Why I Love Trading A Small Account, And Why You Should Too

January is turning out to be a bit of a roller-coaster market for my main account. After a couple of frustrating days last week, I was hopeful I could start this week off with some by-the-numbers trading setups straight off the screeners.

Unfortunately, my first trade on Monday on a breakout in ImmuCell Corporation ICCC turned against me. The stock came up on my high of day scanner squeezing up about 15% and I took my first position after the second circuit-breaker halt for the break above $7. It squeezes up again, gets halted again, I add shares once it resumes and it ultimately collapses after hitting a high just shy of $8.10. ICCC actually got halted a fourth time on the way down while I was still holding shares, which is the wrong direction for a stock to go if you have an open position.

It was an ugly way for the chart to play out and I certainly could have approached it better from a risk management standpoint. Luckily I caught a good break on Thursday’s move in Trans World Entertainment Corporation TWMC that put me back in the green for the month.

However, instead of dwelling on the ups and downs of my regular account, I wanted to spend this article looking at my ongoing small account challenge. The results in my $2,500 TD Ameritrade cash-only account has been much smoother, to say the least.

Because of the Pattern Day Trader requirements for domestic brokers, I’ve only been able to trade the account five days this month. Despite that, the account has grown more than 25% and I’m averaging about $140 a day.

The last trade I took in the account on Wednesday in Neurotrope, Inc. NTRP ended up netting me another $166 in the account. The leading gapper for the day up 85%, NTRP is exactly the type of penny stock I tell traders to look for, with a float of about 10 million and volume in the hundred-thousands.

I watched NTRP on the open as it pulled backed from its premarket high and waited for the next candle to top that. I got in as it squeezed up to $2.40 and it continued riding all the way above $2.50 before selling at around $2.65. It did continue to ride up to a high of about $3.20, but given the tight capital margin I’m working within this account, I’m happy with a 5% gain.

That sort of perspective is important when you’re a new trader just learning how to day trade and it’s why I like doing these account challenges. While I can lose and gain thousands of dollars in my regular account, one day isn’t going to make or break me. Although that me to be more aggressive, it also doesn’t require the same kind of planning, risk management and discipline a small account requires.

So when I can spend a couple of days every week trading the way many of the Warrior Trading students do and post 5% returns, it gives me confidence that these strategies can work for anyone.