What's up everyone Ross here from Warrior Trading. So in this video I Want to answer that question for you if how much money do I use to day trade This last week has been a terrific week. I've had some really big green days and so the question is starting to pop up again of well, you know when you make three thousand, four thousand, or ten thousand dollars, how much money are you using on those trades in order to make that money And I would also say that the answer to this question is different than the the answer to the question of how much money do you need to day trade because the reality is you can if you want to day trade with as little as five hundred dollars I did it in January of 2017 I funded an account $583 I'm going to turn it into a hundred grand in less than 45 days then I did it again in December of 2019 just this past December I funded an account with five hundred and twenty dollars when I turned it into fifty three thousand by the end of the month. so those were really those happen to be really good hot streaks.

Both the times that I funded the account, the market was really hot and I did really well. but you can open an account with as little as five hundred dollars. The problem with a 500 dollar account is that generally the last on these last two challenges, my first day with 500 has been anywhere from a hundred to one hundred and fifty dollars of profit. and that's been on.

You know, one really good trade in my regular-sized account which I am trading with right now. That same trade would yield me probably closer to realistically, it was $150 winning a $500 account. It would probably be a $1,500 winner in a $5000 account, and it would be like a $15,000 winner in a $50,000 account. So it would be a much bigger winner so it doesn't make sense for me to trade with a 500 dollar account every day, even though I've proven you can do it I use a larger account.

So in general, when I take my first position on a stock, I'm buying 2,000 shares. And that's true. pretty much for any stock between $5 and $10 So 2,000 shares of a $5 stock, 1000 shares would be five thousand dollars. Two thousand shares is ten thousand dollars.

So that means with two thousand Sheriff's $5 stock, I've put ten thousand dollars of my money into the trade. My goal generally would be a 10% game. So if the stock squeezes up from 5 to 525, that's good - 550 would be the target I sell at 550 for a $500 winner with a thousand shares or $1,000 winner with 2,000 shares. Now that's my starter position when I'm looking to be a little more aggressive I'll go up to 4,000 shares or 6,000 shares.

My full-size position generally is between 8,000 and 12,000 shares. It's the only times I really go into 12 15,000 shares is when I'm trading the cheaper stocks between $2 and 3 or 4 dollars. Occasionally I'll be more aggressive on stocks between 5 and 10, but but not as often because the problem is in that price range. We sometimes see stocks that will drop quickly and so then the risk starts to get higher with with larger share size.

I Would also remind you that when I take a trade and I put $10,000 into it and I make a thousand Some people would say wow, you risk $10,000 to make a thousand and that's not really true because I bought something that was actually worth ten thousand dollars. You know I bought shares of this company. It would kind of like if you buy a house worth $200,000 with the plan of selling it for 220 that would be you know, a nice little profit $20,000 You're not really risking the full 200 because you've now bought something of value. I mean even if the house is in terrible shape and all that it's worth, it's tearing it down in the land, you still have something that you can salvage.

So worst case scenario, you know you watch some of these HGTV shows. It's not that you couldn't take a loss on the house, it's not that you can't take a loss on the stock, you certainly can. But I consider my max loss to be the full amount of money I have in the because. that's just not really.

that's never happened to me knock on wood and it's just not really realistic. So the way I look at it is if I'm buying a stock at five dollars and I'm buying a thousand shares I've got five thousand dollars in the trade. But what I'm really risking is the difference between my entry price and the price where I'm gonna bail out for a loss. So let's say that's for seventy five.

Twenty five cents per share times a thousand shares. That would be $250 So I'm risking 250 to make five hundred. And now that makes a little more sense, right? You're risking a dollar to make two dollars or with two thousand shares I'd be risking in that case, five hundred to make a thousand. That's the type of profit loss ratio that I look for two to one and so generally on my trades.

This week I've been trading mostly between 4,000 and 8,000 shares. Last week I was a little more aggressive on a few of my trades and this week I told myself I wanted to kind of ease off the throttle and slow down. And what's funny is that as a result of slowing down I've actually made more money because rather than get in and get back out and get in and get back out because I was trading with so much money and share sizes, I started getting nervous I brought it down I've been a little calmer and I've been able to hold through a little bit of the chop and really let the position work. And and in that way realize wow, a bigger winner when they've ended up working.

So my average the average amount of money that I'm putting into a trade right now: 6,000 shares times $5 a share. That's $30,000 and again with a $30,000 position I might be risking a thousand to make 2,000 It might be risking 500 to make a thousand or whatever The case is, the money that I'm putting in is is more of a vehicle for taking this this quick trade where my risk is very calculated and my profit is well defined. Now, if you're trading in a cash account, the problem is that every time you take a trade, even just one trade, you now have to wait two days for that trade to settle and so in your case, you can only trade once every other day now. I'm using a margin account and that's what most day traders are going to use and the accounts that I used the brokers I use with my $500 small account challenge.

they gave you margin on a $500 account and there's some links down in my description if you want to learn more about it. But the point is with a margin account, as soon as you sell, you can trade with that money again. So if you have a thirty thousand dollar account, it's gonna say thirty thousand all day long. you buy a position.

Now you only have you know X amount left. you sell it. and now you have got the thirty thousand dollars again. and so you can just keep trading that money again again Again, whether you have three hundred, three thousand, or thirty thousand with a margin account, you can just keep trading.

So I've been trading in a retirement account and I've been able to grow the account nicely. which is great because in that account I although I have settlement margin I don't actually have any leverage I don't have buying power if I had fifty thousand I can only buy fifty thousand dollars worth of stock whereas with regular accounts, you're gonna have four times leverage. Which means if you put in twenty five thousand, you can actually buy one hundred thousand dollars worth of stock. And with some of the other brokers out there, some offer up to six times leverage.

So with a thousand dollars in your account, you can buy six thousand dollars worth of stock again. On the one hand, it's risky to use leverage. On the other hand, you know you're not gonna hold the position I Hope until the stock goes to zero. So what you're really risking is the difference between your entry and and your max loss.

So if you put six thousand dollars in, but you're really only risking two hundred and fifty, then from that perspective of risk to reward you may be able to feel comfortable taking the trade. but again everyone has their own risk tolerance. Mine has gone up as I've gained experience and that's that's the result of having confidence and that will happen for you as well. The most important thing is when you're getting started that you trade with small share size number one and before you ever trade with real money that you trade in a simulator.

Now if you guys want to learn a little bit more about the process of getting started opening your very first account, you want to learn more the details between cash accounts and margin accounts. You want to learn a little bit more about the PDT rule. I'm gonna put a link right down below in the description. That's gonna be a beginner's guide to getting started day trading I Know that there's a lot of folks that are looking into trading right now.

It's you know it's not some career because you can literally do it from anywhere in the world. I'm at my house right now. we're under a stay at home, shelter in place order so you know I'm I'm I'm totally fine to do this and I can trade from home and still do really well. You know, as long as you've got an internet connection, you're good to go.

So this is my little trading station here. And for the person who said Russ if you make so much money, you know why do you have this little apartment this? This little this little apartment over here is the this is more of my work studio. My house is across the driveway so walk down there. now.

if you guys haven't already hit that subscribe button, make sure you hit the subscribe button so you can see when I go live every morning to do my watch list or when I upload new videos. So there's the regular house. this is just the small house across the driveway. Alright you guys, that's it for me.

I Hope you guys enjoyed this video. Make sure you check out that link down there below for the beginner's guide and I will see you for the next episode. Check out some of the links in my description and if you have questions, ask them in the comments. I Personally respond to every question posted on my channel.

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