I Reset My Account to $2,000, AGAIN! transcript

10 days ago, I embarked on a brand new small account challenge. Funded an account with $2,000, and I set out with two very simple goals. The first goal was that I would demonstrate for you what it looks like for a seasoned trader such as myself to trade in a tiny account. Cuz when you're trading on a small account, you've got zero margin for error. Your back is up against the ropes. You cannot make mistakes. Now, for those of you guys tuning in perhaps for the first time, my name is Ross Cameron.

I'm a full-time trader and I funded my first account back in 2001, so nearly 25 years ago. But I'm probably best known for turning an account with less than $600 into what is today more than $20 million of gross profit. This is a huge achievement. But during the last couple years in this account, I've been taking a lot of risk and I've been trading with huge positions. So, I got some feedback here on the YouTube channel of traders saying, "Ross, it's cool to see you locking up $275,000 on a nice green day, but I'm trading in a $2,000 account.

I'd like to see how you modify your strategy for the small account style." So, I took you up on the challenge. And so what I said was that for this challenge, I would document every step along the way, beginning with a master class, a nearly two-hour long course where I'll teach you the exact strategy that I will trade during the small account challenge. And I decided to provide you guys with a lot of written resources that you can download and utilize in your own trading as well.

So I'll put a link to those PDF documents here in this episode. And at the end of this episode, I'll put a link back to the nearly 2-hour long fulllength training. So, if you haven't already watched it, you can go back and watch that. Now, the second goal of this small account challenge was that I would donate all of this profit to charity. So, guess what? In the first 6 days, I grew the account from $2,000 to over $58,000 in total profit, and I donated it all.

It's already gone. I wrote a check to the Boston Children's Hospital, and I wrote another check to the St. Jude's Children's Hospital. And I wrote a check to two other local nonprofits I wanted to support. One is for food pantries and the other is for revitalizing downtown areas. So, as awesome as it was to grow an account from $2,000 to $58,000 in 6 days, I got some feedback again from you guys right here on the channel and you said, "Ross, that was amazing, but you were using leverage during the challenge, which means you were taking a lot of risk." So, if we jump onto the whiteboard, the way leverage works is when I funded that account with $2,000, I had six times leverage, which means I actually had on day one $12,000 of buying power.

And you better believe I used it. Now, remember, this was for the children. I wanted to grow that account as quickly as I could so I could write a big check to these children's hospitals. But I also understand your point of view for many of you who made this comment that you're not using leverage. And so it wasn't super realistic for the way you would be trading. And so I decided to reset my account back down to $2,000.

And so today I'm trading with a $2,000 account except I'm not using leverage. So with $2,000 I've got times times one basically $2,000 of buying power. So this is my balance and this is my buying power. This challenge will be demonstrating what it's like to grow an account without leverage. And I assure you, it's going to be a little bit slower, but as I often say, slow and steady wins the race. So, let's go ahead right on the slide deck here and jump in with a recap of my first day.

I began the account with $1,940. So, when I dropped the account down, they took out a wiring fee. I don't know, it must have been $60. So, that's kind of a bummer, but it's all right. So $1,940 gave me a total buying power at the beginning of the day of just under 12,000. However, you'll see my buying power in this screenshot reflects the profit from today. So today's profit plus my equity times 6 gives me my current buying power.

So today I locked up $454.51, which means my balance going into tomorrow will be $2,394.51 growth of 23%. In today's episode, I'm going to recap the two stocks I traded today. I took a total of three trades and I had three winners. Now during the first six days, I maintained 90% accuracy. So 90% accuracy is higher than I typically trade at. In fact, if we pull up my metrics right here, you'll be able to see that typically, and this is over the course of the last 10 years, I've got accuracy of just shy of 70%.

So you'll see $20 million uh $20.5 million here profit and accuracy is 68.6%. Now, this year has been um has been better at better than my historical average up at about 71.8%. So, some years are a little better, some years are going to be a little lower. And that's just the nature of trading. But I knew for a small account challenge, even 71%, you know, it was not going to be enough. I wanted to trade a strategy that would be up around 85 90%.

And so that meant I needed to take my existing strategy at 71% and kind of tune it. I need to make some changes. And this is what I would call the small account growth strategy. This is what I taught you guys in the master class. And this is what I want you guys uh to really focus in on. So I have a link, it's pinned at the top of the comment here where you guys can download the PDF resources that accompany that full length master class.

This is my small account worksheet and my trading plan. The small account growth strategy is to focus on trading momentum on breaking news between 7:00 a.m. and 10:00 a.m. Eastern Standard Time. I'm willing to risk 10% of my account in one day. However, my goal is to grow the account by 10% in one day. So 10% growth every day that I'm trading. Now, realistically, you can see that my weekly growth is 70 is sorry 25%. So the way I calculated this was that most likely I would have one red day each week.

So if I have five days in the week, one red day minus 10% cancels out one green day of plus 10%. So that leaves us with 30%. And I carved half of it off because I figured, well, you know, might not have three days that are really good 10% winners. So if I can grow my account by 25% a week, that would be pretty good. I felt that I could do that as long as I was maintaining 70 75% accuracy at a minimum. By focusing on these five pillars of stock selection right here and by focusing on this candlestick pattern, I've been able to maintain 90% accuracy, which has therefore increased my growth rate.

I'm up 23% today and this is day one. So now this sets me in a really good position for the rest of the week. Now, there's an important point that we have to discuss for this leg of the small account challenge. Because I'm trading with no leverage, it doesn't mean that I can't take an unlimited amount of trades each day. So, if we jump onto the whiteboard here, there are really three different types of accounts that you can have.

You have a cash account, which you could set up today with any US broker with as little as a dollar. You could create a cash account with Robin Hood or Charles Schwab, doesn't matter. And these accounts are all subject to a T1 settlement period, which means that trades settle in one day. They settle overnight. So in this example here, in a cash account, if you funded it with $2,000, you have $2,000 in buying power today.

Oops. Buying power today. And that buying power runs up and runs out as you trade. So, in other words, if you bought a,000 shares of a stock at $1, that's going to use $1,000 of buying power. So, now you're going to only have a,000 left in buying power. So, then you take take a second trade of exactly that amount. You could still day trade in a cash account, but you take a second trade, you use another $1,000. Now, you've used the full $2,000 of buying power, and you can't take any more trades because your buying power has now gone to zero.

You've used all of it up. So as you trade in a cash account, your buying power goes lower and lower and lower. Once it goes to zero, you have to wait overnight. All those trades settle and then the next day you can trade plus or minus whatever you may may have made or or lost. Now this is very inconvenient if you're trying to day trade. While it's true that you can day trade in a cash account, you are restricted basically to only taking the trades with whatever buying power you have and then you have to wait till the next day.

However, in a margin account, trades settle instantly. So, the settlement period is instant. Well, that's not actually true. The trade still settles overnight, but the broker lets you continue trading because they know the trade is going to settle and you're good for it. It's not like a check that might bounce. So, they just let you trade as much as you want. Now, in this scenario with the $2,000 account, there is no limit.

You could take a thousand trades. You could take a million trades in one day. Now, I suppose your broker might not like it if you did that because they have certain collateral requirements for settlement periods, but no one's doing a million trades in one day. I guess unless you're trying to run some kind of high frequency trading algorithm. So, for this strategy, taking maybe three to five trades a day, this is going to be perfect.

Now, if we looked back at uh my calendar for the uh days one through six, on average, I was only taking three to five trades. There were a couple days I took more. a few days I took less. So this is what I'm gonna have. However, in the United States, whenever you get a margin account, it automatically includes leverage. Leverage in the US is times 4. Internationally, it can be times six. It can even be higher. So that means this is all of a sudden $8,000 or $12,000.

So here's a question that I'm going to pose to you in this leg of the challenge. Since I'm not using leverage, should I trade differently? Let's say, for example, today the first stock that I traded. So, we'll pull up the live trading archive here. So, when I first sat down this morning, you can see that I had a total account balance of, let's see, um, we're going to put it down here. So, the total balance was $1,940 and that gave me $11,639 of buying power.

So what I did was I created a hotkey to only use 15% of my total buying power. So that's just a little bit less than um 16th. So basically taking away the leverage. So I'm only trading with my cash balance. So for the first stock that I ended up trading um I'll just hide this for a moment. The ticker was VCIG and I bought this stock at $7.88. 88 and I could only afford 231 shares, right? So 231 shares, right? 2 * 7 is 14. 2 * 8 16 uh 31 shares gets me to just under $2,000 of buying power.

So in that scenario, you've So that scenario we're trading right here. So uh 231 shares times $7.88 equals just under 2K. However, if I had gone ahead and used the full six times leverage, 2 * 6, we're talking more like,300 shares times 788, right? So, now we're just under $12,000 in buying power. So, on this trade, how much did I make? I had one entry and then I got out. So, I only took one trade and I locked up $252.

So, back over here. So the total profit was $2 sorry 200 $252. So now what I'm thinking down here is if I had used my leverage I would have made this times six. So all of a sudden we're talking about you know more like approximately $14 $1,500 just on that one trade. So, I think a mistake that some traders will make is when you're in a small account, you'll think, well, if I'm up 20 cents a share or 30 cents a share or 50 cents a share or maybe even a dollar a share, I shouldn't take the profit off the table.

I only have, let's say, a 100 shares or 200 shares. I'm not up enough. It's not even worth my time. I'm I'm trying to make income from trading and if I can't make at least 200 a day, it's not worth it. But here's the problem. Now, what you're trying to do is generate a 10% return on your account. So, $2,000 going up 10% in one day, that's $200 a day, and you're not using leverage. So, now you need the underlying asset to go up 10%.

In order for you to make that 10%. So, on a $7 stock, you need it to go up 70 cents a share. Now, that may happen, and I was fortunate that it did happen today on that first trade, but it's very likely that it won't happen. So, let me show you. Let me give you a little example here. I think this is going to kind of open your eyes. So, when you look at this total profit here, this is $6 million on the year. This is just this year, but what we're going to do is we're going to compare um winners and losers.

So, I'm going to go over to this compare button, and I'm going to go trade P&L winning and trade P&L losing. And I want you to guess how big do you think my winners are on average in cents per share. So we're going to just do yearto date and we're going to run the report. I bet a lot of you would think in order to make $6 million I must be pulling dollars a share out of the market consistently. And the answer is that my average winners cents per share are $18 this year. 18 cents a share.

Okay. So now today's trade is a little bit of an exception because this went up a bit more than I would have probably expected it to. Um so let's just assume it went up only 18 cents. Let's just round up to 20 cents. So if it went up 20 cents a share. So now we're doing um 231 shares times 20 cents a share, I would have been up um $46. $46. Now, if I had taken that same trade using six times leverage, I'd be up 260 bucks.

And this is where I think it's really interesting. This is a 20cent winner. A lot of small account traders will be up $46 and they won't take the profit off the table. They'll say, "It's not worth it. I'm not selling till I'm up 100 or 150 or 200." And in other words, what you're doing is you're trying without realizing it to outperform a trader like myself who's been doing this for a very long time. You're trying to somehow get your average winners to be a full dollar a share.

Now, it's great today that I got a winner like that, but that's not my average. My average is only 18. That's it. And so if you're trading in a small account, you have to be really disciplined about paying yourself. You cannot get into the habit of the stock goes up and then it starts to come down and you say, "I'm not going to take it off the table because I'm not up enough." As soon as you start doing that, you're setting yourself for As soon as you start doing that, you're setting yourself up for failure.

So focus on these base hits. Yes. With a no leverage account, it's not going to be a lot of money, but every day you make $46, you do that 10 days in a row, it's 460 bucks. All of a sudden, the account is up 25%. Right? You do that for another 10 days in a row, and eventually you'll be able to start taking, you know, 250 shares, then 275, then 300. So, let me show you what the equity curve looks like for these different accounts.

So, for a margin account, well, we'll do cash first. So, for a cash account, you start with $2,000. All right? Okay. So, we're going to go kind of like this. So, cash account's going to look like this. And it will increase at a certain point once you have enough buying power, but it's actually I don't even know if it's going to go like that because you're never going to be able to take a lot of trades. So, it we'll just we'll just end it there.

So, kind of like that. It'll it'll increase a little bit. I'm going to go back. It's because it's it's not even going to increase that quickly. It's going to be a bit more linear like this. a margin account. However, a margin account is a little bit different because with a margin account with $2,000, you can take as many trades as you want. So, this is going to move faster and now you have leverage. So, leverage uh something Warren Buffett said is a I think a derivatives and leverage, weapons of mass destruction, financial destruction, because you can do this.

You could I I have done this from $2,000 to $58,000 in on day six, right? I've done uh $500 to 100 grand. I mean, I've done $500 to a million dollars. I've done these types of challenges and it wouldn't have been possible without using leverage. So, here's the thing that you have to come back to. No matter which type of account you're using, the strategy should be exactly the same. And this is a big mistake a lot of beginner traders make.

They say, "I can only buy 10 shares. So, I'm not going to take 18 cents of profit off the table." And then what they end up doing is they have really low accuracy because every time they're up 18 cents, they don't pay themselves. It ends up being a winner turning into a loser. They finally stop out. So, they have low accuracy. They have a poor profit loss ratio and they don't make money. And they say, "Well, listen, Russ, that's easy for you to say.

You can buy 1,300 shares of this. You can buy 2,600 shares of this and every 10 cents is 260 bucks, but it's not the same for me. And I say, right now, you've got to pay your dues. You're down here. Don't change the strategy to accommodate a small account. That's not smart. Trade the exact same way seasoned traders have proven is profitable, but just do it with small size, knowing that it will build and build and build and build and build.

Your buying power gets bigger and you can trade more. So, I'm in a margin account right now. So, I can trade as much as I want, but I'm not using leverage. Is the account growth going to be slower? There's no question about it. Now, if we look at my first trade today in this small account, it was on VCIG. So, VCIG hits the scanners right here. And guess what? It's got a breaking news headline. So, it meets all five pillars of stock selection based on price, rate of change, relative volume, breaking news, and float.

So, I pull it up. I see that it's squeezing. It hit a high here of about $780. It dips down and as it rallies back up, I pressed the buy button right here and I was looking for the break through $8. So, I got filled as you can see here at $7.88. 231 shares was the most that I could afford. It ends up going from 7.88 up to 8 up to$820 up to 840 860 880 and 9. And this is these are on 10-second candles. So basically within 40 seconds, this thing is peaking at $9 and I took my profit off the table right up here.

So once it started doing these topping tails, I got a little bit worried. It ends up peaking and I sold half at $8.97. I sold the rest at $8.95 and I sold the rest at $9 a share. So I basically got out kind of right in this area here. These topping tails are candles of indecision. They communicate that weakness is coming in. And so I got out. Now, as it pulled back here, I was ready to take another trade on it, but that didn't end up setting up.

So, I only took one trade. But now, you got to kind of ask yourself, you know, what was really stopping me from using the leverage. You know, for me, this is where I might have a different risk profile than other traders out there. And we all have our unique approach of, you know, the way we look at trading and the way we think about things. But the way I thought about it even back when I was a earlier trader is that I'm buying and selling very quickly.

I was in that trade for less than a minute. So am I comfortable using five times, four times, three times or two times leverage for a very short period of time? Because the way I was thinking about risk is risk is the total amount of money I have in position definitely but then also time. So, if I was holding overnight, I couldn't sleep. And I still don't hold positions overnight. So, even though I could, I don't because when when it's overnight, it's out of your control.

The market's closed. Anything could happen. But what I felt was that if I take a trade and it's a minute long, I don't mind using my leverage for one minute, getting in and getting back out. And so essentially, therefore, if I want to hit that $200 daily goal, I either need to have a stock with a $2,000 account, have the stock that actually goes up 10%. Or if I'm using four times or five times leverage, then the stock doesn't have to go up as much because I can profit from a smaller move by using that leverage.

And so that's where I can get faster growth. So for me, it's always kind of made sense based on my risk profile that I was comfortable buying a position knowing that I now own something of value and as quickly as I can press the button control Z, I'm out of the position. Hot keys. So shift one right here. We'll just pull this up and I'll show you what shift one does. So we're going to switch to the screen share here.

So when I press shift one right here on Ford, it's going to enter my order using uh approximately 15% of my buying power. It prepares it for 186 shares. So that's the that's the order ready to go and I have to press enter to send it. Now if I press control Z, it would close my position. If I was in a position, it would close it instantaneously. So with a press of a button, I'm out. So when I'm actually trading, I press shift one to get in and then while I'm in the position, my hand is sitting like this.

I'm holding the rip cord. I'm ready to bail out. The second it doesn't look good, boom, I'm out. And so for me, I'm very confident in my ability to exit positions. And so because of that, I don't have a problem using leverage. But again, that confidence comes with years of experience. I always think as a beginner trader, practice in a simulator, prove profitability. Once you've built profitability in a sim, trade with real money using either a cash account or instant settlement margin.

No leverage. Just trade with like 10 shares, super small size. Prove you can make money in the real market and then begin scaling up. At a certain point in your learning curve, you're going to think, am I holding myself back? Am I throttling myself back from further growth by not using this tool of leverage that's at my disposal? And when you get to the point where you're telling yourself, listen, it's just a no-brainer for me to use this tool for these limited periods of time, then that means you've got the confidence to use it.

I don't want you to use a confidence without competence. You need to be competent. You need to have a track record of profit profitability before you use it. But once you've got that, then I think the tool makes sense. Okay, so first trade, VCIG broke the ice, made 250 bucks. The account's now up 10% in one day. Fantastic. All right. So, then we have the stock EPSM that hits the scanner. And it hit the scanner earlier when it popped up.

It then pulled back, popped back up, pulled back, and I was watching it for a potential curl. It moved really quickly back here, but on lighter volume. So, the level that I was watching was this high here and the previous high a day. The way I thought about it was that if it breaks this level here of 1691, what's the next level? It's the high right back here. So that was all the way up over $18 a share. Actually$1 1932.

So when I saw this popping up, I said to myself, if I don't jump in here, I'm going to miss the move. So where did I get in? Right here. It starts popping up, it dips down, and I punched it right here. Micro pullback, very small pullback. It breaks through. It goes from $1850 to$,950 to 20 to 21. Pulls back, goes up to 22, 23, just under $24 a share. That's kind of unbelievable. That's a huge move. The only problem is how many shares could I afford? 112 shares.

That was it. So, I jumped in and then I had my hand on the rip cord. I was ready to panic and bail out the second it wasn't looking good. I'm in at 1823. It ends up popping up. I take a 100 shares off the table at $191 partial fill and I'm all out. And just like that, I'm up about $187 on that first trade. Then it dips back down. It comes back down to this level here. Now, right here, I looked at that as possibly support based on the previous resistance level.

So, when it came back to here, I said, I'm going to go ahead and buy this dip. So, I ended up adding back on it, which gave me my second trade. Let's see. So, second trade on it. I added back at 1966 right here. And that was on this dip. Stop was the low 1932 and was looking for a possible curl back up. It ends up dipping after I get in and then popping back up. And I was able to get back out for what ultimately was a very small winner at 1982.

And that was my last trade. Now, as the day went on, we had another stock that popped up, aka N. This is another stock that squeezed up and I really I didn't really understand it and I said, "Well, since the other two didn't work out as well as I wanted, I don't think I'm going to trade this." But look at this. It ends up making this huge squeeze for about $450 all the way up to just under $9.50. However, ultimately, it ends up giving it back as well.

So, here's the way I trade these. Focus on the chart. Trade the price action. When it's bullish, I'm buying dips, buying dips, buying dips, and selling into the breakouts. Once we get that MACD crossover right there, and we begin stairstepping down, we break below VWAP. I leave it alone. It's on the back side of the move, and I don't want to overtrade it. Now, earlier this morning, we had a number of traders who were posting their P&L from the previous month.

Today's the first day of the new month, so it's often opportunity where people share, hey, here's how I did last month. And this was really impressive to me. Um, there's a couple that I want to show you. Um, so this was a member in the community who posted his P&L right here, which of course is a fantastic month. It's green every single day. Uh, but there was another student, Jack, who posted his P&L here. And this one was especially interesting to me.

So Jack, if you're in the comments, feel free to give a shout out and talk a little bit about your progress if you'd like to. Uh Jack has been a member for a long time and like a lot of members who joined during the pandemic when he first joined you know the market was on fire but for a lot of beginner traders during that period you know it really you would think it was impossible to lose but it was actually very difficult in a lot of ways because the the challenge was things were so volatile it was hard to really know you know what was safe to trade.

And so if we scroll down here, Jack actually posted his equity curve that goes back to 2021. So it goes back, you know, four years. And you can see as he began his career, he went through this very typical beginner experience of losing money. And it wasn't until he kind of based out and then began to turn around that he started to gain some confidence. And this was in 2023. And then he had another period of a little bit of a setback.

Again, not uncommon. Still early relatively in his career. And it's just in the past six months that he's really started to make some big strides. And I think this speaks to the power of showing up every day. Even if you still have a regular job and you're just doing an hour a day, gaining financial literacy is something that pays dividends over time. You just gradually accumulate more knowledge and more experience and it only benefits you in the long run.

And for a trader, you know, like Jack, trading in a cash account would be difficult because it would limit the amount of trades he could take. Therefore, it limits the amount of experience he can gain. So, trading in a margin account and now that FINRA has approved reducing the PDT level, this is going to be a big deal because he could trade in a margin account with a relatively small amount of money and he gain a lot of experience without taking a lot of risk.

Trading in a leverage account, well, if he had traded in a leverage account, I think it's safe to assume that all of this would have been amplified times six. The draw down would have been times six or times four, depending on what broker he was using. the recovery. I mean, the the chart would have been the same, but these numbers would have been times six. And here's the reality. As a beginner, he may not have been able to afford to go down $180,000, which is 6* three, right?

He might not have been able to afford that, and he might have blown up his account right here. So, I think it's important to just comment on the risk of using leverage. It's going to multiply and amplify everything. So, if you're doing well, if you have a track record that supports trading with leverage, then, you know, by all means, you're going to feel feel confident taking that risk. But if you don't have it, then you certainly shouldn't.

And so, I see some of these uh students who are posting their P&Ls, you know, $1,100 in a month. You might argue this person, and I'm not picking on you, Mark, by any means, you might argue that he would have made more money working at McDonald's. And while that is true for this specific month, what he's working on doing is building a track record. He's working on building really developing a proof of concept so maybe he can get to a place like where Jack was just for last month.

Now you've got other members who you know a little bit earlier in their career and you're seeing more red than green. This is someone that needs to work on improving their accuracy and I hope that they're trading in the simulator. Some of these may certainly be uh traders who are posting um simulator profits. Some of them are real money. Uh some of these members have earned badges. Let's see. We've got a member down here that had a nice one. uh whereas some of them are um members that don't have yet a badge.

So, it's hard to say if this is uh verified profit or if this is just um you know trading in the simulator. But nonetheless, what I love seeing are students that are in these various stages of their learning curve. And so you can see some that are very new. They're still focusing on one trade a day, being super disciplined and building the track record. It's not about the money as much as it as it is about building the metrics, building the statistics of a strategy that you know you can trade.

You know, really once you've proven that skill, it's something that no one can take away from you. And that's what I love seeing. You know, just that long-term growth. And you've got to have that kind of long-term vision that this is something that you you want to be doing for a while. You know, some traders come in and they're just thinking, I want to go big. You know, I want to double my account in in one week or whatever the case is.

And although you've seen me do that and there are some traders who are capable of doing that, it's an unrealistic expectation as a beginner. So as a beginner, it's all about building that proof of concept. You do it by showing up every day. You do it by trading the simulator. And you do it by just constantly immersing yourself in a community of people that are speaking the same language. That's what they say. If you want to become successful, you got to surround yourself with five people or six people who are already successful at the thing you want to do.

So, we're certainly in a market right now that's giving a lot of volatility. It's a lot of opportunity. I do think we're kind of between cycles between the theme that was working really well for the last six weeks and I think what's going to come next. So, this is a time to kind of throttle back a little bit. It is a great time for me to be doing this challenge. And as always, all the profits from this small account challenge will get donated to charity.

I want to thank you guys as always for tuning in. Make sure you manage your risk, take it slow, and I want to remind you that my results aren't typical. So, please really pay your dues and practice in the sim before putting real money on the line. If you haven't already checked out my full length master class, I'll put a link to that right there. And I'll put a link to day one of the last round with a small account where I was trading with six times leverage.

You might want to check that out. I think you'll find it interesting. Thanks as always for tuning in. I'll see you for the next upload real