Have you ever imagined making over $12 million dollars in trading profits during your lifetime…
Jack Kellogg didn’t, either…
Despite only starting with $10,000 when he joined my challenge, he focused on learning and studying every piece of trading wisdom I shared with him.
Now Jack has profited over $12 million and is sitting down with Business Insider to share what strategy he uses.
Many traders believe that making profits with a small account is almost impossible…
However, my strategy is specifically tailored to help traders who are starting with a small trading account!
If you think a small trading account puts you at a disadvantage, think again…
In fact, trading with a small account can give you huge advantages, and today I am going to show you why that is…
And what you can focus on to grow your account faster than you think!
Growing Your Account
If you still don’t believe starting small is beneficial, let’s break it down to show you the advantage that you truly have.
Let’s assume that you have a starting bank account with $1,000.
But maybe you don’t think penny stocks are worth investing in, but large-cap stocks are the way to go…
So let’s take a look at a very common stock, Apple Inc. (NASDAQ: AAPL).
At the time I am writing this, AAPL is currently trading at $152 a share.
Now, let’s say you decide to buy 1 share of Apple ($152 price x 1 share = $152)…
Which is essentially 15% of your trading portfolio.
In a span of a trading day, the stock may move let’s say 3% (this could fluctuate a little).
You are risking ($152 x 1 share) = $152 and yield a 3% return, leaving you with a profit of $4.56.
Not a whole lot of money, but made 3% on the day, not too bad in terms of a percentage gain.
Now let’s focus on a penny stock Global Developments, Inc. (OTC: GDVM)
I traded this stock yesterday and made 10.57% (Risked $3,831 to profit $405) (I typically look for a 5-10% bounce) with this strategy…
But let’s say you only risked 5% of your account on this trade instead of 15%.
$50 @ $0.0615 would give you 813 shares…
And with a 10.57% move on this trade, it would yield you a $5.28 profit – already surpassing the $4.56 profit you would’ve had with AAPL.
And you risked even less money than you did for your previous trade!
Penny stocks can be incredibly volatile, and that’s why they can be so lucrative….
They can have moves that large-cap stocks may never see!
Penny stocks have the ability to go Supernova…
Maybe some of you remember AMTD Digital Inc. (NASDAQ: HKD)…
If you don’t, go take a look at the chart!
Trading penny stocks are one of the best ways to grow a small trading account, especially if you catch a stock before they explode!
Taking these quick types of trades, with a lot less risk can yield greater results…
And over time, these quick gains could add up over time.
But no matter what type of stocks you trade in the market, it’s important for every trader to understand this…
Risk Management
I hate to say it, but every trader will experience losing trades…
It’s just part of the industry…
And if there is ever a trader telling you they never lose, they are LYING.
The biggest thing every trader should know is how to manage their losses when it happens.
But only focusing on managing your losses is only part of the battle…
It also boils down to how to calculate your risk on every trade.
Do you think those traders on Wall Street risk the majority of their portfolio on a single trade?
Of course not!
Do you think they stay in a position for a long period of time?
Heck no.
These traders understand the risks associated with trading, and that’s what I strive to teach every one of my students.
That’s why I came up with my #1 rule for a reason.
Traders who refuse to exit trades are bag holders. They lose so much on a trade, that they are stuck holding and hoping the stock will rebound just to get back to even…
This isn’t a strategy any trader should have.
Instead, it’s all about position sizing and knowing what you are risking.
Never risk a large chunk of your portfolio, these penny stocks have the ability to move quickly so even risking a small amount can yield a large return…
But if they move in the opposite direction and you are holding in hopes to get back to even…
You may be packing your bags early.
I don’t like to be involved in risky trades, or stocks that don’t have ideal setups…
Instead, I like to stick to a pattern I feel most comfortable with…
Morning Panics
Investing in large-cap stocks requires a lot of money, and if you don’t have tens of thousands worth of dollars to throw around on every trade…
That means the morning panic dip buy is perfect for you.
This strategy may not yield a large percentage gain like some other penny stocks could…
But it can build your account from a few hundred to a few thousand each time with consistency.
All you have to do is follow this framework, and wait for them to panic…
And most of these trades all start from a big percent gainer.
Every stock that fits my framework starts from basically nothing…
And sometimes you may happen to find a stock that is going Supernova based on breaking news…
But even then, those types of plays almost follow the steps of my framework every time.
Every time a stock spikes, all you need to do is wait for them to crash back down to earth…
And wait for them to panic before they bounce.
With anything, practice makes perfect…
That’s why I provide all of these different learning lessons and videos for my students.
Stop thinking you need a lot of money to be profitable or focus only on large-cap stocks…
There are several advantages to trading with a small account and making sure you fully understand my strategy.
I’ll see you all here tomorrow!
-Tim
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