It seems that part of the answer to this question rest with what and how you plan to trade. I gave my answer based on my experiences at equity prop trading firms. Firms that take licensed traders or get them series 7 and 55 licensed and give them 200k to 300k to trade with. In most of these firms the $5000 is just a way for the firm to protect itself from traders who might be tempted to do something foolish that the risk management team doesn't catch fast enough. Often time these firms will limit how much you can lose in a day, before they shut you down. This is designed to keep you from losing your entire $5000 in a week or so.
I have seen traders bring in $3000 and over the course of a year or so develop into really good traders who were very profitable (during this time they built there accounts up and were able to take on a lot larger positions) and I have seen guys bring 100k to the table, so that they could immediately trade large size and they still ended up blowing their accounts out. The important thing (specifically at these equity trading firms) that seemed to determine who was successful and who was not at these firms was how quickly the new traders were able to develop winning strategies and how good they were at limiting their risk and their losses.
In saying that $5000 is enough to at least get in the game to be a trader, I was speaking from the fact that most of the prop firms that people speak of on this site require a minimum of $5000 to get started. Firms like Echo trade, Assent, Generic, Barkley...etc..etc. Some of these firms will give more leverage than others off that $5k, but that amount seems to be the standard to at least getting in. When I started prop trading back in 2002 there were firms that allowed people to start with no capital deposit. That situation has changed but many of the firms do not require more than $5k to start nowadays. Often times on places such as monsterboard.com there are ads for people interested in prop trading and the firms offer mentoring and other training opportunites, which could also be of some benefit.
Now if you are looking to do things as a retail trader then you will obviously need much more capital, but not have to worry about the licensing requirements.
In either scenario your living expenses money would need to be seperate from your trading capital. In the past I have worked night or evening jobs to take care of living expenses.
Making a living at trading is of course extremely difficult and most new traders do not ever become consistently very profitable, but there are a lot that do and the only way to determine if you will be one of the successful ones or not is to try it and the prop trading route is just one avenue that you may decide to explore. Where these firms ad value is that they make it possible for people who would not normally be able to raise $25k to $100k to try retail daytrading. People interested in trading can save up a much smaller amount of cash see if they can be successful as a trader and if they fail then move on, without having lost their life savings. With so many fewer opportunites to get hired in as a market maker at brokerage firms, it would seem that for many prop trading deals are their best chance to give trading as a career even an attempt.
I have seen traders bring in $3000 and over the course of a year or so develop into really good traders who were very profitable (during this time they built there accounts up and were able to take on a lot larger positions) and I have seen guys bring 100k to the table, so that they could immediately trade large size and they still ended up blowing their accounts out. The important thing (specifically at these equity trading firms) that seemed to determine who was successful and who was not at these firms was how quickly the new traders were able to develop winning strategies and how good they were at limiting their risk and their losses.
In saying that $5000 is enough to at least get in the game to be a trader, I was speaking from the fact that most of the prop firms that people speak of on this site require a minimum of $5000 to get started. Firms like Echo trade, Assent, Generic, Barkley...etc..etc. Some of these firms will give more leverage than others off that $5k, but that amount seems to be the standard to at least getting in. When I started prop trading back in 2002 there were firms that allowed people to start with no capital deposit. That situation has changed but many of the firms do not require more than $5k to start nowadays. Often times on places such as monsterboard.com there are ads for people interested in prop trading and the firms offer mentoring and other training opportunites, which could also be of some benefit.
Now if you are looking to do things as a retail trader then you will obviously need much more capital, but not have to worry about the licensing requirements.
In either scenario your living expenses money would need to be seperate from your trading capital. In the past I have worked night or evening jobs to take care of living expenses.
Making a living at trading is of course extremely difficult and most new traders do not ever become consistently very profitable, but there are a lot that do and the only way to determine if you will be one of the successful ones or not is to try it and the prop trading route is just one avenue that you may decide to explore. Where these firms ad value is that they make it possible for people who would not normally be able to raise $25k to $100k to try retail daytrading. People interested in trading can save up a much smaller amount of cash see if they can be successful as a trader and if they fail then move on, without having lost their life savings. With so many fewer opportunites to get hired in as a market maker at brokerage firms, it would seem that for many prop trading deals are their best chance to give trading as a career even an attempt.
