On Friday, I talked about how to trade aggressive stock movers.
We’ve had a lot of them lately and I think we’re going to be seeing more and more of them than ever before.
By the way, I have to brag for a moment…I nailed one of the recent big movers, Bright Minds Biosciences Inc. (NASDAQ: DRUG), on my last Thursday’s Weekly Squeeze Report.
These stocks are very tempting to jump into impulsively, but you need to first know how to do it.
That’s why I wanted to stress that you can trade these things safely and still enjoy the thrill of the price action, but you must size down your position.
Read Friday’s blog post to learn more.
Along that same theme, today, I want to talk about day trading safely and successfully with a small account.
All of this advice is so that you trade smart…
If you trade smart, you can make it off the battlefield alive, come back tomorrow, trade again, grow your account, and then take advantage of even more opportunities later.
I’m going to walk you through the steps of day trading with a small account, specifically tackling the challenge of trading with just $100.
Know upfront that you’re not going to turn $100 into a million overnight. If you think you will, stop right now.
Trading isn’t a lottery ticket. It’s about consistent, small wins that build into something bigger over time.
Also remember that when you’re trading with a small account, especially one as small as $100, every mistake hurts. A $20 loss in a $100 account is a big deal, so you have to be extra careful.
It means you have to be highly selective about your trades. You’re looking for short-term profit opportunities while protecting your capital. You have to practice great risk management and time your entries and exits well.
Table of Contents
It’s About Quality, Not Quantity
To succeed, you need to focus on quality trades, not quantity.
One of the best ways to grow a small account is to focus on high-probability chart setups.
The beautiful thing about the stock market is that certain patterns tend to repeat themselves. And if you can learn to spot these patterns and trade them consistently, you’ll put yourself in a good position to succeed.
Start Small
With a $100 account, limit yourself to just two or three trades per week.
This is especially important if you’re using margin because you’ll find yourself bumping against . the Pattern Day Trader (PDT) rule.
Some traders get discouraged by the PDT rule, which only allows three trades in a rolling five-day period, but the fact is, most weeks, you won’t see more than three to five perfect setups anyway.
And PDT can actually be a good thing for traders with small accounts because it forces you to be selective.
If you’re not subject to the PDT rule, a general rule of thumb is to never risk more than 1-2% of your total account on a single trade. So if you’ve got $100, that means you’re risking $1-$2 per trade, tops.
And for everyone, don’t trade unless the setup meets all of your criteria. Use a screener to avoid chasing mediocre trades, and stay focused on the absolute best opportunities.
Practice with Paper Money
Next, practice with paper money. I actually recommend doing this with any new strategy, big account or small.
I know, you can’t spend paper profits but look at it this way — if you’re going to make mistakes, wouldn’t you rather do it with fake money than real cash?
Most trading platforms offer paper trading accounts, where you can simulate trades with no financial risk.
And keep it realistic—if you’re trading with $100, don’t pretend you’ve got a million in your paper account. Follow the same rules for stop losses and profit-taking as you would with your actual money.
If you’re looking for a great trading platform that includes all the things you need to start trading with a small account including a paper trading environment, technical indicators, stock screeners and more, I have the answer.
StocksToTrade is my top pick and the one I use every day.
It also has a selection of add-on alerts services, so you can stay ahead of the curve.
Grab your 14-day StocksToTrade trial today — it’s only $7!
Protect Your Downside
The most important rule by far: always have a stop loss and stick to it.
Letting a small loss grow into a massive one is a fast track to blowing up your account.
For example, if you’re risking 10 cents a share and don’t cut your loss when it hits 20 cents or 50 cents, you could spend weeks or months just trying to get back to break-even.
Don’t try to be a hero and ignore the stop because you think the stock is going to come back…You’ll regret it.
And the second rule, which is really just as important as the first, is to cut your losses quickly. When a trade starts moving against you, take the small loss and move on.
Humbling yourself and taking the small loss now means you can bounce back faster with your next trade.
Let Your Winners Run
When you’ve got a winning trade, let it run. If a stock is trending up, making higher highs and higher lows, there’s no reason to bail early.
It can be tempting to take profits as soon as you see some green, especially after taking a few losses, but if the stock is in a strong trend, give it room to run.
With small accounts, even if the stock pulls back a bit, you’re not going to give up massive profits.
Monitor Your Trades Closely
Keep a close eye on your trades, especially with a small account where every move matters.
Also, consider using a trading journal to track every trade you make…even the small ones.
By keeping a detailed record of your trades—entry price, exit price, why you entered, why you exited—you’ll start to notice patterns in your own trading behavior, and you’ll be able to see what’s working and what’s not.
Over time, you’ll refine your strategy and improve your results.
Watch my video to learn the basics of creating a trading journal.
Reinvest Your Profits and Add to Your Account
Whenever you make a winning trade, take that profit and add it back into your account.
Even better, try to add to your account from outside sources if you can. Maybe you put in an extra $20 a week from your paycheck. Every little bit helps, especially with a small account.
The bigger your account gets, the easier it becomes to compound your gains and build momentum.
My Final Thoughts…
I get it, trading with $100 can feel like a grind, and there will be moments when you feel like it’s just not worth it.
But your goal with a small account isn’t to make huge gains in a week or even a month. Your goal is to learn the process, build your discipline, survive another trading day, and grow your account bit by bit.
The lessons you learn with a $100 account will set you up for success when you eventually grow your account to $1,000, $10,000, or more.
And to learn more about trading with a small account, tune in to one of our free live webinars.
They run all day and offer trading tips and tricks, information about how we use our proprietary Oracle system, and other valuable training.
And for access to my watchlists and more training, subscribe to my StocksToTrade Advisory service.
Every STT Advisory member gets a monthly newsletter with my top stock picks, three weekly videos that show what stocks are on my radar, bonus reports, and more.
Sign up for StocksToTrade Advisory right here!
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade