 Hey everyone, in this video I want to talk to you about trading options for small accounts. Now this is a question that I get a lot from members and students at Navigation Trading and the question is can I be successful trading a small account or should I just wait till I save up more money or start trading when I get a larger account? And the answer is you absolutely can be successful trading a small account. We have a lot of members who have smaller accounts that continue to have consistent success all the way up to members who have seven figure million dollar accounts who are having success. So you can absolutely be successful with a small account. Now can larger accounts take advantage of more opportunities? Yeah, absolutely. So traders with smaller accounts just have to be more disciplined in their trading. So the other thing is if you're successful trading a small account then you'll be extremely successful when your account is larger. And the cool thing is the success that you have trading will run over to other things in your life. You'll have a positive effect to if you're in business or your career with your relationships, with your friends and your family they're all going to grow when you have success trading. And it's kind of funny because now I kind of relate everything in my life to trading and everything in probabilities and statistical outcomes. So with my rental properties when I'm buying a rental property I'll try to figure out what the probability of success will be with that specific property and it's really help me mentally evaluate different risk versus return things. You know when my kids kind of get mad at me because sometimes they'll ask me a question and I'll respond with saying that's a very low probability of chance of that happening. They kind of shake their head because they know it's a trading analogy that I'm about to share with them. But it will truly help you in every other aspect of your life. So when it comes to small accounts kind of what we classify as a small account at navigation trading is $25,000 or less. And when it comes to trading a small account and this really goes for any size account but really specifically for small accounts is that the position size that you take your trades on is key. So there's going to be certain high price stocks and ETFs and futures that may be too big for you to trade and do not trade them because eventually it will come back to bite you. And I know this from personal experience so if there's a stock or ETF and it's going to take up too much capital relative to your account size you have to pass on that trade. Do not take that trade. You may get lucky once or twice or three times but you're in this for the long run. Do not take those trades because eventually it will come back to bite you and if you incur a huge loss in your account it's going to not only affect what you can do trading going forward but it's going to affect your mental vision of trading and how that affects you going forward so just don't do it. And then secondly you want to build long term consistencies. You have to let the probabilities play out. So let's talk first about position sizing and I've created this chart that shows you based on your account value how much you can allocate to each trade. So the maximum a maximum percentage that you can allocate to anyone trade is five percent okay you've got to internalize that and you've got to take that serious when you're making your own trades. Now personally I stick to the one percent or two percent or sometimes even smaller range in my account. Now I trade a larger account so that's easy for me to do it's not as easy when you have a smaller account so you have to be way more picky on the trades that you take. So if you've got a five thousand dollar account and you're looking at the one percent range you can only risk fifty dollars. Now that's a pretty hard thing to find when we're trading the option strategies that we teach at navigation trading so you are going to have to go up a little bit higher allocation when you have that smaller account. Now as your account grows you can grind down the allocation to a lower percentage and I would say if at all possible you want to try to stay in that one to three percent range but absolutely never go over five percent. So if you for example if you have a trade that you can get into for and let's say you have a twenty thousand dollar account let's say there's a trade that you can get into with one contract for three hundred dollars okay you should go ahead and do just one contract stay in that lower percentage of your account allocation. If you do two contracts you'll be up to six hundred and so forth and so on but really try to stay as small as possible regardless of your account size especially starting off until you really understand fully and have traded through many market cycles so that you understand exactly the nuances and everything that can happen within a trade. The goal is to hit singles and doubles and live to trade another day every day that the market opens is going to be a new opportunity for trading okay so don't you can't feel like you're in a hurry and you've got to trade bigger because you want to make money quicker everybody wants to make money quicker but you've got to trade small especially starting out and especially with a small account size to make sure that you can grow that account consistently and that gets us to the next next point which is long-term consistency you know the probabilities of your trades will play out over time okay but it takes a lot of trade so you know at at navigation trading most of our trades are around a probability of success of an average of let's say around 70 percent it's about 71 percent so over time we're going to be right on about 70 percent of our trades however in the short term that's not always going to be that's not always going to be the case think about this if you flip a coin 10 times will it always produce five heads and five tails of course not okay even though the the probabilities of a coin flip or 50 50 it's not always going to happen in that short period of time so sometimes traders forget that whole statistic and they you know they take 10 trades and seven of them are losers and they and they stop trading or they think oh the strategy doesn't work and they switch to a new strategy and they try to go find something else but really they didn't let their probabilities play out over you have to create hundreds sometimes thousands of trades to let to let the probabilities play out the option models and the pricing of options is so accurate over over extended periods of time and over extended numbers of occurrences but you have to let those probabilities play out if you can internalize this fact and and if you can really make it a practice in your trading in your mental mind state of trading every single day and with a small account you can become consistently profitable if you'd like to learn more about the different strategies that we use to make consistent returns come see us at navigationtrading.com we've got a ton of free resources including the navigation watch list which is a list of the most profitable symbols to trade for each type of strategy we've got the volatility indicator which you've seen on my charts you can download this directly to your thinkorswim trading platform and we've got a free options course called trading options for income which is a step-by-step guide to get you making consistent trades right away we look forward to seeing you there