you need enough to last until you learn the game. you will have losses. start very small and make your market humbling lessons cheap ones.
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Enough Capital???? Whats your experience?
- Thread starter pairsarb
- Start date
you need enough to last until you learn the game. you will have losses. start very small and make your market humbling lessons cheap ones.
Quote from Joetrader:
I started with 8K and had saved (after taxes, expenses, etc) millions by the time I started my fund this year. But I started trading a known market inefficiency and I didn't quit my full time job until I passed the 250K mark and my wifey didn't quit her's until I had well over 1M.
I like how you let your equity tell you when you could trade full time only. You were not undercapitalized in trading 8K because you had a full time job and a good support system. I think there are other factors that we could consider "capital" besides cash, that are important components of developing oneself. Like another job, a supportive family or set of friends, low living expenses, or any kind of creative practice that would allow a trader to trade and improve his skills.
The issue of minimal capital is closely tied to reasonable expectations of returns.
To illustrate the point, let's assume that a "good trader" could consistently makes 50% a year and a "great trader" could make 100% a year. I'm not even taking into account the learning curve.
You can start even with $5,000 only, as long as your business plan (strategy, risk per trader, etc.) aims for $2,500 the first year.
The more capital you start with, the faster you'll be able to make a living out of trading.
If you ask what is the minimal capital level to trade for a living, it will depend on other sources of income and your expenses. The key is to make a business plan.
One thing is sure: If you aim too high, it means the risk you're taking is too high and you will blow up your account.
One of the previous posters expects to make 10% a day!! I'm sure he was just kidding, but in case he is not...
1% a day on average for a year makes 989% for the year.
If anybody believes he could even start to get close to these figures, he lives in dreamland.
To illustrate the point, let's assume that a "good trader" could consistently makes 50% a year and a "great trader" could make 100% a year. I'm not even taking into account the learning curve.
You can start even with $5,000 only, as long as your business plan (strategy, risk per trader, etc.) aims for $2,500 the first year.
The more capital you start with, the faster you'll be able to make a living out of trading.
If you ask what is the minimal capital level to trade for a living, it will depend on other sources of income and your expenses. The key is to make a business plan.
One thing is sure: If you aim too high, it means the risk you're taking is too high and you will blow up your account.
One of the previous posters expects to make 10% a day!! I'm sure he was just kidding, but in case he is not...
1% a day on average for a year makes 989% for the year.
If anybody believes he could even start to get close to these figures, he lives in dreamland.
Oh...one more point:
The smaller you start, your commissions, slippage and fixed expenses (such as data feeds, platforms, etc) will take more out of your profits.
This will become clear if you make a business plan as I suggested above.
The smaller you start, your commissions, slippage and fixed expenses (such as data feeds, platforms, etc) will take more out of your profits.
This will become clear if you make a business plan as I suggested above.
Quote from OptionsWizard:
Oh...one more point:
The smaller you start, your commissions, slippage and fixed expenses (such as data feeds, platforms, etc) will take more out of your profits.
This will become clear if you make a business plan as I suggested above.
This resonates with me as I negotiated my first prop account since trading for a fund. The largest component is the relationship between fees and capital. However, each one's specific business attributes are different. I proceed to trade knowing that I have a larger part of fixed expenses relative to capital. But I have skill in trading and also other incomes from ventures not related to trading. When I trade for a fund, had a salary, all fees covered and was paid a bonus based on my trading profit, I had the commensurate high costs of living as well. Lived pretty high on the hog. I now own my cars outright, have savings, have trading capital, and feel that at the end of the day I win.
I am now better suited to take advantage of growing an account, so I believe this makes my capitalization adequate for my decision.
I spoke with my father today regarding work and this topic. He had a good laugh at my caution before I began. At some point, not trading for me was too much of a cost. I scrooged myself for many months running through various scenarios before I decided that in the worst case I could live with the numbers, and in a medium to best case my trading would be just awesome. At that point I took my small capital and began on my own for the first time.
I am learning a lot and confirming a lot from the responses in this thread.
"One thing you can't do when you trade is trade from scarcity; you have to trade from abundance. Because when you trade from abundance, youâre not worried about it and you can cut the loss fast because you know that there are more opportunities coming. But when you trade from scarcity you donât think there are more opportunities; you feel you have to get it back right now. What happens in most cases is that the position goes against you and you take a large loss." -John Netto.