Ideal Account Size for New / Developing Day Trader

E

_eug_

I am outside of USA so no PDT Rule for me. I trade stocks usually between $10 - $30 price range. I am not trying to live off my trading profits yet as I have plenty of cash saved up on the side to live of for a few years with no income if it comes down to it (Savings are in long term index following EFT's and cash).

I understand that if you want to live off of your trading you need to have a decent sized account but what about if you are just using an account to learn? Is it reasonable to learn to trade on a 10k USD account before committing a more significant sum?

I tried to paper trade but its very hard for me to take it seriously for longer than a week or two at a time. I have been live trading an 11k account and my equity curve for the last 3 months is pretty much looking like a trading range, up, down, up, down. Have a few winning days, than give it all back and be back at square one.. and repeat.

Is there a specific reason to put down more cash upfront? A lot of resources mention that one of the big reasons for failure is under capitalized account. But I don't want to risk blowing up due to emotional or disciplinary issues while learning.

Why is a large account necessary?
 
_eug_ said:
I am outside of USA so no PDT Rule for me. I trade stocks usually between $10 - $30 price range. I am not trying to live off my trading profits yet as I have plenty of cash saved up on the side to live of for a few years with no income if it comes down to it (Savings are in long term index following EFT's and cash).

I understand that if you want to live off of your trading you need to have a decent sized account but what about if you are just using an account to learn? Is it reasonable to learn to trade on a 10k USD account before committing a more significant sum?

I tried to paper trade but its very hard for me to take it seriously for longer than a week or two at a time. I have been live trading an 11k account and my equity curve for the last 3 months is pretty much looking like a trading range, up, down, up, down. Have a few winning days, than give it all back and be back at square one.. and repeat.

Is there a specific reason to put down more cash upfront? A lot of resources mention that one of the big reasons for failure is under capitalized account. But I don't want to risk blowing up due to emotional or disciplinary issues while learning.

Why is a large account necessary?
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You will get a variety of answers here on ET or maybe none.
 
_eug_ said:
Please explain why you say this.

I can take 100 or 200 shares and keep my risk to 1% or less per trade. Why is 10k not enough for learning reasons?
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If you are trading straight stocks with 10K, and you are taking 100-200 shares per trade, without risking more than 1% of your capital per trade, what kind of companies are you trading? What is the price per share? On what exchange are you trading these stocks?
 
Overnight said:
If you are trading straight stocks with 10K, and you are taking 100-200 shares per trade, without risking more than 1% of your capital per trade, what kind of companies are you trading? What is the price per share? On what exchange are you trading these stocks?
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I am trading "in play" stocks that have fresh news catalysts and are gapping up or down. I tend to do best with $10 - $20 stocks. Its not too hard to catch a 50 cent to 1 dollar move in first 2 hours of the day. Hard part is making sure the move is in your direction.
 
First off, you've already shown that you have "emotional (and/) or disciplinary issues" by not being able to issue or stay with the trades you've developed thus far. And you *hope* that by raising the stakes, focus and staying power will result.

Well, if "self-knowledge" means anything, then you're half-way home.

Whether 10k will do the rest of the trick, none of us can tell. It not only depends on you, but on your intended style of trading. Specifically, "expectancy." Making many trades, and many small losses, takes a whole different brand of mentality than taking few, near-sure winners. Where you decide to exit, whether to double-down, back up the chain to the initial entry -- it ranks right there with whether you think of yourself as a tactical "trader" or a strategic "investor."

I would take what I thought was okay to lose, and promise myself to *stop* everything and re-examine my intended path, should I lose half of it, or should I double it.

Would 10k do it? Sure.
 
_eug_ said:
I am trading "in play" stocks that have fresh news catalysts and are gapping up or down. I tend to do best with $10 - $20 stocks. Its not too hard to catch a 50 cent to 1 dollar move in first 2 hours of the day. Hard part is making sure the move is in your direction.
More...

Is my math off or am I not understanding something? How do you trade 100 shares of a $10 stock and risk only 1% of your 10K capital?
 
Overnight said:
Is my math off or am I not understanding something? How do you trade 100 shares of a $10 stock and risk only 1% of your 10K capital?
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By risk I am referring to where the max loss that I will stop myself out at. 50 cent drop in price with 200 shares = $100 loss or 1% of the account.
 
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