourage students to do the one day one trade per day challenge before scaling up prove that you can be consistent with just one maybe two trades a day"
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The speaker believes that for beginner traders, cash accounts are currently the best option due to T+1 settlement, emphasizing risk management and a slow, steady approach.
"for any beginner Trader so I hope you found this episode super helpful if you did I hope you hit the thumbs up I hope you subscribe to the channel and as always I'll remind you trading is risky so manage your risk take it slow"
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