I am an intraday trader. And it's damn hard to make money. I think if I had the necessary capital, I would trade on the day. So much profitable. But it is already necessary to study economics and fundamental analysis.
Do you trade for an income or for a compound effect?
- Thread starter danielc1
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If you can't make money with a small account what makes you think you could make money if you were better capitalized.
some strategies require more capital just because the minimum notional sizes trade in certain sizes.
running an ES system with 2000 means you taking 200k of risk every time you trade. Possibility of permanent impairment of capital goes up a lot.
Another example: delta hedging options is hard if you don’t have PM
I'm suspicious of systems that require a lot of capital to make them viable. If you have an ES system that works you should be able to make it work with one contract.
If not how about trading the mini or SPY or one of the leveraged ETFs?
I realize that being undercapitalized is one reason traders fail, If you don't have enough capital for your system; Don't trade.
I agree with the latter statement.
but some strategies require diversification or access to products that have high notional.
You can compound AND generate income at the same time.
Compounding does not necessarily mean you are always using 100% of your profits for trading purposes, you can withdraw some of with (say 15% each year) and still continue your compounding strategy.
In fact, I strongly recommend you withdraw your initial capital after 3, 4 or 5 years of strong returns, and play with your profits after that, as you see fit (some low-life brokers hate that practice, for obvious reasons....
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I have to disagree with that statement, DeadDog.
If a trader has a very good trading system, he can start with ANY capital, however small, and compound his capital from there, slowly but surely, while still risking 2% per trade or so.
Believe me, it's doable.
I taught one of my trading systems to my little nephew and he is making money. Not much at the moment (he started with $1000) but I am pretty sure he will start generating a decent income soon (for his age that is), just from that one trading system alone.
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Damn!! and I was doing so well.
If a trader has a very good trading system, he can start with ANY capital, however small, and compound his capital from there, slowly but surely, while still risking 2% per trade or so.
Believe me, it's doable.
I taught one of my trading systems to my little nephew and he is making money. Not much at the moment (he started with $1000) but I am pretty sure he will start generating a decent income soon (for his age that is), just from that one trading system alone.
What I meant is if your system requires 10K and you only have 5 then you are better off not trading.
Damn!! and I was doing so well.
Nowadays there is almost no market or system that requires $10K to trade.
In the Forex market for instance, you can trade micro lots with a mere $100 deposit, or even less.
In fact, some micro FX brokers do not even have a minimum deposit requirements.
For traders with limited capital I suggest they start small and bet big with the house's money only, that's the only way to break the bank, so to speak.
If you double your money withdraw your initial capital and trade with the rest.
But again, most crooked brokers will somehow prevent you from withdrawing your initial capital. They will use any trick in the book to "explain" why you cannot take your money out, for very obvious reasons...
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