When first getting started many traders find themselves in a situation with a smaller trading account. This leads to the common thought process of “I need to trade penny stocks in order to build up my account.” Richard Davis (RDTrader12) discusses his experience with this same thought process and where it lead him in his journey. Spoiler alert… it was not to the land of riches and success. He learned some valuable lessons along the way and he is kind enough to share the experience with us.
Are you currently under the impression that the “only” way to trade with smaller accounts is through small cap and penny stocks? If so, definitely set some time aside to listen to this interview.
Notes:
RD began trading as a puppet and was fortunate enough to find early success before giving it all back.
After taking a few months off, he attempted to start paper trading but fell into the trap of hindsight before realizing the issue.
RD decided to invest in his education as a final attempt to become profitable and once he developed a trade plan his account started to skew positively.
A big stumbling block for RD was the amount of risk he took on and once he corrected that he developed much more confidence in his long term trading ability.
RD abandoned penny stocks as the volume dried up and now trades options fully.
Quotes:
“Within the first month of trading, that 2000 dollars evaporated to about 550 and not quite understanding how it happened.” tweet this quote
“There is a right way to do this, and I know this because people make a living and I have to figure out what that is.” tweet this quote
“Now, if I have a loser, I don’t even blink an eye because I understand what my max loss can be.” tweet this quote
“You’re going to have losers. When you accept that/learn how to handle those it will just put you that much farther ahead.” tweet this quote
“I really had to back down my entry size almost to the point where I didn’t care. I just had to practice.” tweet this quote
