Good morning, traders…
Most newbie traders dream of hitting it big right out of the gate … managing massive accounts, making flashy trades, and raking in huge profits.
I get it. I had similar emotions when I first started. There’s a rush to wanting it all right away, like you’re chasing the feeling of “making it” as fast as possible.
As I mentioned last week, we’re living in an era of instant gratification. You have to practice patience in your everyday life to have it translate into your trading strategy.
Who you are as a person = who you are as a trader.
I wish someone had drilled this into me on day one: starting with a small account is a good thing.
It might not be as exciting as barreling forth with a big bankroll…
But managing a small account teaches you discipline, sharpens your strategy, and forces you to respect every trade you take.
And over time, that builds the foundation for real growth, consistency, and success.
So, let me show you why your small account isn’t holding you back — it’s actually setting you up for bigger wins in the future…
Start Small, Dream BIG…
I’ve met tons of new traders who can’t wait to play in the big leagues.
And to that, I always say, “Start small, but dream BIG…”
I get it, it’s super exciting to imagine having a seven-figure account when you’re just starting.
If you form a solid game plan, you just might nail those huge wins one day…
But a big account isn’t just a ticket to bigger wins … it also opens you up to the possibility of bigger losses.
The more you put on the line, the more you stand to lose. It’s that simple.
And that’s why starting with a small account is actually a blessing in disguise.
It forces you to size your trades conservatively and pick your plays meticulously, which will help stop you from making an account-ruining mistake.
But if you’re really trying to grow a small account quickly, it’s all about options trading…
5 Ways Options Can Help Small-Account Traders
I see four main reasons why small accounts should be trading options…
- Lower Cost to Enter
When you buy a stock option, it often costs less money upfront than buying the stock outright. You’re not risking as much. This is a bit like putting a small deposit down to hold your place in line for something you might decide to buy later.
- Leverage Means Bigger Potential Gains
Each options contract represents 100 shares of the underlying stock, causing the % moves to be amplified compared to the moves in common shares. This leverage is why one big options trade could exponentially increase your entire account value.
- A Wider Variety of Strategies
Strategically, trading common shares gives you only two choices: buy or sell (long or short). Conversely, the options market is like an ‘all-you-can-eat’ buffet of potential trading strategies.
- Defined Risk
When buying options, you can never lose more than the amount of premium you spent to enter the trade. This allows you to create a defined-risk strategy around options contracts.
And speaking of defined risk…
Shorting Stocks vs. Trading Put Options
Your risk/reward profile is particularly important to consider when attempting to short a stock.
Tim Sykes has been warning traders about the risks of shorting stocks for years. And he’s right to do so.
I agree with Sykes — shorting common shares is just too risky.
In fact, the risk is infinite, because stocks have no limit on how high they can go (theoretically).
And this is where options come into play…
If I want to bet on the downside of a stock, I use put options as opposed to shorting common shares.
Because I’m able to define my risk.
For example: In February, when the market started tanking, I bought SPX puts to hedge my long positions. I slept like a baby holding those puts because I knew I wouldn’t lose more than my initial investment in the position.
On the other hand, if I hold a normal short position overnight, I can potentially lose more than I initially bet on the trade.
Traditional short selling isn’t a great option (excuse the pun) for small-account traders.
That’s why you should use put options to hedge your longs, or bet against stocks (without risking your entire account on it)…
If you’re anxious to grow your account quickly, slow down. Keep things in perspective.
A small account is a blessing in disguise…
Zoom out and look at the big picture. Understand where you are in your trading journey.
If you take things one step at a time and approach each milestone of your journey with discipline, you’ll be well on your way to your dreams of trading a massive account.
Happy trading,
Ben Sturgill
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*Past performance does not indicate future results
