I couldn't agree more. Its 2:00 am here in California. I never went to sleep... I gotta go though, if I am going to work tomorrow.
Michael B.
Michael B.
Is $5,000 enough to get started with trading?
- Thread starter icantoday
- Start date
A little bit of history.
I started in 1990 with 5K. Lind-Waldock account with $30 commissions per trade. Back in the days! I've lost it all. Did learn something though! Borrowed 10K (never ever, ever, ever do it!) Lost it too! Got the margin call on 10 contracts of Canadian Dollar. Borrowed another 10K. Learned a lot!!! Quit trading for 2 years, worked 3 jobs, 18 hours a day to pay the loan back. Read a lot of books, bought a lot of courses. Started trading again. Broke even in my first year. Learned some more! Bought Trade Station, eSignal etc. started to develop my own systems. Made 10K profit in 1994! Went back and spent 1 year trading and studying. Made my first 25K profit in 1996. Working day job and trading in between. Built my first system and made 92K in 1999! Never looked back since. So, i did start with 5K. Took me over 13 years to learn how to trade. You decide now!
I started in 1990 with 5K. Lind-Waldock account with $30 commissions per trade. Back in the days! I've lost it all. Did learn something though! Borrowed 10K (never ever, ever, ever do it!) Lost it too! Got the margin call on 10 contracts of Canadian Dollar. Borrowed another 10K. Learned a lot!!! Quit trading for 2 years, worked 3 jobs, 18 hours a day to pay the loan back. Read a lot of books, bought a lot of courses. Started trading again. Broke even in my first year. Learned some more! Bought Trade Station, eSignal etc. started to develop my own systems. Made 10K profit in 1994! Went back and spent 1 year trading and studying. Made my first 25K profit in 1996. Working day job and trading in between. Built my first system and made 92K in 1999! Never looked back since. So, i did start with 5K. Took me over 13 years to learn how to trade. You decide now!
Ken, as you can see from the opposing opinions here, the answer is yes and no - it entirely depends on your experience.
If you are new to trading then, unless you are one of very few who become profitable quickly, you will probably eat through the $5000 just learning. Remember it only takes a few months of consistent small losses, $50 here $100 there, before most of its gone. Don't underestimate the effect of fear of loosing - if you start with just $5000 it will put you under a huge amount of pressure to get it right, even if you are trading very small. A larger account will give you some breathing room and ease the pressure psychologically - although you should still trade very small.
If you are experienced and can become immediately profitble, then yes its doable. But still start small - money management is key.
Whatever you do, don't give up your day job - on the dream of starting to trade full time on $5000.
Good luck.
If you are new to trading then, unless you are one of very few who become profitable quickly, you will probably eat through the $5000 just learning. Remember it only takes a few months of consistent small losses, $50 here $100 there, before most of its gone. Don't underestimate the effect of fear of loosing - if you start with just $5000 it will put you under a huge amount of pressure to get it right, even if you are trading very small. A larger account will give you some breathing room and ease the pressure psychologically - although you should still trade very small.
If you are experienced and can become immediately profitble, then yes its doable. But still start small - money management is key.
Whatever you do, don't give up your day job - on the dream of starting to trade full time on $5000.
Good luck.
This is not an atypical story, and it's what most new traders face. Thanks for sharing.
Any experienced trader knows that the single largest hurdle that a new trader can put in front of himself is an account that is undercapitalized. You are immediately trading with fear, and you have zero margin for error.
It would take a fool to start any business, particularly one with such a low success rate as trading, with those odds.
That was my thinking. While it may be theoretically possible to "make it" with a $5,000 account, it is pragmatically highly improbable. A lottery comes to mind as another fine example.
I think that part of the draw of the markets to newcomers is that entrants characteristically overestimate their "ability" and underestimate the challenge. That was certainly true in my case. Perhaps the standard text in brokerage account documentation should include "The learning curve is much larger and steeper than it appears."
Well some people here will tell you 5K is not enough. I would say since you stated you want to daytrade, it is possible. However, I would paper trade for at least 6 months to a year. Read as much as you can. Tony Oz is a excellent trader and author. Purchase a few of his books. Second you will need a broker that will allow you to daytrade under 25K. The only way around this ridiculous rule is to go offshore. http://alldaytraders.com does just that. There located in Jamaica and are not regulated by the SEC. I personally have an account with them and I've had no problems withdrawing money or depositing money there. There commissions may seem high but you can get lower commissions if you just email them.
Also another good reference point might be to take a look at http://www.trendfund.com Very good website for the beginner. I've personally bought and used there tapes and books. There the real deal.
I've been trading since 99. People here will tell you don't waste your time but I think with the right trading skills and attitude you will become successful over time.
Good luck to you.
Hey guys, what happened with that 2% risk per trade rule?... Suppose he will start with a 10x leverage, how much he should risk per trade ? Besides the guy will be just starting to learn, a couple of mistakes and he is faced with a drawdown of 30% !!!
And I wouldn't recommend day trading - it requires much faster decision making process than swing trading for example, he wouldn't be pressed with 30-seconds decision window as in day trading.
The real problem is that anyone would try to make a fortune with $5000 and we know how that ends...
It's the edge that "makes" the money not the leverage.
Perhaps he should try to double his capital every year and in six years he will have a quarter of a million
And I wouldn't recommend day trading - it requires much faster decision making process than swing trading for example, he wouldn't be pressed with 30-seconds decision window as in day trading.
The real problem is that anyone would try to make a fortune with $5000 and we know how that ends...
It's the edge that "makes" the money not the leverage.
Perhaps he should try to double his capital every year and in six years he will have a quarter of a million
One thing I think we have all missed is the state of the markets. I for one do not have a lot of money and therefore I trade stocks $15.00 or less. With market flucuations it is hard to get a little ahead of the game. Its possible to pick the right stock and then go nowhere because the trend turns down. I personally do not have to follow the trend, I create it. When I take a position the market trends down. Its called the ms_9901takeapositiongetstoppedout oscillator. But good luck, whatever you decide.