How to manage a small portfolio

[Trade Prophet]

What timeframe charts are in play here, how much time per bar?

That's flexible, I can teach any reasonable approach

 

[Trade Prophet]

Here's an idea on how NOT to lose money. Open an account at Interactive Brokers, choose the zero commission option (IB Lite) and use the IB paper trade account with 20K until the mentee can double it to 40K.

I really like this approach, they can have a 20k portfolio for live trading but another 100k for paper, that way they have the feeling of playing with big money, examine risk, trade a number of strategies, but live trade only the profitable ones and grow slowly,
Thanks

 

[Nobert]

Exactly, it's hard to explain this concept to a newbie, a new trader enters the market with expectations to double every few months, like he saw on the news, they don't see the patience element of the trade.

True story :

A coworker , heard another guy who made $2 in one week on BTC. 10%. A man came with a genius plan on how to rent a better place since now he will put half of his life savings into BTC and it will generate 10% per week of passive income.

Sounds like a sci fi movie or worse(for us) but's that's the perception of newbs.

 

[taowave]

If they are learning the basics,why should the size of their portfolo affect their returns,assuming they are trading stocks with zero commisions???

Are you the mentor??

Its a bit of an odd question if you are

Hello,
In my mentoring program I come across traders who start young and with a small portfolio, around 20K$,
On one-hand its very good to start small since you have to learn the basics,
On the other hand, a small portfolio can generate low returns thus discouraging the trader,
Any ideas on how to make money with a small portfolio?

 

[smallfil]

95% of traders fail and lose their monies. Every trader should risk no more than 2% per trade. Some suggest just 1% per trade if you are a newbie. Now, you have to have a system to trade the stockmarket and generate returns several multiples of your risk which is say 2%. My suggestion is to trade with the major trend and remember to use stop losses too, to further limit your losses. If a stock is going up, go long. Now, if it is headed down, short it but, only with put options or reverse ETFs like SQQQ by way of example. Losses will come whether you like it or not, so best be ready to handle it. Make sure any trade you take is aligned with the major trend. You should win 80% of the time if you do this because the percentages favor you. Like owning a casino. All you have to do is wait for the monies to roll in. This takes time. Do not expect to be overnight millionaires like the Reddit traders.

 

[deaddog]

Hello,
In my mentoring program I come across traders who start young and with a small portfolio, around 20K$,
On one-hand its very good to start small since you have to learn the basics,
On the other hand, a small portfolio can generate low returns thus discouraging the trader,
Any ideas on how to make money with a small portfolio?

Let's start with defining how much money you want to make. What do you consider a low return?


Look at returns as a percentage of your portfolio, that way the size of the portfolio doesn't affect the size of the return, unless transaction costs become a factor. (If you are trading stocks there are zero commission discounters available)

 

[Trade Prophet]

True story :

A coworker , heard another guy who made $2 in one week on BTC. 10%. A man came with a genius plan on how to rent a better place since now he will put half of his life savings into BTC and it will generate 10% per week of passive income.

Sounds like a sci fi movie or worse(for us) but's that's the perception of newbs.

I don't think there's anything someone could say to stop the horror, it's calibrating expectations which you can't do without real experience

 

[Trade Prophet]

Let's start with defining how much money you want to make. What do you consider a low return?


Look at returns as a percentage of your portfolio, that way the size of the portfolio doesn't affect the size of the return, unless transaction costs become a factor. (If you are trading stocks there are zero commission discounters available)

Right, but even then when you try to send the message that 15% / year is actually not bad, it sounds low compared with the media stories on X00% of the last wall street hit

 

[deaddog]

Right, but even then when you try to send the message that 15% / year is actually not bad, it sounds low compared with the media stories on X00% of the last wall street hit

Well some people want to buy the Brooklyn Bridge.

Explain the magic of compounding.

 

[cesfx]

With fractional shares and micro's one can manage a small equity portfolio.
Some option trading can be done as well, european options or even some strategies on stocks of about 50$, with very careful margin control.
At the end of the day, it's a game of %