This Key Change Helped A 24-Year-Old Trader Become A Millionaire In Less Than 2 Years

One 24-year-old stock trader blew up his first trading account. After examining where he went wrong, the trader changed his strategy and saw his account swell to more than $1.4 million. 

What To Know: Former software engineer Matthew Monaco started trading stocks in 2017. According to Business Insider, he started with just $2,000. After a few months in the markets, his brokerage account had been cut in half.

But Monaco didn't throw in the towel. He viewed day trading restrictions as an obstacle to success. So, he quit trading until he saved up the $25,000 minimum required to bypass pattern day trading rules before going back at it. 

The second time around, beginning in 2020, was much different.

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In less than two years' time, Monaco saw his account accumulate more than $1.4 million, according to a 1099 form viewed by Insider. He owes a lot of his success to  one key change he made that led him to hit it big: learning how to lose.

Instead of getting attached to each trade, he tried to maintain a 60% win rate. He began going into his trades expecting to lose, which helped him manage his position sizing and eventually develop enough discipline to exit losing trades before the market really turned against him.

A lot of people think they can just wait a little bit longer and maybe a trade will turn around for them, but that's a terrible approach, he said.

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"Once you start doing that, it's a very slippery slope and you'll just lose more money than you'll make. It blows a hole in the whole math of winning and losing," Monaco told Insider.

He also made sure to start fresh on each trade in order to not let emotion influence his decision making. It's hard to generate consistent returns from a strategy if you aren't in the right mindset to execute it, he explained. 

Regardless of approach, traders need to leave dreams of getting rich quickly behind. That mindset will lead you to losses, he said, adding it's more about letting small gains compound over time. 

"There's that happy medium where I find a lot of successful traders live," Monaco said. 

Photo: TheInvestorPost from Pixabay.