As many of you know, back in December I decided to embark on a personal challenge — trading a small account with only $10,000.

Using my tried-and-true puts trading strategy, I turned that account into $100,000+ in just a few weeks!

But since nailing that challenge, students have been asking me if I’d be willing to take on an even bigger task…

… trading an even SMALLER account — $3,000!

If you know me, you know I’m a stubborn perfectionist who’s never one to shy away from a trading challenge…

So of course I’m doing it!

Let’s break down what led me to take on this experiment of growing a small account and how I plan on nailing it once again.

Why I’m Trading a $3,000 Account

Before I go on, I should note that my trading results are in no way typical. I’ve been trading for years. That means I have the benefit of experience, dedication, and knowledge on my side. Always remember that most traders lose. 

Now that we have that out of the way, let’s break down what inspired me to go back to trading a small account. 

The bottom line: Like my mentor Tim Sykes, I live to teach. 

These days, I honestly get more pleasure out of seeing students flourish than I do out of making huge money on a trade. (This might be hard to believe, but it’s the truth!)

When I pressed myself to consider what Evolvers would benefit most from, a small-account challenge seemed like the obvious choice.

After all, most of you aren’t trading seven-figure accounts like I am. I understand that growing an account to this size seems unreachable to some. 

With that in mind, let’s talk about how I plan on doing it…

How I’m Trading a $3,000 Account

We’ve gone over why I’m trading a small account, but what about how I’m trading it?

The keyword for me is discipline — you MUST have it, or else your small account is DOOMED.

But what exactly do I mean by this? And how do YOU trade a small account with discipline?

In my opinion, there are three key steps to take when trading a small account.

Step #1: Cut Losses (and Book Profits) Quickly!

You’ve heard me repeat my mentor Tim Sykes’ #1 rule many times before: Always cut losses quickly. This remains as true as ever, and the same goes for booking profits quickly…

If a trade’s going well, greed is your worst enemy. You must fight the urge to hold out for some glimmering, pie-in-the-sky price target. 

NOTE: I re-learned this valuable lesson when I allowed emotions to ruin my recent Tesla Inc. (NASDAQ: TSLA) puts trade.

Pick a nearby realistic round number. When the share price gets close to this level, sell your contracts no matter what. 

I can’t overstate the importance of timing in options trading. When traders come to options from the world of common shares, the volatility can be jarring. 

So I’ll emphasize it again. If you’re up big on a short-dated options trade, one tiny move in the wrong direction could wipe out a huge chunk of your hard-earned profits. 

Bottom line: If you’re trading options with a small account … cut losses and book profits QUICKLY!

Step #2: Focus on Ideal Setups

Listen up, Evolvers. This is HUGE. Only focus on the best plays.

If I had to choose one key to small account trading, it would be narrowing down your setups.

Recently, it’s been as simple as targeting the single hottest momentum stock that week. These stocks tend to provide the best volume, volatility, and price action for small accounts to grow.

Do this and you’ll already be ahead of the small account curve.

My ideal setups usually contain the following:

• Above-average volume
• Exaggerated price action
• A major news catalyst

So do yourself a favor: Cut your watchlist down to the stocks that check these boxes and focus on plays with your highest probability of success.

Step #3: Be Aggressive on Perfect Patterns

I’ve missed a few huge trades this year by second-guessing myself. In hindsight, the chart patterns were perfect.

I’ve learned from my mistakes. If the pattern’s perfect for me — it’s time to be aggressive.

This is especially important if you’re trading a small account. Take advantage of golden opportunities when they come to you. 

I don’t mean you should bet big on a speculative trade. Never risk more than you’re willing to lose.

I’m saying you should take the time to do your homework. Study hard and it will become easier to find disciplined conviction in your trading strategy.

Then, if the pattern you’ve been patiently waiting for suddenly appears — don’t hesitate. Strike while the iron’s hot.

Final Thoughts

I’d be lying if I said trading a small account is easy. But I live for the challenge. I’ve done it before, and I’ll do it again — even with only $3,000 to start. 

I have to admit that I have experience on my side. I’ve been trading for years. 

Bottom line: Don’t expect to experience the same results that I have. 

But I promise you this: If you follow my advice for small account trading, you’ll help set yourself up for success.