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In today’s episode, you’ll discover essential tips to grow your small account when you’re trading part-time.
So tune in right now…
Resources
The Truth About Part-time Trading Nobody Tells You
The Truth About Trading Daily Timeframe Nobody Tells You
How Long Does It Take to Become a Consistently Profitable Trader?
Transcript
Hey, what’s up, my friend? In today’s episode, I want to share with you how you can grow a small trading account while trading part-time.
Here’s the deal, most of you have a full-time job and trading is just something that you’re doing a part-time with a small account. So how can you make the most out of this small account and grow it consistently over time?
1. You must regularly add funds into your trading account
If you want to grow your small account into something sizable, something worthwhile in the future, you have to regularly put money into your trading account. And this is especially so after you’ve become consistent in your trades and found your edge in the markets.
Let me give an example. Let’s say you have a trading account which you start at $1,000. If your trading strategy makes about 20% a year, then you compound it for the next 20 years, that $1,000 will turn into $30,337.60.
But on the other hand, if you have a $1,000 account, but each year, you regularly put in $1,000 into your account. Using the same compounding of 20% a year, after 20 years, your account will snowball into $262,363.20.
You can see that there’s a lot of difference between adding funds and not adding funds. If you don’t add funds you only have about $30,000 after compounding for 20% each year over 20 years.
If you add funds regularly each year, just $1,000 each year, you end up with $262,000. Can you see the difference over here? Can you see that if you want to grow your small trading account, you have to put in the effort to regularly add funds to your trading account, no matter how small?
Do it consistently and let the compounding effect do its job. That’s the first tip that I have for you.
2. Trade the higher timeframe
When you are trading part-time, you don’t have the luxury to be staring at the monitor all day. You probably have a full-time job and you probably can’t devote more than two hours a day to trading.
That’s why you want to trade on the higher timeframe because the general rule of thumb is that the higher the timeframe that you trade, the less screen time you need.
And that’s because on the higher timeframe, let’s say the weekly timeframe, you need one week to paint one candle on the weekly chart.
Needless to say, on the higher timeframe, less screen time is needed. So trade on the higher timeframe.
3. Trade more markets
When you trade on the higher timeframe, it’s a fact that you’ll get less trading opportunities because the market takes more time for your trading setup to unfold itself. To combat this problem, you’ll want to trade more markets.
For example, let’s say you only trade the FX markets now, you might want to consider branching out to the stock market.
There are thousands of stocks out there. So you can trade the stock markets on top of your FX markets, where you’ll find more trading opportunities even though you’re trading off the higher timeframe
4. Systemize your approach
Let’s say you trade stocks in the Russell 3000 for example. There are 3000 stocks in the Russell 3000. So if you want to trade breakouts or take on trend continuation trades, it’s going to be very cumbersome to click through 3000 of them to find your trading setup.
To make your life easier, you can use a scanner to make your life easier. Let’s say you trade the stock market and you want to identify stocks which are in an uptrend.
You can use a stock scanner, there are paid ones or free ones to use. For the free ones, I’ll recommend using Thinkorswim.
Use the stock scanner and just scan the stock markets. For example, you could scan the stocks to their rate of change (ROC) over the last 52 weeks. Then list the stocks from high ROC to low ROC.
Those stocks with the highest ROC values over the last 52 weeks will be ranked at the top and these are stocks which have increased the most in price over the last 52 weeks.
So all you need to do is to pay attention to these top 30, 40 stocks because chances are they will be in an uptrend.
If you have any doubts, just google and the answers will be all out there. Do the hard work – it’s something that I keep coming back over and over again. You have to be willing to do the work. You can’t expect me to spoon feed you everything.
I’m giving you the nuggets of tips to make your life easier, but short 10-minute videos like these are not enough for me to explain everything. Sure, I can be explaining the process or steps, but it’s all out there the answers are out there, go and look for it.
Systemising your approach in discretionary trading
And last part about systemising your approach is that, for those of you who are more of a discretionary trader trading the FX markets, maybe you don’t need a scanner.
What you can do is that during the weekends when the FX markets are closed, you can do your homework to identify potential trading setups that could occur on the following week.
Let’s say you trade off the 8-hour timeframe. Then on Sunday, you can do your homework and identify on the 8-hour timeframe the pairs which have potential trading setups for the upcoming week.
And once you’ve identified the FX pairs, you can just list them on a document or a spreadsheet, and tell yourself to pay attention to this pair when the market opens on the coming week.
This is another way to kind of make your life easier by systemizing your approach while trading part-time.
5. Be patient
Anything worth pursuing in life requires patience because there are simply no shortcuts. There’re no get-rich-quick schemes out there. When it comes to business, you must have patience.
Look at Warren Buffett, possibly one of the richest investors of all time. He took 50 years of compounding his returns at an average of 20% a year to get to where he is now. 50 years!
I think for most of you here, if you have to do something consistently for 5 years is also tough for you to do.
I want you to know that you must have patience, you must let time be your friend. You can’t expect shortcuts or get-rich-quick schemes because instant gratification doesn’t work. Anything worth pursuing in life requires time.
Look at Mark Zuckerberg. When he started Facebook, he didn’t start globally. Instead, he started just at Harvard University amongst students, then he started opening up to other universities. And then finally, he let the world in.
Or how about Amazon? It started by simply just selling books online before starting to sell more stuff in their stores. And now it pretty much sells everything in anything under the sun including some cloud computing services and stuff like that.
It all started off really small. So be patient and let time be your friend. It’s the same for trading. Your account might be small now, but we all have to start somewhere.
Anything big has to start small. Be patient and I believe you will get there.
Here’s a quick recap…
Recap
How to grow your small trading account part-time:
- Regularly add funds to your account
- Focus on trading the higher timeframe because you require less screen time
- Trade more markets for more opportunities
- Systemize your approach using tools like a scanner to make your life easier
- Be patient – anything worthwhile in life takes time to build
With that said, I wish you good luck and good trading. I will talk to you soon.