Order Flow Trading With Less Than $20K Is Doable, If You Learn These 3 Simple Rules…
Are you tentative with your trading because you don’t have a multi-million-dollar bankroll like your institutional competitors?
Better not be — because whether you like it or not — even a tiny institutional trade makes tidal waves that’ll capsize your best trades. This leaves you with two options: ride their waves by trading with them, or get wiped out by trading against them. Either way, the most foolish thing to do — especially if you have a tiny bankroll of $20K or less — is to ignore the fact that you’re drilling for oil in the same ocean.
OK, now that I’ve got your attention, buckle in as we roller coaster our way through the 3 rules you need to master to trade order flows with less than $20K. Find out for yourself what it takes to protect and grow your small bankroll while playing with the big boys.
Order Flow Rule #1: Flush Or Be Flushed
Could you be falling for ‘Retail Flush’ traps?
Did you know professional institutional traders purposely set traps for retail traders? Happens every day. You think you’re in a position that is going to sell off forever, so you start to sell. When enough other retail traders join your panic, pros swoop in to buy huge blocks lower than what you sold for. This heavily pushes the market in a different direction, and retail traders are ‘flushed’ from the action.
Why do traders fall for these traps?
Just like cod dangling in a crab pot to catch king crab, retail flush traps offer irresistible bait: greedy trade setups. They’re counting on your trading education being little more than what you read in a 20-year-old book. Or even worse, quick tips from an internet ‘guru’ (who uses a sim account) teaching a new version of the same outdated ways to try to trade.
Sometimes there are good gurus who risk their own money, but they can mislead you too. Not intentionally, but they teach like you already have a pro-level education — and a bank account of $250,000+ at your disposal. So you make decisions that might be good for someone who can take a $10,000 hit, but certainly not for someone with a $5-$20K trading account..
Is there a way to profit from retail flush traps?
Glad you asked. Because yes, you can. Once you learn the other two rules in this report (along with how to spot retail flush traps) you will no longer panic like your retail brethren. Instead, you’ll know how strictness keeps your account from being shipwrecked. Which is exactly what Order Flow Rule #2 covers.
Order Flow Rule #2: Be Strict, Or Shipwreck Your Account
What does being strict have to do with small account order flows?
Most people start out trading order flows with a futures account somewhere between $5K and $20K. This is both winning-the-lottery good, and living-in-an-asbestos-house bad.
The good is: You have the chance to make hundreds of thousands of dollars for such a paltry fee. It’s like being able to buy a seat at the final table of the WSOP (world series of poker) for a few hundred bucks. If you play your cards right, you stand to strike it rich.
The bad is: Your broker will let you trade as if you have a $200K – $300K account. The voodoo magic giving you this monetary mirage is leverage. Better known as intraday margin.
How not being strict with leverage shipwrecks most retail traders
When you have an over-leveraged trading account, like most retail traders, you’re always 1-2 trades away from a shipwrecked account. For example, 1 E-Mini S&P 500 futures contract is worth about $100K. And most futures brokers will let you trade 1 of these puppies with only a $500 margin (cold hard cash in your account).
So what’s wrong with getting more bang for your buck?
Risk. Starvation. Homelessness. Okay, I’m only half-kidding about the last two. Most retail traders only see the upside of the 200-fold leverage. But like a jobless high school senior with a newly minted credit card, they just can’t see the downside of maxing out.
What does over-leverage look like?
Let’s say a retail trader has a $5K account, they trade five 100K contracts — all leveraged. Even if a pro likes to gamble, they’ll never shove their entire account into the center of the market table like this.
But if you have a small account, don’t you have to use leverage?
That’s true. You have no possibility to trade ½ or ¼ contracts. Since you need at least one full contract, you HAVE to use leverage when you trade with a small account (unless, like pro institutional traders, you have a spare $100,000 in cash lying around).
I’m guessing you don’t.
That’s precisely why you need an extra strict trading mindset
The first part of your mindset needs to know it only takes 1-2 bad trades to wipe out your account. If you will remind yourself of this before every trade, like a soldier thinks of his beloved before going into battle, you will be quantum leaps ahead of 95% of retail traders.
But trust me, pressure to survive the markets will still be a constant companion.
Once you understand the stakes of being over-leveraged, another pressure will mount. The pressure to be right on every trade. With a tiny account, this can make you feel desperate — especially when losses start to mount. Stay strict with your fundamentals and you can turn this pressure into an ally.
How do you spot those juicy trade setups?
Order flow sequences. This is what the top 5% of professional institutional traders use to consistently find more winners, more often. In short, they trade with the institutions, instead of against them.
Order Flow Rule #3: Use Order Flow Sequences To Trade With The Institutions (Instead Of Against Them)
Besides account size, what’s the biggest difference between you and institutional pros?
Institutional pros know how to analyze the market and filter out all noise to discover the important facts. With Jedi calmness and concentration, they block out all the crap and focus on the stuff which drives the market.
They also have a bloodhound’s nose for order flow sequences.
Order flow sequences?
Order flow sequences are patterns that happen when market manipulations are about to take place. There are 3 key elements to order flow sequences pro institutional traders look for:
1) Bid / Ask
2) Institutional Block Trades
3) Trade Imbalances
These 3 elements, when combined, are like a lighthouse beacon: helping you steer clear of trouble, and safely guiding you from one rich port of call to the next.
How do order flow sequences limit your risk and increase profits?
Successful order flow trading is all about the trade location and entry timing. Order flow sequences help you do this with small stops, so you don’t risk your entire account every day.
They also help you pick all the low-hanging fruits the average retail trader misses. That’s because most retail traders are trading against institutions in a desperate search for the one big trade that’ll let them buy the entire orchard.
We’ve all tried to do that.
The difference is, the pros have learned those home-run trades are rare. Few retail traders have. Most spend every trading hour in prayer: looking for the market to skyrocket so they can take enough profits to play golf the rest of the week.
Stop chasing home-run trades and start being profitable
Home-run trades of a lifetime will not happen every day, every week or even every month. Even if you luck into one, chances are it’ll cost you a painful amount of losses to seize it.
That’s why institutional pros live on low-hanging fruit, and can position themselves to catch the most juicy fruit about to fall, with little risk of hurting themselves.
If your goal is to make consistent profits, you can use order flow sequencing just like the pros do every day. When you check your greed for monstrous profits, you can trade order flow futures for smaller, yet far more consistent profits.
How do the little profits of order flow sequencing add up to big money?
If you could rack up 5 ticks’ profit in the market every single day, would that feel like a successful trading career? You bet.
Not only would the consistent cash feel great, but with your fear and greed under control, you’d also make better decisions based on facts, not on emotions.
Now imagine trading just 1 market with one contract for a modest 5 ticks’ profit. What happens when you trade 10 contracts… and then 10 other markets with the same odds?
Order flow sequences — plus the other two rules of not falling for institutional traps and being strict with your fundamentals — is what lays the foundation for you to become a wealthy trader.
So, What’s Your Next Best Step?
You’ve learned a lot. And if you want to get to know me and some other resources to help you go deeper with what you learned here, then sign up for our two free mini-courses: Order Flow Basics
and Tape Reading.
You can also explore our Institutional Edge System, Advanced Trading Group, or Funded Trader Program.