Millionaire Trader Reveals Top Trade Idea Each Week

RagingBull.com CEO, Jeff Bishop, shares his top pick for the week each Monday, straight to your inbox.

“My strategy aims to help you pull one winner out of the market each week, regardless of market conditions!” – Jeff Bishop

Whether you’re going into 2020 with a large or small trading account…

Know this… Many traders mistakenly hold an erroneous notion they need a big account to trade the markets. I’ve got news for you… If you can’t cut it with a small account, you won’t win with a larger one! With stock commissions a thing of the past, there’s little reason anyone shouldn’t be able to build an account from as little as $500. Your strategy should never change. The key to success is adjusting trade management factors like position size, risk tolerance, and trade selection. Every week I get inundated with emails, asking me if Weekly Money Multiplier works with small accounts. I point to members like Mark, who doubled his within a week.

No, it’s not typical to double an account your first week out of the gate. However, I want to share some insights and tricks to work your small account into a nice nest egg.

Stick to a risk management rule

Even during my best years, I never change the maximum size of my trades until the following year. It’s how I manage both myself and my money.

Other traders I know follow the 5% rule. This popular method allocates no more than 5% of your total account to any one trade as a possible loss. I wrote about it extensively in an article a while back you can read for free. However, it can be challenging to trade $200 options with a $500 account. That doesn’t leave much room for error before you would hit 5%. So, you need to adjust your risk expectations. Risking 10%-20% is okay with a small account when you feel you have an edge. Just realize that you have a greater chance of one trade damaging your account.

 

Choose the right Instruments

Some stocks cost a lot of money to purchase even one share. In-the-money options could cost several hundred dollars. If you only have $500 in your account, a $200 option or a $1,000 per share stock might not work for you.

I prefer to trade options that are at or slightly in-the-money on momentum stocks. These tend to cost several hundred dollars apiece. However, I have members that adjust the strike price and expiration to lower their up-front costs. This works the same setups but fits the trade to their individual needs.

 

Stick to high probability setups

Not all trades are created equal. Some simply have a better shot of profit than others. Small accounts should work to get modest, consistent gains. There’s nothing wrong with making $50 on a $500 over a month. You keep that up, and you’ll double your money in a year!

High probability trades combine multiple clues to identify setups. For example, my TPS setup relies on a clear trend, consolidation chart pattern, and a squeeze indicator. These three items create a favorable matchup.

 

Be automatic in your profit-taking

Small accounts don’t have the luxury of letting winners run all the time. You want your money continually working for you, churning out trade after trade - that’s not the same thing as over-trading.

I use the 127.2% extension as my first price target, and 168.1% as my second. If I traded a small account, I would cut everything at the first level. The incremental amount on a per-period basis wouldn’t maximize my capital usage. I’d do better taking a completely new trade.

 

Create a trade journal

I talk about trade journals all the time in Weekly Money Multiplier. In fact, I have one that I make public to all the members to hammer home this fact.

 

Notice how I capture all the relevant details to the trades. I also keep a secondary log that takes screenshots of the setups so that I can review them later.

I cannot stress enough how invaluable this is to driving success.

 

Leverage simulated accounts

Let’s be honest, if you’re trading a small account, you’re probably new to trading. So rather than learn by losing, use a simulated account.

I have members that struggled for years switch over to a simulated account when they first start with Weekly Money Multiplier. The way I trade may not be the same as anything they’ve learned.

They take the opportunity to focus on their trade management and skills without the stress of turning a profit. It lets them work on decision making, which is a key component of any trading strategy.

 

Don’t be afraid to fail

Blowing up an account isn’t a sign of failure. It’s almost a right of passage. Most successful traders go through 5-8 before they actually turn a profit.

If you haven’t heard my full story before, check out my interview with Jeff Bishop and Jason Bond, where I talk about how I struggled before I finally turned my $38,000 account into $2,000,000. It’s a free video you can check out here.

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