Transcription
Most trading advice will kind of give you an idea of what to do with $10,000, $20,000, $25,000 plus dollars. But nobody really talks about the right way to trade when you only have $1,000 to trade with. And the reason why I'm telling you this is because I was no different than you. I had $1,000 when I first started and I didn't have a ton of money, no cash injections, nothing to really build up my account other than the $1,000 [music] that I had. And I'm going to explain to you today's video exactly how you can build up your account with just $1,000. Everything that I would do if I was starting up again with $1,000. [music]
See, now most people with small accounts try to chase literally everything they see on social media. Hot tip, you know, guru alerts and things like that. But that's actually the worst way to get started because you're just going to be wasting years, potentially months of your life just doing random things that don't work. This is why I'm going to show you exactly how to be able to grow this steadily, but also do this consistently over a long period of time and eventually get to the point where you have hundreds of thousands of dollars [music] to trade with.
Your starting capital needs to be the amount of money you're willing to lose to learn this game. For some people, that amount might be $1,000. For others, it might be $5,000 plus. And for others, it might be $300. So, everybody is different when it comes to their starting capital. [music] So, only put in what you can afford to lose.
First, let's get your foundation set up right. Most people skip this and wonder why they lose out on money. So, the first thing you need to do is you need to sign up to a reputable broker. I like to use weeble.com because that allows me to put really good orders in. The fills are great on Weeble. You have conditional orders for options and the trading interface is super simple to use. For charts and screening, I use tradingview.com. Sign up at tradingview.com. It's literally free to start. It works perfectly fine on the free version. Once you need the premium version, you can get to that as well, but it's not necessary. You can look at charts, you can screen, you can look at options even on tradingview.com, and it works perfectly to be able to identify the chart patterns and setups that you need to be able to make money in the markets.
For trade tracking, you're going to want to use Tradezella. Now, this is something a lot of beginners skip out on, and this is one of the most important things, journaling and tracking your trades, so you could see why some things are working well and why others are not working. Go to tradzella.com and set up a trading journal. This costs anywhere between $25 to $50 a month. But here's why it's worth every single penny. It shows you which setups make money. With limited capital, you can't just throw money into the markets and be able to actually have a lot of other money to be able to use. This is called opportunity cost. You have a limited amount of money. So, if you tie up some capital in one position, you can't just put the rest of the portfolio in another position because then you're overrisking. So, this tells you exactly which trades will work and exactly which trades are not going to work and what your mistakes are for those trades that you're taking. It also tracks your psychology. When you lose $50 on a $1,000 account, that's 5% of your total account gone. The journal tracks exactly how you felt before every single trade. and it will basically be able to tell you why you're making the mistakes that you're making and how to get out of these kind of slumps or these mistakes that you're making and build good habits. And the most important thing is it actually calculates your real performance. It tells you what your average win loss is. It tells you what your risk-to-reward is. It tells you what your average loser and your average winner is. And it gives you all the statistics basically broken down so you know exactly what you should be improving. Should you need a higher win rate to be making money in stocks or do you need to make a higher average winner and cut your losers quickly? It tells you exactly what you need to do to make sure you actually become profitable. Most people think they're doing better than they actually are. And using Tradezella and a journaling platform will be able to help you actually understand how good you are doing and how you can make your trading better. Your monthly tool cost is about $29 and now you're left with $970 to trade.
Step number two, you must have the right strategy and focus on only one thing. Too many beginners and small accounts will focus on a ton of different strategies, a ton of different indicators, and will chase that one shiny object that they think is going to make them millions of dollars. But the truth is, consistency and hard work is the only shiny object when it comes to trading. And being able to focus on only one strategy and one system is what's going to separate you from the rest.
Now, I'm going to give you one simple, repeatable, and scalable plan that will actually work, and this is trading momentum, midcaps, and growth stocks in the market using options. Here's why this actually works best when you have limited capital. Midcaps and growth stocks have predictable patterns, but they're not too expensive like mega caps to be able to trade with options, as well as they're also liquid enough to trade rather than small caps, which have very low liquidity. And if you buy one of those, you can get pump and dumped. These also have much less manipulation and a lot of these stocks are within themes and sectors that are moving the markets higher, which can make you an absolutely insane return if you're in the right theme like artificial intelligence. over the last few months. These also have very steady volume. So, they're going to be trading on more than a million dollar in volume per day, which is going to mean you're not going to have a random lapse of no liquidity, and you're going to be able to track this the way the stock moves very smoothly.
Now, here's my specific criteria for the stock and the setup. So, the market cap must be over $300 million. We don't want to trade too small of a market cap. The average price of the stock must be over $3 because these have the most liquid options contracts. The volume of the stock must be over a million dollar in volume traded every single day. The stock should also already be in an uptrend if you're going to be playing the long side and it should be in a downtrend if you're going to be playing the short side. And the stock must be in a big daily base and setting up over the last few weeks. It can't be an overextended stock that you're chasing from a guru, a hot tip, or anything that you see on social media. This will give you maybe three to five stocks that are setting up super super tightly that you'll be able to trade. These are called the fat pitches. This is where you're going to make a ton of money in the markets. [music]
See, most small accounts will literally buy anything. Their money will wither away because they're not buying the best setups within the market and then they'll wonder why they can't make any returns. As a small account, you must be super picky. You must wait for the big pitches in the market. This is when stocks get super super tight. There's big consolidation, there's big bases, and then they explode out of those bases. You can buy right when the stock breaks out, set a super tight stop at the low of day, and your risk-to-reward becomes absolutely insane. And if you can just catch a few of these a year with options, you can flip that $1,000 account into $10,000 plus within just a year doing it the right way versus trying to chase unrealistic returns every single day.
Step number three is going to be our entry system. Here's my exact system of when to buy a stock. You need all three signals, not just one, two, or three. And you'll be able to buy the stock when these all align. Signal one is going to be your technical setup. The stock must have a big daily base that is setting up for at least the last 2 weeks. So, there must be at least two weeks of consolidation. The stock needs to have accumulation volume patterns, meaning on the buy side, the volume is higher and on the sell side, the volume is lower. And the stock must have a key level that you can use for your stop-loss that is very close to your entry. I usually like to use low of day for my stop loss. This keeps my risk super super tight, so I'm only risking about 5 to 10% while potentially making 100%, 150%, 200% plus [music] if a trade ends up running.
Signal number two is going to be volume confirmation. So the volume must be at least over 50% the 10-day average as the stock is breaking through a key level. This is going to confirm that institutions are buying and this isn't somebody's uncle or aunt just getting into the stock and funds and whales and institutions are behind the big move. This is going to mean that you have continuation on these stocks and these are the ones that end up making these multi-day moves and multi-day runs.
Now, signal number three is going to be one of the most important things that a lot of traders overlook, and this is going to be our market environment. We need the markets to be uptrending if we're going to be looking to buy calls. We don't want the markets to be choppy while we're trading options or even shares, and we don't want to be buying calls when the market is downtrending. We always want to be playing with the trend of the market. So, what we're going to do is use the exponential moving averages to give us an idea of what the trend is. When stocks are above the 8/21 EMAs, exponential moving averages, you know the stocks are in a super strong uptrend and there's momentum within the market. When stocks are below the 8/21 EMAs, you know that the momentum of the market is a little bit lackluster and could potentially be turning to the downside for a downward trend. You always want to be trading within the trend of the market. You never want to buy calls when stocks [music] aren't in an uptrend.
Now, here's an example of all three signals. The stock open is trading at $8. It sets up in a massive base over the last month and it continues to fail to break over the $9 level. The moment the stock breaks $9 and you start seeing that volume is 50% higher than the 10-day average, you enter the stock and you make sure that the S&P is above the 8/21 EMAs and it's uptrending to the upside as you're entering the trade. Your stop loss goes to $8.80, which is the low of the day. And then you look to target big previous level of resistance, which in this example is $10 plus. This sets you up for a 5:1 risk-to-reward if the stock ends up following through. Meaning you could potentially get a 10% loss, but if you take a winner, you're going to make 50% on that trade. This is why it's so important to have a good risk-to-reward. And this is why it's so important for your stop-loss to be super super close to your entry so that you don't take a ton of risk for no reason. especially with a small account.
Step four is going to be our position sizing math. This is where most small accounts die. They risk too much per trade. They full port. They average down. They do things that they know they should not be doing. And today, we're going to be able to give the rules on how we should size and why we should be sizing the way we're sized. So, this is the 5% rule. Never risk more than 5% of your account per trade. With $970 left after all tools, our risk per trade is about $40 to $50 as our max risk. So, here's the exact calculation. Find your entry price and stop price on the option that you're going to trade. So, for example, you enter at $2 and your stop price is $1.70 at the low of day. From there, you want to calculate the risk per contract. So, if that's going to be a $2 entry at a $1.70 loss, that's going to be a $30 potential loss, which fits within our 5% rule. Now, this is how you find your risk and how you know if you're overrisisking per trade. You could take a $200 position, but as long as you make sure that your risk is not more than 5% of your total account per trade, now you have a good foundation for your sizing. You also want to make sure you never exceed more than 40% of your account on one single position.
Step five is going to be our exit strategy. Most people focus on their entries, but have no system at all when it comes to their exits. This is my system. First and most importantly, the stop loss is non-negotiable. The moment you get into the trade, you put your stop loss at the low of the day. If it hits, you're out of the trade and you're on to the next. Too many people hold on to their trades. They hope, they pray that something is going to end up working and they just end up taking absolutely massive losses and blowing their account. If I started managing my risk better personally when I first started trading at this point, I would be way ahead of where I am right now because I wouldn't have had massive draw downs and massive pullbacks within my uptrend of my personal account.
Now, for taking profits, I have the three-tier system. So, for this trimming strategy, you're going to sell one-third of the position at a 1.5 risk-to-reward, meaning your winner is going to be 50% bigger than your loser. From there, you're not going to sell the stock until it hits the next TP, which is going to be at at least a 4 risk-to-reward, meaning your winner is going to be 200% your potential loser. Now, from there, if you still have enough contracts to be able to use, you're going to sell the rest of the position only when the stock breaks the 8-day moving average and you're not going to sell it before that. Now, the most important thing is trying to buy enough contracts of the stock that you're looking to trade to be able to have at least two to three so that you can scale out and trim. If you don't have enough contracts to be able to scale out and trim, you want to be focusing on that first TP with a 1.5 risk-to-reward. If you can do this consistently with just a 50% win rate, you're still able to make money and build up your account. Once you build up your account, that is when you're going to focus on making sure that you're going to take more than one contract so that you can have two or three to be able to use the streaming strategy correctly. And this is where you can make a lot of progress in your trading.
Step six is going to be our daily routine. So, here's our exact schedule. So, Sunday 8:00 p.m. for 45 minutes, you're going to scan and make sure you're finding the best setups in the market. If you can't find any setups, it's usually a sign that the market is not ready to make a big move. So, you should probably avoid trading unless you have a trade plan. You're also going to be reviewing last week's closed trades on Tradezella, going over your mistakes, going over your winners, studying what went right and what went wrong, so that you can perfect your system and your craft. You also want to plan maximum about five setups for the week. You never want to go over five because you want to be laser-focused on your highest conviction and the best setups within the market. If the stock doesn't trigger, we're not going to trade it. But we're going to make sure we have the right plan. So, we want to know exactly where our entry is going to be, where our target is going to be, and where our stop loss is going to be to know exactly where we should be taking the trade and how we're going to manage it and what our risk-to-reward [music] looks like.
Monday to Friday at 9:00 a.m. for 15 minutes. You're going to get on before the market opens. Don't be that person that gets on at 9:30 and then expects to have amazing results right at the open because you're not preparing. You want to look at pre-market news. You want to make sure there wasn't any big news on the stocks that you're looking at. You want to see where the themes and the flows are for the morning of to know where the money is going to flow in the markets. And you want to make sure the market is not gapping up too big or gapping down too big. And where the stock that you're looking to trade is is in relation to where the open is.
During market hours, what you want to do is set price alerts instead of watching the market screens the whole day. If nothing triggers off the morning, you don't want to sit on your screens 24/7. Go hit the gym. Go become productive. Go study the markets, but don't sit there because that's going to just make you want to take a trade that you know you shouldn't be taking. And again, as a small account, the most important thing to do is build patience, discipline, and wait for the right setups, those fat pitches.
At 4:15 daily after the market close, you want for about 10 to 20 minutes to review everything that played out during the day. Put down any notes that you might have had, your psychology, what worked, what didn't work, how you felt during the trades that you took. From there, you want to just put everything in your trade zella and make sure everything is journaled down. And you also want to set your overnight alerts in case anything moves overnight or the morning after.
Now, these are your critical tracking metrics. You want to make sure you're averaging at least over a 40% win rate. Anything below that and it's going to be very hard to make money consistently in stocks. You want your average winner and your average loser to have a ratio of 2:1, meaning your average winner is twice as big as your average loser. You want your maximum daily loss to never exceed $50 because that's going to be your 5% risk rule. And you want to make sure you're tracking all your setups and seeing which setups work the best and which setups did not work.
Step seven is going to be the growth path. Here's what realistic growth looks like with the system. Month one to two, focus on the system. Expect to lose some money. Expect not to make a ton of money. The most important thing here is to focus on the system, learn the skill, and build good habits. This will carry you when you actually start to become profitable. And it will help you to make a ton of money later down the line. At this phase, it's all about the bigger picture. You always want to think big. You never want to think short-term. This is how a lot of traders get stuck.
Month three to four is going to be your consistency phase. This is when you start recognizing good setups versus bad setups, doing the things you know you should be doing, building the good habits. This is when you should target around a 5 to 10% return for the month. That's going to be about $50 to $100. But eventually later down the line, once you do the right trimming strategy, this is going to compound really well.
Month five to six is going to be our confidence phase. The patterns start to become second nature. You're consistently profitable. you're able to do the things that you know you should be doing. This is when you want to start aiming for about a 10 to 15% return in the markets every single month and doing that consistently to build up your account and get to a point where you almost double triple your account. And that's when we can really start to work on our trimming strategy to have massive winners.
Now, month seven is going to be our scaling phase. After 6 months of consistent profits, now you're ready to scale up. But you don't want to do this too quickly. You want to do this at a time. What I did was I put in $100 every single week for about 6 months. This gave me more capital to trim out on positions, meaning I was able to hold these positions longer and capture [music] some very big moves to be able to grow this account and compound.
The most important thing is don't try to get rich quick. If you try to get rich quick, you're just going to make mistakes. You're going to build bad habits. You're going to do things that you know you should not do, but deep down, you know, you continue to do them because you develop bad habits from trying to make money too soon. Focus on consistency. Consistency compounds. The moment you start making some good money, that is going to compound and compound and compound. It might not take a few months. It might take years or it might even take some people decades, but eventually once you get the skill down and the consistency kicks in, you're going to make more money than you even know what to do [music] with.
This is the psychology factor. So, let's be honest. What will actually happen when you start using the system? You'll have some early wins and you'll want to risk more per trade. Eventually, you're going to hit a slump and think the system doesn't work. You're going to chase another shiny object on social media that you see because you see someone else's results and you think your system is too slow and not reliable. These are all normal psychology traps. The most important thing is to understand that this is not get-rich-quick money. This is our educational money. This $1,000 is for education. We're not looking to flip this into a million dollars in a month. This is to learn and become better within our system. And this is what we have to focus on at first. Your trade zealot journal becomes the most important thing here because it shows you what the critical mistakes that you're making are. Are you getting too anxious when you're sizing up or do you have your biggest mistake when something specific happens? Tradezel is going to show you exactly when things are going wrong. Most successful traders take years to even become profitable. And the ones who did make it only made it because they focused on the process and not the profits. The psychology shift was literally everything for me.
So, here's your next steps. These are some homeworks to do for the week. Day one, you're going to set up your TradingView and your broker on Weeble. Day two is you're going to set up your Tradzella and you're going to create your tracking system and journal. Day three is you're going to run your first stock screener and then update your portfolio watch list. Day four to seven, you're going to paper trade. Get used to the system. Get used to the broker. Get comfortable with the things that you're doing before putting in real money into play. Don't use real money until you've successfully practiced this system with at least 20 trades, knowing exactly how to use it, where to put your stop loss, where your entries are, and all that good stuff.
Remember, this isn't about turning $1,000 into $100,000 in one year. This is about making sure that you follow a process and a system that can make you money over a prolonged period of time. The market will always be here tomorrow, but your money might not be if you don't actually respect it and if you don't treat trading like a business. Focus on the system, trade your planned setups, and the rest will take care of itself. This is called process over profits. And then the profits will come as you learn the skill.
But here's what I've learned after years of trading and teaching students on how to do the exact same thing. The difference between traders who make it and those who don't isn't just the strategy. It's having someone hold you accountable when you want to break your rules. It's getting real-time feedback when you're not sure about a setup and you start second-guessing yourself. It's learning from others' mistakes so you don't have to make the same mistakes yourself. That's why I created my inner circle. This is for a small group of traders that get direct access to me and my daily trades. We review setups together, share things while they're working in real time, and make sure that everybody is held accountable. If you're interested in taking your trading to the next level with direct mentorship, fill out the application down below, and we'll see if we're a right fit to work with each other. But honestly, start with this free system first. Prove to yourself you can follow the rules with $1,000 and be able to do that consistently. And don't forget to like and subscribe to my channel for more trading content that's going to make you consistently a profitable trader. And I'll see you in the next one.