People ask me all the time “How can I build from a small account?” In this post we’re going to discuss the FOUR main things you can do starting today!
1. Figure Out Your Goal
Trading is one way to generate money, but there’s a lot of ways to generate money so you need to gain some clarity behind why trading? First, ask yourself “What is my trading goal?” And then ask yourself and what your bigger goal is. Is this meant to be for a retirement account, something that’s meant to be longer term? Are you trying to generate income? What are you building this thing for? Because that goal is going to determine your methodology. How are you going to turn this $1,000 or this $3,000 into something much bigger? Write these answers down. I have a great tool called the Trader’s Thoughtbox with a list of questions you can fill out in order to help gain some perspective about your goals. It helped me and I know it will help you get started. Download it here: https://marawealth.com/thoughtbox/
Once you gain some clarity and figure out what you are doing this for, then you can figure out the best way to achieve that goal.
2. Model Success
So now that you’ve gained some clarity behind your goal, you need to figure out how to reach that goal. Let’s say that your goal is to generate income. Great. Now you want to find somebody that’s done what it is that you’re trying to do. You want to model their success. There’s a lot of people you can go to in order to model their success and figure out if this person is genuine. One of my favorite books to read is this book called Market Wizards by Jack Schwager. He interviewed at least 50 of the top traders in the world. They all have different styles and they found a way to be extraordinarily successful. If you’re able to think of your goal, there’s likely somebody in that book that’s already done what you’re trying to do.
That’s what I did. My initial goal was to compound my wealth and I also wanted to start to generate income based off of that. So I read Market Wizards and I found people that are doing something similar to what it is that I wanted to do. Next, I dove deeper into those peoples’ world. Through this research I found guys like William O’Neil, Mark Minervini, and David Ryan. I learned more about them and then started to model their success and apply it for myself.
Modeling success works. None of us need to reinvent the wheel, but we do need to learn how to drive the car. The best way to figure out how to do that is to find somebody that’s already done what it is that you’re trying to do and then model their success. Don’t try to be a carbon copy of them. You can’t do that. I’ve gone down that path. It doesn’t work, but you CAN learn from them. Try to apply it to yourself.
3. Be Patient in the Game
I have traders who come to me and expect that they are going to turn a $1,000 account into a million in the span of a year. You need patience. This is crucial if you want to make money with a small account. With patience you can learn your craft and then after you learn it and you’ve gained consistency, then you can start to bet bigger. By betting bigger, I don’t mean that you’re going to risk all of your capital on one trade. It’s learning how to leverage your account.
Here’s an example: If you’ve been following my newsletter or my previous post, you know that I just made 12000% in the span of six months in a small testing account I have in Robin Hood. I took this account that was almost nothing and was able to dig that account out of a very steep hole. How did I do that? Well, I put on a sizeable position on each trade that I was taking, but that doesn’t mean that entire portfolio was at risk. I only risked a very small percentage of that account on each trade. I think the most that I was risking at any one point in time, was 5%. Now that is extremely risky. I wouldn’t recommend anybody to start out risking 5%, unless you have a good amount of experience and know what the hell you’re doing.
4. Stay in the Game
There’s a very famous quote that says that in order to win, you need to have enough chips where you can bet, but if you lose all your chips, then you can’t bet. The main idea is that you’ve got to stay in the game. All you need is a chip and a chair, and that gives you the ability to be at the table and to be able to win. When it comes to trading, what you need to do is risk just 1% of your capital. At most, risk 1%. That means that you could have 100 trades and have 100 losses, and then you’re out of the game, right? Nobody’s going to allow themselves to have 100 losses in a row, but you get the idea. If you’re only risking 1% of capital, then you could stay in this game for a very long time.
Start These Steps Today!
Don’t wait! If you have a small account then you can start doing these four main things to start growing your account today. To recap, here are the four main things that you want to focus on
- Figure out your trading goal and your bigger goal.
- Model success of somebody that’s already achieved your goal.
- Have Patience.
- Stay in the Game
It’s going to take time. You’ll get there, but you’re not going to get there if you bet all of your account and you lose everything. Then you’re just knocked out of the game. I want you to stay in the game and by following these steps you can stay in for a long time.
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Best Selling Author – Trading Coach – Creator of the Trade Gauntlet – Founder of MaraWealth.com