How to Grow a Small Account Successfully

2020-09-22 | Jack Roberts

In 2020, I accomplished my goal of growing an $8K account into roughly $60K from July to September. Since then, I needed another challenge, so I started a project of growing a $500 account. I started on December 28th of 2021 and by mid February of 2022, it grew to $11K. But the race is never done, so, my new goal by the end of 2022, is to grow my account to $100K. I want to show you what it takes to meet such a goal, and the discipline required to be successful because it’s no easy task. Trading can, and will be, tense.

Small Wins for Successful Growth

To achieve success, one of my favorite things to do is compliment my options trading with profits from trading Micro E-mini’s. It’s nice to have consistent wins that, overall, have obvious net positive influence on your P/L by the end of the week (see a recent $1K day trading /MNQ on 1/25/22 below).

But let’s not lose sight of how to get a small account to $100K… let me recount my efforts in the past year and a half to shed light on what’s possible versus what’s realistic in the current market environment.

It was the week of September 17th, 2020 and the elephant in the room was the rotation out of tech and the Nasdaq puking us into Triple-Witch Expiry. Now everyone shouts “yay” sarcastically, and let’s admit it – that was the vibe. However, I had a relatively successful week, even though I endured losses that reminded me of my old days of trading. It was a little bit of crossing the fingers and hoping that due to the volatility, maybe AMZN would trek back up and my butterfly I’d put on earlier that week wouldn’t be worthless later on. Well, that didn’t quite work back then and I stomached the full loss. 

Fast forward, now it’s February 2022, and all you see deep into Twitter’s horizon is “record put selling followed by a tiny flare of inflation fear” rinse and repeat. One thing has remained the same, volatility is here, and it’s here to stay even whilst on our way to a new phase of market personality. It’s time to shift from directional options strategies to  “take the money and run mode”, it’s either that or you’re light on your feet ready to take small pounces. I take my small pounces with Micro-futures and the good news is, like I said in September, volatility’s here to stay.

So since we know that volatility’s here to stay… Let’s talk about what it takes to grow a small account (and see if you’re up for the job).  

The Psychology of Growing a Small Account

2020 had volatility, giant swings in the Nasdaq, the dollar was “trying” to break out, and the market internals were sloppy half the time.

2021 is what happens when another major institution steps in. It’s called the Fed, and it was the year of record call buying, high short-interest, and meme stocks. It seems there’s some residual strength, but are we going to neglect the fact that tech and the general market, as cyclical as it is – will cool off. Will cooling off just mean a new set of prices across the general market? 

So far 2022, as mentioned above, has shown us that volatility’s going nowhere and we need to adapt how we face the market.

But let’s stop focusing on the negative, and pivot toward the positive. My small account is up in a major way and I intend to grow it to $100K by the end of the year. I also want this to be my first 7-figure account by 2025. I consider this a realistic goal for how I trade. 

Frankly, the better I trade, the higher the P/L. It’s a common mode that I enter once I start trading a 6-figure account. I naturally become more careful and actually tend to focus and really shine. That being said, I know a bunch of successful traders that are quite the opposite, and tend to struggle as accounts grow larger. I like to think I’ve had my teeth kicked in one too many times in my 20’s to start allowing bad habits to creep in again. However, here are the lessons I learned through that good teeth kicking.

Trading Lesson #1

Trading’s a journey to the inner-self. 

Trading is an art, it’s an art in humility and life lessons, and even more directly to the core, it’s a game against yourself, a game I like to call – discipline. An easy guide for finding out what this means very simply, you just ask yourself  “what’s working and what’s NOT working.” Again, the level of accountability to yourself is the difference between “are you taking profits at 50% profitability” versus “it should just keep going, the money is secure.” Hey Jack I gotta tell you something, as a micro-futures trader for someone that grows small accounts, I sure do appreciate the gift of volatility bestowed upon ye gentle feet!  Every trader has to realize that it’s your job to manage losers. 

Just because the beginning of the week starts off solid as can be, the market’s still there trying to rip it from you once you start slipping on your “morals”, or in this case – not trading your plan. If a trade you’re in is too good to be true, in this market – it most likely is. 

Back in 2020, my beginning trades really helped me out as they were Butterflies on NFLX, and of course scalping micro-futures was a successful venture. I then continued momentum plays by buying delta 70 calls on high volume options on high beta stocks. I mainly stuck with ZM, TSLA, NVDA, DKNG, FSLY, WKHS. The account was up to $30K and I was focused, but relaxed. I then continued to carry on and just managed small losers and took profits early on really nice bullish trades.

This year on January 18th, I had a $1,300 day trading micros on the /MNQ. Opening morning extended hours created a dip that was very easy to anticipate and that I’d planned on buying due to previous day strength. The market opened and this was an out-the-gate morning trade with a strong reversal that was getting bought on every dip. We didn’t have 10X bars that were green, but in this scenario it’s not really necessary as it makes sense for them not to print within smaller time frame squeezes. That was the most important part, it was a weak bearish overnight move and the bulls pounded hard, we were there to take advantage of the squeeze. 

Trading Lesson #2

Euphoria takes you from reality if you let it. 

One of the main reasons why I like growing small accounts is because it essentially is like taking your discipline muscle to the gym. A reminder of strict discipline needed to trade successfully. There are a lot of external factors when growing a small account, things like the day-trading pattern rule and lower buying power. Things like this always tend to be pet peeves, but if you can get past it then all the better. I realized every time I grow a small account, that position size and admitting loss are still the most important things to consider. So, as I continue to grow the account I change nothing. 

My Method to Growing a Small Account

The question is, what exactly is working? Well, I’ll tell you what works for me. I have three key setups. Buying delta 70 calls in lower timeframe bullish squeezes (ranging from a 15 min to an hourly) for an intraday momentum play. This usually takes place the day of or second day after the 8 SMA crosses through the 21 SMA. Even better, if we open up with above average volume. For example, like how I played MCD on September 16th, 2020 for some nice and quick $2k gains.

My next setup is bullish put credit spreads, mixed with calls in TSLA, to catch short covering rallies. This can be a swing trade or an intraday momentum play, you might know this guy named John Carter that might be familiar with this. 

Lastly, the micro-futures trades I use in order to supplement my account and compliment my options trading, here’s a bit more about micros.

Trading Micro E-mini’s helps me:

  1. Pay for small losses.
  2. Compliment gains.
  3. Have more exposure in a volatile market which allows me to take a lot of smaller profits and to my surprise sometimes larger ones (even on only 2 or 3 /MNQ contracts as seen earlier on that $1K+ day).

This is definitely a market where sometimes “things aren’t as they seem.’ Just watch your position size and know that while it’s fantastic to have quick gains, sticking to the appropriate position size and only trading your setups is crucial. You, too, can trade successfully just like me by doing that. 

Growing Pains in the Market

No doubt these are trying times but just know that volatility is a great thing as an Options trader and that there’s constant opportunity. I always say, be grateful for what the market gives you and move on.

I’ll end with this: one of my favorite things that John Carter has taught me over the years has been if it’s not going your way, “trim it off, you’re probably wrong” and “your job as a trader is actually to be a professional loser.” This is paramount to mitigating risk and it’s definitely a hard one to swallow if you’re new or even just struggling. 

So I say, a small loser is still a winning trade. The more you experience this, the more you grow to understand that the market’s filled with paradox, irrationality, and your ego will prompt you to react in negative circumstances because it’s survival. Usually a life-lesson from the trading world presents itself to add salt to the wound. Just think, if you have discipline and setups that you stick to, trading can actually be super fun and easy – and it should be this way. The takeaway from all this? Again, like John Carter says, “making money in the markets is easy, holding onto it is the difficult part.” We’ll see you in the next update, happy trading.

Growing a small account can be very stressful. However, you don’t have to do it alone, here at Simpler Trading we offer guidance and mentorship in our Simpler Day Trading Room. Where expert traders like Jack Roberts, offers their knowledge and guide you every step of the way. Sign up today and be a part of the team, only at Simplertrading.com.

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