I love stocks under $10 (penny stocks) because of the extraordinary potential they provide to grow a small account quickly.
“Today makes the 3rd consecutive Friday with realized profit over $5,000!!! On an account that started under $15,000!!! Thank you for all you do. This last month has truly been nothing short of amazing!!! Long live Jason Bond Picks!” ~ Scott S.
And nothing is more exciting than turning a few thousand dollars into hundreds of thousands.
“Hey Jason, I never did thank you a few years ago on your FNMA call when it was $.50 and ran to $2. I remember you said if FNMA gets into the $.70’s to take a position and you did, I did as well and 2 weeks after FNMA touched $5, I made $165,100 profit, it changed my life, again thanks.” ~ Gonzalo O.
But how much money do you actually need to get started?
Truth is, that’s different for every trader.
… after teaching thousands of clients over the last 4 years I believe I can narrow it down into 3 different mindsets.
$0 – STUDENT
I spent $70,000 in tuition over 6 years in college plus loss of income during that time for a Masters in Education to teach in a NYS public school. Hired immediately out of college I made $429,804 from 2001 – 2011 teaching. Over the 16 years I averaged $22,500.
After leaving teaching in 2011 I recorded this 8 hour instructional course with 12 concise lessons. Following the lessons I’ve now made over $500,000 in trading profits in 4 years while teaching thousands of clients my strategy. That’s $125,000 yearly compared to $22,500.
Learning to be a teacher cost me a lot of money, time and loss of income during that time.
Learning to trade didn’t cost me a dime but it did take some time. Think or Swim’s paperMoney is a real trading platform you can download which gives you access to a virtual margin account and $100,000 of “play money”.
Once you’ve downloaded paperMoney do the following:
- Watch all 60 of my video lessons while reading the watch list daily
- Take trades from the watch list or my real time email / text alerts
- Put no more than 1/5 of the portfolio into any swing trade or $20,000 into 5 trades at a time, this prevents blowing up your account if 1 of 5 gets wiped out
- Monitor the trades across 1 – 4 days (swing trading)
- Seek 5 – 20% profit in that time and always take half your shares off between 5 – 10% profit
- Pay yourself religiously, think like a machine
- Stop loss around 3%
If you do the steps above you’ll see exactly how my system works, where I succeed, where I mess up and how not only to survive but to thrive. You will learn a ton about trading during that time, without risking any real money and be better prepared to proceed to real money trading.
$2,000 – SNIPER
If your not interested in taking my advice on paperMoney and want to start right away, but only have a few thousand dollars, you’re a sniper. A sniper operates behind enemy lines, often in very dangerous conditions. They go all in, shooting to kill, before moving onto their next target. If a sniper gets caught behind enemy lines, it’s usually over for the sniper.
Traders with a few thousand dollars do not have the luxury of spreading it equally amongst 5 picks, like the example above. Instead, the sniper goes all in, looking for explosive returns quickly, while cutting loss with intense discipline. Successful snipers often make the best traders because the same discipline needed to grow $2,000 into hundreds of thousands will quickly help them turn hundreds of thousands into millions. But remember, you only have to get caught behind enemy lines once to wipe out a small account which then makes the few thousand the cost of tuition on Wall Street.
$10,000 – TRADER
You’re in the game if you have $10,000+, period.
The most important part of survival is staying in the game and the best way to stay in the game is NOT going all in. With $10,000+ you can start to spread the $10,000 across 5 picks to protect yourself from losing your entire account if 1 pick goes really bad, something the sniper, above, doesn’t have the luxury of. This doesn’t mean the sniper won’t make it out alive, it’s just more difficult for the sniper.
With $2,000 in 5 different stocks and a 75% win rate, similar to what I have across the last 4 years, you can quickly see how hitting small wins can build your portfolio fast.
Assuming every 4 trades you hit nothing more than 5% wins on 3 and a 3% loss on 1 you’re winning 75% of the time and would have made a return of 84% in your first 20 trades building the balance from $10,000 to $18,405.
Keep hitting 5% winners every 3 trades with a 3% loser on the 4th and after 20 more trades your $10,000 is now $32,858 or a 229%.
And now you see how I’m 156% +$146,285 in 2015, swing trading part time, when the S&P 500 is flat.
So how much money do you need to get started?
I’ll let you decide but after working with thousands of clients over the last 4 years, that’s been my experience. There’s no right or wrong selection, it simply comes down to what works for you.
I’ve traded with $10,000 in my account and half a million and almost never put more than 1/5 of the portfolio in any trade to avoid catastrophe. So when I had $10,000 I made $2,000 bets looking for 10% profit or $200 on wins, -$60 on losses. When I had a half million in the portfolio I put $100,000 in trades looking for $10,000 on wins, -$3,000 on losses. I bring this up because I didn’t find it to be any easier the bigger the account grew. Discipline is always priority. Cutting losses fast and paying yourself 10%, rinse and repeat.
At the end of the day it’s just a numbers game and those who embrace that have the best chance of surviving.
Remember, I have clients in high school trading on custodial accounts. I have clients using paperMoney. I have clients with $1,000 and others with millions.
Ultimately I provide a service that’s grounded in winning about 70% of the time and in doing so I’ve made a half million in 4 years, doing this part time in my pajamas from home.
And that my friends is how much you need to start trading.
That pretty much sums up what I’ve wanted to know for a while now. Thanx Jason !
Hi JB. Thanks for the details. I had planned to start trading real money in January with a $3,000 account but because of the information in this blog post, I’ll begin your swing trade service in December using the paper money account and then trade real money from January 2016. Thanks a lot for the info.
Very concise and readable. Thanks, Jason
When you say Stops at 3% what do mean exactly?
So when you take trades you need to have a stop loss in mind in addition to a profit goal. I see a lot of traders who have neither. As a general guideline I try to take -3% losses on the trades that don’t work and +5-20% wins on those that do. I win 70% of my trades and lose 30%, which makes me very profitable if I can find a way to keep my risk reward in the -3% and +5-20% ranges. But not all fall into that, sure I have some -10% losses and +100% wins, it’s just a general guideline I work hard to follow.
Very good explanation. When you’re making 100,000$ trades on a 500,000$ portfolio what would be your avg.
yearly income if you don’t mind me asking. thanks
2013 was the year I went big. Started the year with $304,786 and finished at $543,066 so +78% +$238,380 profit. Basically as the portfolio grows across the year I keep increasing the size of my bets consistent with the 20% of the portfolio rule. So what started as $60,000 per trade was up to about $100,000 per trade. A good win in the beginning of the year was $6,000 and grew to $10,000 by the end of the year. The key is keeping the losses to about 3%, though naturally, some get away for various reasons, just like some wins were 50% for various reasons. General rule, win 70% of the time, losses -3%, wins 5-20%. That’s what’s helped me make +$500,000 in 4 years part time. Keep in mind I rebalance my portfolio to keep it inline with what I think my clients would be trading with, had I not rebalanced my profits would be much bigger of course.
Cool. I attempted to count cards at blackjack and i was extremely good at it but the the casinos are very strict these days and they wouldn’t let me play. I feel this has a similar skill set and once i save 15-25 k i’m definitely gonna sign up for this
Hi JB, I have a plan to start with 5,000 USD, but I already have a full time job, so I believe that receive your text messages would be better. What’s the best way for me and how much time do I need to reach 50,000 USD ?
I’m located in Brazil and what’s the best broker ?
Hi, impossible to answer. But it’s good to have goals. It’ll be different for every clients.
I plan on starting with $1500 in January 2016. I have been paper trading this Month with your service and have profited each day. I think with strict discipline and your help, I can turn this $1500 into $5000 by end of January. I have learned allot watching your videos and paying close attention in the chat room and am ready for 2016 with your guidance!
Excellent, good luck.
I don’t understand how the math adds up for the 10k account. If i’m winning 3 of the 4 trades at a 5% profit, isn’t my profit from 2k on that trade 100 bucks?
Run the numbers I gave you there on an Excel sheet, you’ll see how it compounds.
when you say loss at 3%, o you put a stop loss on your trade or do you just sell it off manually after you see it has reached a 3% loss?
I don’t do a physical stop loss unless it’s a leveraged ETF / ETN. For stocks I do a mental stop loss and yes, my area of concern is at -3%.
Sounds good Jason . I will have to be a sniper for a while and will follow your advice. Thanks.
Do I understsnd correctly that upon having your order filled you would automatically enter a 5% sell limit order for 50% of your position and then enter a stop8 order for the remaing 50%?
That is something you could certainly do but you wouldn’t be allowing much wiggle room (I try for -3%) upon entry meaning the 50% of your shares you put your stop in for would need to be a few % lower than entry to allow the trade to move around some.
Awesome Jason! This is an excellent article. I shared with my trader friends, many of whom are just starting out.
Really appreciate this summary. I am paper trading at prsent with think or swim. Still learning the discipline and focus I need and mastering my personla Achilles heels. I pan to trade with $2K but plan to take a Trader approach parceling it into 4 lots of $500, rather than the all in Sniper appraoch which I don’t like for my level of risk tolerance. I feel I can biold this through compounding into a sizeable account and more. What do you think?
I always think it’s best to divide the portfolio up amongst 4 stocks at a time or less.
That’s my plan as well. I don’t have the recommended 10k but I think it’s possible to get there over time with consistent smaller trades.
Why do you use a mental stop loss as opposed to a physical stop loss..pros/cons
ATR on small caps is big and we target that, volatility can run your stop and take you out of an otherwise good trade. I cover this in detail in my lessons.
Wow this is really good info Jason, I’m a sniper for now and a student. Paper trading and once in a while sniper trading, can’t wait to try your service!
Everything is so helpful. I get excited every day learning new things.