Warrior Trading’s Ross Cameron is an expert trader and entrepreneur. Currently, he generally trades relatively large volumes of stock in one day. But it wasn’t always that way for Cameron. He had to start somewhere. The interesting thing is that the trading strategy he developed in those early years is pretty much the same one he still uses today. It all comes down to scale.
“I’ve heard so many traders say to me, ‘Ross, your strategy — that’s great that it works for you, but I don’t have $30,000 [to spend on a single trade], I have $500, and I can’t afford to buy 1,000 shares of a stock and make 20 cents a share and hit my $200-a-day [target] … I trade with 100 shares and need to get at least $1 out of the market [from each individual stock] to get $100, so I can’t sell when I’m up just 20 cents’” Ross Cameron recounts of myriad conversations he’s had over the years with newbie traders.
Such doubting day traders are usually focusing on stocks like Tesla or companies in the mid-cap markets.
The comment is usually made in one of Cameron’s classes, where he teaches aspiring day traders to be disciplined, concentrate in markets where there’s both high liquidity and volatility — like the small caps — and develop a framework for identifying stocks across that universe that will make significant gains on a given day. Concentrating on commonly held household names like Tesla is essentially disregarding the blueprint Cameron has created.
“It clearly works for me, and I have students who have made over a million dollars,” says Cameron. Although he’s quick to remind that their 7 and 8 figure results are rare, he says, “Most who attempt to day-trade lose money, so the learning process needs an approach with good risk management. Aspiring traders should consider using a simulator before ever trading with real money.”
Scaling Requires an Expansion of the Mind, Says Warrior Trading’s Ross Cameron
Two things worry Cameron when students make statements about the blueprint not working for them. While results will vary for learners, there are some common pitfalls Cameron has observed over the years.
His first concern is about their expectations as new traders.
“Trading a $500 account should not be about making money. If you came in with a $500 account thinking you were going to be making $5,000 a month [then you’re kidding yourself],” says Warrior Trading’s Ross Cameron. “While, technically, it isn’t impossible, I have never met a six-figure trader who started with $500 at the beginning of each month.”
But his biggest worry is that traders who voice such sentiments also seem to be missing a crucial point about how trading strategies need to be scalable.
“[They’re] saying, ‘No, that doesn’t apply to me because I have a small account.’ And I think that’s a mistake,” Cameron says. “A $500 account should be correctly thought of as proof of concept.”
Additionally, Cameron adds, “Every trader has to assess their risk-to-reward ratio and only trade an amount they are comfortable losing. While using a small account can be a great way to limit risk, traders also have to understand that there are scenarios where they can lose more than their account. For example, shorting a stock. This is why it’s so critical for traders to take their time to become knowledgeable and practice in a simulator before moving to a real account.”
Warrior Trading’s Ross Cameron Says Smaller Accounts Are Where Scale Starts
On a micro-scale, traders with small accounts need to be trialing and then incorporating the concepts people use on a larger scale.
“If you can find success with that, the only difference between making 20 cents a day with 10 shares and doing it with 1,000, 5,000, or maybe 10,000, ultimately is having more buying power,” says Cameron.
He admits there’s a limit to how much you can scale a trading strategy. But those limits have more to do with liquidity in the markets than anything else.
“You can’t jump in and out with 500,000 shares of a stock in one or two minutes on most stocks,” says Cameron.
But between 100 shares and 10,000 on most stocks is where you can scale pretty well without too much slippage, he adds. When his students seem to have trouble understanding scale, Warrior Trading’s Ross Cameron tries to reorient them to ask themselves what experienced traders are doing.
“Because if I was doing everything [experienced traders] were doing, I would be profitable,” explains Cameron, hoping his students will realize that.
He invites them to investigate whether there’s something that experienced traders are doing that they’re doing differently, to help them figure out what the differences are and how to get to a trading strategy that’s closer to what the experienced players are doing.
“I really want to try to get people thinking about what experienced traders are doing that’s different and I want to shine a light on this false belief that what experienced traders are doing doesn’t somehow apply to me because I have a small account. Because I don’t believe that that’s true,” says Cameron. “I think if someone has a small account and they were thinking that they were going to use that to make a living, then this is their dose of reality. That’s not a realistic expectation, and they need to adjust that.”
Warrior Trading’s Ross Cameron: Scale Is All the Sweeter
As well as a successful trader, Ross Cameron is a big aficionado of maple syrup — so much so that he collects his own tree sap to distill into the sweet elixir.
Maple syrup is made by collecting the raw sap from maple trees and then reducing it in large pans called evaporators to make the thick, tasty syrup everybody loves.
Last year, Cameron was collecting more sap than he’d ever amassed.
“I was like, I’m not able to keep up with how much sap I need to cook without staying up 24 hours a day,” Cameron recalls.
He contemplated buying more and bigger evaporator pans. Then he found a company online that sold systems for reverse osmosis — a process that dramatically improves evaporation effectiveness that’s used by professional syrup makers.
“I was like, wow. So that’s what the professionals are doing. They’re not just getting infinitely bigger pans. They’re increasing the efficiency of their evaporation by increasing the sugar density before they start boiling,” says Cameron.
And it turns out many maple syrup hobbyists have worked out how to use reverse osmosis on a much smaller scale than the professionals.
It’s all about scale.
For Warrior Trading’s Ross Cameron, saying that a professional trading strategy can’t work on a small account is like saying reverse osmosis can’t work for hobbyist maple syrup makers because the systems are too expensive.
They can work. You just need to be able to scale.
Disclaimer: The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. The content is not intended to provide specific financial, investment, tax, legal, or accounting advice. You should consult with a professional financial advisor to determine what may be best for your individual needs. Trading in financial markets involves risk and is not suitable for all investors. Past performance is not indicative of future results.