How does someone get the capital required to turn trading into a business?

rwk · Mar 23, 2014

The $25k minimum for day trading applied only to securities, not futures or forex. With futures, you can start as small as your broker allows.

Money management in futures has a "friends & family" exemption that allows you to skip the expense and hassle of registration while you're small. I am less familiar with what is available on the securities side. Anybody know?

The problem with managing money for friends and family is that, unless you're a total jerk, you feel bad when you go into a drawdown. That added pressure is not good for your trading, especially when you're starting out. It's better to trade your own money until you have the bugs worked out. Just be aware as you grow that the bigger your capital base, the harder it is to execute.

cornholio · Mar 23, 2014

smallStops said:
NoDoJi mentionned topsteptrader : they offer 150,000$ for a risk of 400$, if you qualify. Why go and risk alienating family and friends if you have not really proved yourself?

Yeah whats the catch? Strings attached?

smallStops · Mar 23, 2014

cornholio said:
Yeah whats the catch? Strings attached?

Strings : obviously you can't piss off if you have just made quickly say the 10grands you needed to go and trade somewhere else.

cornholio · Mar 23, 2014

cornholio said:
Yeah whats the catch? Strings attached?

This topstep seems more geared toward daytraders. It would be kinda hard for a swing trader to try to make the 8.5K in 1 month with the 100K account and a max drawdown of only 3K. Furthermore one requirement is that you: "achieve an Overall Winning Day percentage of 55 or greater" - Is that a joke?

cornholio · Mar 23, 2014

SouthbeachCTA said:
The best and most honorable and professional way is to show 1 year's worth of positive returns....verified thru an independent certified public accountant. You then show this to friends and family and say you are looking for seed money to start a trading business....and see who, if anyone, bites.

This is how I got started. My first year's returns(2007) were positive, trading FX and energy futures on an intra day basis. I got a CPA to verify my returns at the end of the year. Then showed my mother's childhood male friend(who is now a very successful cancer surgeon in the Wash DC area and is like an uncle to me). We talked about it for a few weeks over the phone, and at a birthday party he had at his house one weekend for one of his daughters(has has 9 children...half of them adopted), at the end of the party he handed me a check for $250k.......with many conditions!

Nobody is going to offer you start up capital if you can't show(with proof)that you're already making money trading with proper risk management parameters. To think otherwise is to live in a fantasy world.

So if you are trading family/friends money do you have to get a CTA license and are you considered a hedge fund? I heard also about seed capital firms like BRI Partner's in Chicago - What's your take on this route? I think you would get more money than from friends/family but who knows what strings are attached with these places.

brad10 · Mar 23, 2014

If you are into day trading, join a prop firm. They will allow you to have access to potentially millions of dollars in capital.

Wide Tailz · Mar 23, 2014

STC Capital said:
For me --- working a job, saving the amount I figured I'd need in order to get started, swing trading for small but consistent profits and using compound interest to my advantage.

I definitely agree with this approach. And for some reason I make a lot more money trading when I have a job, compared to when I try to sit at home and try to do it full time. Professional income + 100% returnz on trading account = retired in 5 years :eek:

NoDoji · Mar 23, 2014

cornholio said:
This topstep seems more geared toward daytraders. It would be kinda hard for a swing trader to try to make the 8.5K in 1 month with the 100K account and a max drawdown of only 3K. Furthermore one requirement is that you: "achieve an Overall Winning Day percentage of 55 or greater" - Is that a joke?

I agree that they're geared more toward day traders based on the criteria you have to meet. I think they set the bar pretty low for day traders with a 55% winning day percentage. That means about half your trading days must be profitable, not even wildly profitable, just profitable.

Obviously, TopStep is not for you if you find their requirements to be too extreme.

cornholio · Mar 23, 2014

NoDoji said:
I agree that they're geared more toward day traders based on the criteria you have to meet. I think they set the bar pretty low for day traders with a 55% winning day percentage. That means about half your trading days must be profitable, not even wildly profitable, just profitable.

Oh, I thought 55% return. That sounds better.

jb3398 · Mar 24, 2014

cornholio said:
Wouldn't it be faster if you traded family/friends money at first and then after you had enough you could just trade for yourself? That would be the fastest route. But if that's not possible then I guess one just has to save, trade and slowly build it up like you describe.

I was also thinking about trading from phone when at work. Which phone do you have? I'm think samsung galaxy S 3 which is 4.8" - is that big enough? The biggest phone I can find is a Boost Max that's 5.7".

What kind of family members or friends do you know that will give you money to trade with? Without having a successful trading background!

First off I don't trade other people money unless I can back them dollar for dollar. When I have $30K in my account, them an investor can come in at $25k or less. So If for what ever reason, my losses and the stress level calls for a break (which has never happened) I can return the investors money and sleep at night.

I have a Samsung Galaxy Note 2 phone. Looking to upgrade to the LG G Flex with T-Mobile on 4GLTE. That phone is 6 in display which is bigger than the Note 2. With the most important aspect, having 4G LTE for faster executions and application stability.