Contrary to what all the marketing tell you,
Trading penny stocks is NOT the only way to build your small account. How i’ve personally done it years ago, is
by…. So most new traders, myself included when
I first started trading, lean towards trading small cap penny stocks under the impression
that, hey since they’re cheap, I can buy more shares with my small account and make
that lamborghini money quick! While drinking at the beach or sitting on
the toilet. Well, five years later, I'm not at the beach
or sitting on the toilet. But i do own a lambo, hat! So I got to the point where I can afford a
lambo, hat, by yes trading small cap penny stocks, but also, trading momentum on large
cap and mid cap stocks. I incorporated trading these two kind of stocks
into my trading playbook, so I can adapt to various market conditions. Because let’s just face it, there isn’t
going to be hot penny stock breakouts every single week for you to build your small account. And if i force those trades in slower markets…
well i’d lose all the profits from before. So in this video I’ll go be comparing trading
penny stocks versus large cap stocks, the best set ups in both market caps for people
with small accounts to take advantage of, and the specific market cycles and the months
of the year that favor those set ups. So if you have a small account, but are struggling
to find penny stock setups when the market is slow, and you end up forcing your trades
and lose all the profit from the hotter months, this video is going to help you out! And all its costing you, is this $5000 DVD. Just kidding, it's just costing you a simple
tap on the like button. I truly appreciate it. So let me address the two biggest misconceptions
regarding trading large cap stocks right now. First, trading large caps is like competeing
with ivy league graduates, while trading penny stocks you’re just competing with the dumb
money. And that's partially true statement. But what most gurus are not telling you is
that, when you’re just starting to learn to trade, and following their alerts and newsletters,
you are their dumb money. So they are selling you the idea that hey
its “easier” to trade and make bank in penny stocks
so you should come and join thousands of their alert followers, which, according to this
amazing trader psychology book “Trade the Trader” by Quint Tatro, those tens and thousands
of followers trading small cap stocks, is the dumb money. And regarding trading large cap stocks, yes
it’s mostly smart money and big money in comparison to the small caps. But when institutions, aka the big money,
start pouring their funds in and out of a stock, they leave tons of money trails, and
it’s not difficult for us retail traders to follow the money and the buying or selling
volume. We’ll talk about these large cap set ups
for small accounts in a little bit. Now the second misconception regarding mid
caps and large cap stocks is that they are expensive for small accounts under $5000. But thats not true at all. $PCG was a stock in play last week. They have a market cap of 3Billion so its
a mid cap stock. But it was trading around $6, just like our
small cap stock XNET. And mid cap large cap stocks generally give
us a lot of range, especially when they have catalysts such as earnings and deals. So let’s take a closer look here. So $XNET is a small cap blockchain penny stock
that was very hot in the past week. You can see it spiked from $3 to $4.8 at the
close on Friday. And opened at $6 on Monday Oct 28. So let’s say with a small account you only
want to put $3000 exposure into this trade. And you pick up 500 shares of XNET at the
$6 breakout, and you sell into the pop at $6.30. So thats a 30 cents a share, which is $150
gain. For a small account under $5000 thats a very
solid profit. But what a lot of newer traders with a small
account cannot handle, is the volatility of these penny stocks. When a penny stock price fluctuates from $5.75
to $6 in 3 minutes, then squeeze to $6.80’s in 5 seconds. Then drops back down to 5.80 in 2 minutes,
its hard not to get emotional watching this price action when you have your hard earned
money on the line. Whereas if we take a look at Pinterest stock
on Friday Nov 1. The stock gapped down overnight due to disappointing
earnings. So with the same account if we were trading
the breakout of this day’s high at 19.8, which is also an important daily pivot line. So with 3000 BP you can buy 150 shares of
pinterest stock, and you take the stock up for for 1 point to 20.80. So the profit would be the same 150. Yes its the same 150 profit. But the stock is way less volatile and much
less stressful than trading small cap penny stocks. The key is that large cap stocks like Pinterest
are more likely to form a trend, and stay in the trend up or down for an extended amount
of time. Of course not all large caps are like pinterest
stock here. But generally speaking, they are way less
volatile than small cap penny stocks. So once you get in long on the dips along
this trend, as long as the trend holds, you can stay in it for 10. 20 or 30 minutes and more. Its much easier on your emotional health and
allows beginner traders to practice patience, which you need for either trading penny stocks
or large cap stocks. I remember when I started out in 2014, I was
pulling my hair out trading these volatile penny stocks. I swear I aged like 5 years in 6 months. I was like, no way man, I don’t want to
have to deal with this sort of emotional hurdles up and down. If i keep on trading only these trash stocks
Im gona start looking like my real age. What really helped me with growing a small
day trading account years ago… is by tapping the like button at the bottom of this video. Be careful guys, I’ve gotten some complaints
that people are breaking their mouse and phones doing this. I really appreciate your support guys but
please be gentle with that like button. So what helped building my small account,
is to only trade small cap stocks during the hot cycles, and while the small caps are slow,
i would redirect my focus to the mid caps and large caps which are trading in much bigger
range and volume. Yes, focusing on one or two penny stock long
setups definitely helped, but more importantly, I only trade and look for these small cap
stocks in the market conditions that favor those set ups. Why? Simply said, most beginner traders starting
out only have the account size to buy or go long stocks. But as i had mentioned in this video on market
cycle psychology… Small cap sentiment rotation happens almost
every few weeks. Some weeks are going to favor the longs, while
others favor the sellers. This year pretty much most of June to September
was like that. We didn’t see much continuation to the upside
on day 2 or day 3, and most of the premarket gappers just sell off right at the open. And if you were trying to look for long set
ups to build your account, well, there wasn’t that much ideal setups. In this situation many people would go for
sub-par set ups, and chase the one or two breakouts that looks like it “could” be
the turning point for the small ccap market. What happens next may sound familiar, I’ve
certainly done it. Iused to lose all the profits i made from
the hot markets favoring the longs in March and April, slowly in June to September where
everything is selling off. Like I said, I’ve done that years ago too
where Im expecting the same penny stock long strategies thats worked for a few days to
a week, to stay working the entire year. And that's just not going to happen. Unless you run a very large chat room with
thousands of followers where you could alert all of them to buy the pump after the half
a second internet speed latency. I mean, that sounds like a pretty smart and
solid strategy actually, why isn’t anyone doing that? Man I’ve gotta put that 1000% winning strategy
into my “How to make lamborghini money DVD”. So what changed the game for me as a trader,
was to adapt. When I didn’t have shares to short the penny
stocks in the market conditions that was against my long strategies, I started working on trading
mid cap and large cap stocks, instead of giving back all my profits from the months before. In the mid cap and large cap markets, there's
almost always daily fresh news and headlines that will provide opportunities for us traders. It could be China tariff news, earnings and
guidance , FDA approvals with biotech stocks, street analyst upgrades downgrades, or deals
and agreements between these publicly traded companies. As you may have seen in my weekly recap videos
posted every Saturday or Sunday, I trade the small cap pigs such as XNET, CANF, ISEE long
and short, and I trade many large cap earnings gap up and gap downs such as Tesla, BYND,
Etsy and Pinterest as well. Now I know most beginner traders just want
fast cash and make fifty thousand dollars in twenty seconds, but a lot of times, taking
10 minutes to read the earnings and guidance reports will allow you to form a solid trading
plan on these earnings plays. In large cap trading, you have your volume
as a reliable key indicator, and the trend to follow. What works really well for me in large cap
trading, is trading gap up break outs and shorting the gap fill. And yes, while I don't buy breakouts in penny
stocks, I don’t hesitate to buy break outs trading large cap stocks. The good news is, many of the text book technical
setups like the descending triangle, or the wedge breakout, or the lambo flag formation
works really well in large cap stocks. What im trying to say is, if you want to trade
purely based on technical patterns, trading large caps could be a friendlier choice. Whereas when trading penny stocks, its much
more important to use trader psychology, not follow the crowd, the alerts, and trade the
traders on the other side. Because if you’re not trading against the
dumb money in small cap penny stocks, then you could be the dumb money. If you want to know more about trader psychology,
make sure to check out these videos. Stocks like AMD, NIO, SNAP, GRUB are all in
a manageable price range for small accounts. Another benefit is that these mid caps and
large caps are much more accessible for small accounts to short. If you have a margin account you could pretty
much almost always find free or cheap short borrows on them. And do not have to worry about not being able
to access hard to borrow penny stocks. I think all in all, traders with a small account
should focus on one or two set ups that they’re really good at, and only them in the cycles
and the months that those set ups works best. If your go to strategy is to buy penny stock
gappers, then generally speaking March to April and October to December are the months
that favor that set up. And maybe in the slower months that doesn't
favor your set up, thats the time to paper trade and practice large cap set ups. The focus should be to preserve your capital
and profit you’ve made already with your small account, and not to force trades using
the same strategy every single day. If you want to see more of how I trade large
cap stock earnings gap up and gap downs, make sure to check out my weekly recap videos. I talk about my approach in details there. And many of those set ups are friendly to
build your small account. And if you have any questions feel free to
leave them down below. And If this video helped you out, please remember
to always tap the likely gently for the Youtube algo.
