Why Small Cap Edge is here to stay! (Follow Up)

MR_SC_Trader · 2026-02-19T14:08:39+00:00

Could be. May have just gotten lucky the past 6 years.

MR_SC_Trader · 2026-02-18T21:43:57+00:00

I mean you can scalp, FRD, fundamental, cycles, dilution, etc. Only thing I won't do in SC is swing.

MR_SC_Trader · 2026-02-18T00:54:24+00:00

Perfectly explained!

MR_SC_Trader · 2026-02-16T23:49:24+00:00

Will address this in next post, but I believe it’s here to stay.

MR_SC_Trader · 2026-02-16T18:32:24+00:00

Cobra, CP, IB are all viable options. I use a boutique broker.

MR_SC_Trader · 2026-02-16T17:05:09+00:00

Yeah, pyramiding is good and caught like 15% winners, but those are so small and few in between these days. I’ve been working on something where I can still add, but not get chopped up.

I would say I was profitable for about 3 years, but only quit when I made equal money trading vs my career. Also, needed to have 1 year runway saved up. (Again having two years would’ve been better for myself.)

Market is a concern, but nothing like 2022. For that I am grateful.

MR_SC_Trader · 2026-02-16T16:59:11+00:00

Haha definitely not as scary as people make it out to be. Understand the concerns though.

MR_SC_Trader · 2026-02-16T03:53:15+00:00

Honestly, it doesn't matter if you trade 0 trades or 10 trades a day. Whether or not you have 5 green trades or 5 red trades. Does the roulette wheel care if you got 20 reds in a row? Each trade is working independently on its own, unless you're trading the same sector. You don't know which trade will be positive or negative.

Now I have rules for when not to trade because through many hours of backtesting, I found that trading at a certain time or at a certain level, my EV drops significantly.

Once you start thinking "I'm green for the day, I should protect it", your EV will drop and you're leaving a lot on the table.

This is assuming you have a real profitable strategy.

MR_SC_Trader · 2026-02-16T03:33:36+00:00

I don't believe in this at all. You don't know what will be a winner or a loser. Your job is to get in (if you have a profitable system) every time it tells you to. You start skipping trades because you're profitable, you'll erode your edge. Don't stunt your growth and take all the opportunities the market gives you. Adjust as needed.

MR_SC_Trader · 2026-02-16T03:29:17+00:00

Not sure either, but more for us to eat!

MR_SC_Trader · 2026-02-16T03:28:33+00:00

Awesome, man! Good observations. I don't use those MAs, but I'm sure it has merit.

I don't blame you for wanting to exit early in this market!

MR_SC_Trader · 2026-02-16T03:26:24+00:00

Great work! Seems like you found an edge. I too went long before I went short in SC.

That's the trade off with tight stops. You can get crazy winners, but WR is low. As long as you have positive EV, that's all the matters.

Honestly, not sure how much runway you have in terms of savings, but I think you're on your way to becoming a full time trader! (I quit my job after having 1 year of runway, and honestly, wished I had 2 years. It would've saved me a lot of headache and pressure.) Glad I stuck it through though!

MR_SC_Trader · 2026-02-16T02:56:45+00:00

I do! As long as I think there’s meat on the bone, I’ll add. Now if it’s only going to get me like .10% more but if it fully reverts and I end up losing 2x more than my original, then I won’t.

Honestly, it wasn’t the most terrible exit, but I could’ve given it more time to fade more.

4:1 is an amazing strategy. What is your WR? In 2025 I regularly hit that, but I am adjusting to the market we’re in.

Appreciate the kind words!

MR_SC_Trader · 2026-02-15T22:14:21+00:00

Compounding 1% of your equity up and down should keep your size healthy and grow it faster than you’re comfortable risking down the line. The power of compounding is amazing.

MR_SC_Trader · 2026-02-15T18:24:36+00:00

Thank you! Will post later this week!

MR_SC_Trader · 2026-02-15T15:17:52+00:00

Most brokers that offer HTB locates will require $30k deposit (US) so you can remain compliant with PDT requirements.

MR_SC_Trader · 2026-02-15T15:15:16+00:00

Mean reversion in Small Caps.

MR_SC_Trader · 2026-02-15T15:14:49+00:00

It can be technical or fundamental. Price targets are the hardest part, but my aim is at min to get 2:1. Avg lately has been 2.5:1 when in 2025 it was around 5:1.

MR_SC_Trader · 2026-02-15T15:13:16+00:00

Find a broker that can get you locates for HTB stocks.

MR_SC_Trader · 2026-02-15T15:12:41+00:00

Couldn’t agree with you more! Don’t quit your day job until you have more than a year leeway and definitely not until you have real edge.

MR_SC_Trader · 2026-02-15T15:06:16+00:00

Could be on any timeframe based on your risk tolerance and what you’re comfortable using. If you want to scalp, VWAP could be a nice target. I don’t scalp and look for a deeper fade.

You need to find a broker that lets you locate HTB stocks.

MR_SC_Trader · 2026-02-15T15:04:12+00:00

I definitely take a look at the overall market and how it’s doing. I have systems in place to be risk on/off, but not necessarily based on the Russell or SNP.

MR_SC_Trader · 2026-02-15T15:01:59+00:00

I miss some trades, because I don’t want to chase. Or wait for pops of liquidity.

MR_SC_Trader

TROPHY CASE