On Friday, Jeff Bishop and I went live to show the thousands in attendance how and why Trade of the Day works.
With so many skeptics in the crowd… it was the perfect place to quiet them down.
It was epic!
The opening bell hadn’t stopped ringing before we started to ring the register (or at least it felt that quick).
The Trade of the Day was like lightning in a bottle… Jeff was so excited, he misheard the trade I called out (so he got something similar), he jumped into the trade late because of that.
It didn’t matter—Jeff made money on it anyways!
Of course, when you introduce a trading system as powerful as mine, you’re going to get bombarded with questions.
Traders got a chance to ask me how I manage my trades, my expectations for the fourth quarter, and thoughts on the overall market in general.
However, two questions seemed to be on everyone’s mind – Does it work with small accounts and pattern day trading?
The answer to both… a resounding YES!
But don’t take my word for it…
Both are great questions. And both deserved a detailed response…
Options trading allows you to control large amounts of stock with limited capital. Each option contract controls 100 shares of stock (known as lots).
Friday’s trade cost $215 to trade the SPY. If you bought the same number of shares, it would cost $29,500.
That’s the power of options.
Most of the people I work with have small accounts that grow over time. Daily Deposits and Overnight Installments trade options to let you use leverage.
Leverage can certainly be a double-edged sword. That’s why sizing your trade is extremely important.
A lot of traders assume you should spend the same amount on an options trade as you would a stock trade. If you made that mistake with Friday’s trade, you would have controlled $2.95 million of the SPY!
Always, always, always remember that you don’t need to risk a lot to make a lot with options.
That’s why you can use small accounts to hit big wins.
Options let you control how much you want to risk – Heck, Jeff adjusted his trade on Friday to suit his preferences… and he made a killing.
Even just one contract lets you work an effective strategy.
Consider a $1,000 account to start. Let’s say you don’t want to lose more than $50 on any trade (or 5%).
Friday’s trade would have cost $210 to trade ($2.10 entry price). Your max stop would be $210-$50 = $160 / 100 = $1.60.
Even with a small account, you can risk a loss of almost 25% on a trade.
Before every trade, you can decide whether it fits your risk parameters. That puts you in control instead of the market.
Pattern Day Trading Does Apply
Anyone who lives in the U.S. or is subject to its laws follows the Pattern Day Trading rule. This means that you are limited to three round trip trades in a five day period.
That means you would miss two trading days a week.
I get it… we all want to make money now. You don’t need to trade the market every day to grow your account. Three days a week will make your account grow plenty quick.
Let me throw a little math around to show you.
You start with the same $1,000 account above. Again, we want to limit losses to 5%. Assume our profits are only $25 or 2.5%.
To break even, you would need to win two-thirds of the time. In the month of September, we had members who won 100% of the time.
Assume you only win 75% of the time. You would be making 0.625% per trade. After one month your account would be $1,077… two months at $1,161…six months at $1,566… one year at $2,452.
A real-life example
Honestly, it doesn’t take long. Some members have more than tripled their accounts in less than two months.
You don’t need to risk tens of thousands of dollars every trade. Plenty of traders come to me with accounts under $1,000.
Take things at your own pace. Plenty of members start out paper trading. Many work full-time jobs. They find plenty of success.
We have loads of training videos you can watch on your time. I’m here to answer questions to get you where you need to go.
One trade a day can change everything.