Lesson 50 · Small Accounts
Anyone who gives you one number is guessing or selling. Here’s how to work out yours in five minutes.
TL;DR
• Your ceiling is what you can lose without it touching rent, bills or savings.
• Risk per trade decides the rest — not account size.
• A cash account also needs settled cash for every position, every day.
Step 1: the money you can afford to lose
Most beginners lose money while they learn. Plan for it. The amount you could lose without it hurting your life is your ceiling — not your target.
Reality check: a bigger account doesn’t make you better at trading. It makes your mistakes more expensive.
Step 2: what one loss costs
Lesson 11 covers this in full. The short version: decide what one losing trade costs before you look for a setup. A common guideline is around 1% of the account.
Example numbers only.
| Account | 1% risk per trade |
|---|---|
| $1,000 | $10 |
| $3,000 | $30 |
| $5,000 | $50 |
Divide that risk by your stop distance and you have your share size. $30 of risk with a 10-cent stop = 300 shares.
Step 3: what the position ties up
Same risk, different share price, very different amount of cash. Example numbers only.
| Stock price | Stop | Shares for $30 risk | Cash tied up |
|---|---|---|---|
| $3 | $0.10 | 300 | $900 |
| $10 | $0.25 | 120 | $1,200 |
| $30 | $0.50 | 60 | $1,800 |
If the cash a position ties up is more than your account can spare, your setups don’t fit your account yet. Lesson 43 shows how to check which price ranges work for you.
Step 4: settled cash per day
In a cash account you can only trade settled cash, and US stocks settle one business day after the trade (Lesson 49). If you keep part of the account back each day, the cash you use per day is smaller than the account. Size from that number, not the balance.
Step 5: subtract what trading costs you
- Commissions and fees — some brokers charge per trade or per share, some don’t.
- Scanners, data, Level 2 — monthly fees hit small accounts hardest. Start with free plans until you know you’ll use the paid one.
- Broker minimums — some have none, some require a deposit.
Rules change. Fees, minimums and data costs change often. Check each one on the provider’s own site before you fund an account — our broker reviews list where we checked and when.
Step 6: set the stop for the day
Pick a daily max loss — for example two or three times your risk per trade — and stop trading when you hit it. Lesson 44 shows how one bad day can erase a week.
The five-minute check
- Ceiling: what can I lose?
- Risk per trade: what does one loss cost?
- Stops: do my usual stops give a position worth taking?
- Cash: does that position fit inside the settled cash I’ll use each day?
- Costs: after fees and tools, does it still work?
All five yes? You have enough to start small. Any no? Keep practising in a simulator (Lesson 27) and keep saving. There’s no prize for starting early.
An honest word on risk: these numbers decide how much you can lose per trade, not how much you’ll make. Most retail day traders lose money overall. Nothing here is financial advice.
Keep learning
With your numbers set, go back to the strategy lessons with a size you can actually afford — and track every trade in R from day one.
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