How much to start with?

[ddunbar]

If you trade E-minis, $10k minimum to trade 1 emini using stops.

Forex, EUR/USD, $5k minimum to trade 1 lot(100,000) with stops.

Stocks? $25-50k


It's been mentioned before, but expect 25 - 50% of that to be chalked up to tuition. Kissed up to God, Etc.

Don't fear loss. Embrace it. It is the only thing that sharpens the learning faculties of the mind. But do plan for loss. The first thing you MUST develop is a money management strategy. Primarily, how to deal with being wrong. Stops, for instance, can be an invaluable tool if used properly. Each market/instrument has it's own volatility which must be factored into any money management strategy. Then refined based on your system. Some markets and systems allow for wide stops. Some tight.

 

[poboy]

Quote from stktrdr:

I'll tell you what. Give me half of that, then I'll take you out back and kick you in the nuts.

That way you get to keep half. You'll be alot better off. Trust me.

 

[JMowery1987]

Quote from tyler19:

Hello Im new, Im just in the learning process right now. I was wondering if starting with 2000 would be possible. I know that I would only be able to do 3 trades in 5 day period. Right now thats all the money I can use.

Starting... of course!

But like others have said, consider that the money you will more than likely lose and pay for your education in the markets.

So make good use of it, protect it, and try to keep as much of it as you can to learn all about trading.

 

[Johnny Walker]

Hey man, dont listen to these guys. Let me tell you a little something. Take that $2000 and open a futures account with a broker that offers day trade margins and free streaming charts. You can day trade 10 year bond futures with minimum margin of $200 PER CONTRACT, each tick is $15.63. You can also day trade corn at $175 per contract. If you cant beat the corn market then you should never try trading again. You can also trade the TOKYO GRAIN EXCHANGE, because their contracts are much smaller. Have a great time. Leverage is a great thing. You probably will lose all your money, but who gives a shit, you probably lose $2000 at the tables in Las Vegas.

 

[rimshaker]

Quote from Johnny Walker:

Hey man, dont listen to these guys. Let me tell you a little something. Take that $2000 and open a futures account with a broker that offers day trade margins and free streaming charts. You can day trade 10 year bond futures with minimum margin of $200 PER CONTRACT, each tick is $15.63. You can also day trade corn at $175 per contract. If you cant beat the corn market then you should never try trading again. You can also trade the TOKYO GRAIN EXCHANGE, because their contracts are much smaller. Have a great time. Leverage is a great thing. You probably will lose all your money, but who gives a shit, you probably lose $2000 at the tables in Las Vegas.

..futures.... margin....day trade..... leverage..... las vegas

wow, that's some great advice for someone just starting out. You touched base on practically everything he should AVOID.

 

[JMowery1987]

Quote from Johnny Walker:

Hey man, dont listen to these guys. Let me tell you a little something. Take that $2000 and open a futures account with a broker that offers day trade margins and free streaming charts. You can day trade 10 year bond futures with minimum margin of $200 PER CONTRACT, each tick is $15.63. You can also day trade corn at $175 per contract. If you cant beat the corn market then you should never try trading again. You can also trade the TOKYO GRAIN EXCHANGE, because their contracts are much smaller. Have a great time. Leverage is a great thing. You probably will lose all your money, but who gives a shit, you probably lose $2000 at the tables in Las Vegas.

Hehe, problem is, I actually did that.... except it was with the YM. You just have no idea how much longer and more experience I could have got on that 2k if I just traded 100 shares of a stock.... vs day-trading Futures.


Leverage is a great thing for some, but it was a very bad experience for learning, because the learning spanned across only a few weeks, where as with equities, with solid risk management, it could last for several months if done right.

But Johnny was right with one thing. You probably will lose all your money in Futures

If you are in it for the thrills though, Futures is a nice way to go.

 

[cashmoney69]

Quote from candletrader:

If you are gonna start with $2000, you are gonna have to risk losing around 20% of your account per trade to have some kind of shot of making a modest living out of trading...

In other words, you are gonna do one of two things
1) slow bleed or stay flat if you don't risk enough
2) blow up if you risk too much

On an account size of $2000 there is no compromise between 1) and 2)...

So, buddy, here is my recommendation... get together around $50,000, and then you have a shot at making a living... even then, the odds are only around 5% of succeeding at making a living... but with your $2k, your odds are close to 0% of succeeding...

Candle is right. If your trading on margin with that 2k, technically you cant lose any of it, or else you will get a margin call. I have little over 2k myself (no borrowed funds) but I learned from past experience from trying to trade with 1k..LOL..Even with 2k, you'll have a hard time, because you need to at least buy 100 shares of whatever stock your trying to trade to over come the cost of commissions to even make the trade worth while.

here is a small example of how much a stock will need to move, if you bought "X" number of shares and paid a 14.00 commission.

20 shares .71 .17 profit after coms

40 shares .36 .37 profit after coms

60 shares .24 .37

80 shares .18 .37

100 .15 1.03 after coms


As you can see, if you only bought 20 shares, the stock would have to move close to over a point, for you to JUST BREAK EVEN. but if you bought 100 shares, the stock only has to move by .15 which happens alot in daily fluctuation. I trade intel and can just barely afford 100 shares, which puts 90% of my account in one stock.

- nate

 

[steve46]

So first, I would suggest you use the search function to obtain some background. The subject has been discussed before.

1. In general terms, undercapitalized traders cannot survive an early drawdown. It is a "catch 22" kind of thing, but here is how it plays out. You don't have much experience. You put on a trade, but you don't know the best way to enter, or what to do while you manage the trade. The way your trades end, is A.) you get stopped out early because you don't know how to enter. B.) you get washed out because your stops aren't big enough. or C.) You freeze, or you refuse to cut your losses and you take repeated losses too big for your account size.

2. When starting with a small capital account if one suffers several consecutive losses, it becomes psychologically difficult to continue.

3. If your luck is bad, it becomes very difficult to trade because your confidence evaporates. Do you pull the trigger or not? What if this is another loser? How many more can you take? It starts to feel like a bad dream.

Yep, except that a bad dream ends when you get up.

Thats when yours is just beginning.

Best Regards,
Steve

edit:

The way to "fix it" is not to trade. Wait, watch & learn.

 

[JMowery1987]

Another option, like I did, is to take that money to a remote prop shop. Trade only 100 shares, but now at least you can affordto trade with 100 shares, and even day-trade if you wish.

That is of course an option if you are really serious about trading and need to be able to buy 100 shares of stocks like AAPL or stuff like that.

It just depends on your needs.

I also had been playing around on the Think or Swim platform demo that a guy at the company set me up so I could test all I want on it to learn about options *they are a nice bunch of people*

You could learn about options and go that route, you probably won't make money doing that, but if you are interested in learning about options... that is a route.

Last of course is mini forex. Oanda account and trade $1 per pip to learn.


---
Don't think about making money. I know that no one on here is going to stop you from trying. But at least make a sincere effort to learn about trading with that money. Trade the lowest amount of shares/lots/contracts in whatever market you pick, and focus on not losing a lot.

Regardless of what suggestions are up here, that above paragraph is probably the best YOU can do to help you learn these markets.

Just a few suggestions from a young trader who is always learning.

 

[mschey]

Quote from MrsSavant:

The amount of money you start with, dictates the amount of money you should trade with on each trade.

ElectricSavant uses a microscopic amount of money to trade with compared to his equity sitting in the account in question.

As long as you keep commissions factored in, you can weigh out the validitiy of your plan.

Of course you need an edge too and be careful with leverage accelerations and such.

Wifey

Wifey.....you have got to get electric to start pushing his edge and start trading as a business, not as a hobby. He has done the work, is passionate, and probably has a good edge, but to trade microscopic amounts of capital is far too conservative of an approach. If he is making money, and able to do this nearly every day, then he needs to push himself to trade a little bit larger every day until he reaches the point he is no longer making money. What do you really have to lose anyway?