Quote from newbie2006:
Very interesting conversation going on here
I agree with Mav and Don that if a trader who just started out is left alone to trade his $5k account then I would assure you that he will blow it out in less than 2 weeks.
Butif someone is disciplined enough (at the end of the bell curve as Mav pointed out) or if he has a good Mentor who really in keen to make him succeed then I would say that $5k is enough to know if this new guy will make it or not.
Here is the plan for a day trader who wants to scalp (can be tweaked to fit any other strategy):
Phase 1) 2 weeks of theoretical background, this is where he will learn what is it all about, what are ECNs ? what is Ask, Bid, blah blah blah, all the basic theoretical information that he will need
Phase 2) 2 weeks of simulated monkey trading, this is where he will be taught how to use the software to watch the quotes, place orders and tracks his positions, in this period he will learn to use the keys and do most of the order entry mistakes, get real familiar with the software and feel ok with placing orders
Phase 3) 2 weeks of simulated disciplined trading, in this phase the trader will learn to stick to a plan, what is this plan ? very simple, the trader will trade only one stock something like "VLO", give him a time sheet with something like: 9:50 Long, 10:30 Short, 11:10 Short and so on, so at each time he will enter a trade in the direction that you randomly predetermined for him, stop loss @ $0.05 and take profits @ $0.1
Phase 4) 2 weeks same like phase 3 but on live account, with only 20 predefined trades, this phase will really teach him to cut his losses short and not to fear losses, with this random entry he will not lose much every day, I would say maximum $100 including all commissions and fees
Phase 5) 2 months of live rationale trading, in this phase he will learn some real techniques that makes the odd better than random, maximum number of daily orders 10, at this stage with only 10 trades and supposedly good discipline (learned from the previous phases), he would lose maximum $50
Phase 6) Either quit or live on
so here are the expenses:
Phase 1) zero
Phase 2) zero
Phase 3) zero
Phase 4) 10 days x $100 = $1k
Phase 5) 40 days x $50 = $2k
Total expenses = $3k
ok, is this a bullet proof plan, definitely not, but believe me when I tell you that if you first teach your traders to cut the losses short and not to fear them you would be doing them a big favor.
If a trader is patient enough to do the above full time working not less than 10 hours each day (6.5 trading, 1.5 reading books or other resources, 1.5 reviewing every tick of his traded stock during the day, 0.5 sitting down with his mentor to get some real hard spanking if he break any of the rules) , if he is patient and disciplined to do so for 4 months as stated above then I assure you he will make it IF HE WOULD EVER MAKE IT , if not then better for him to save his time and money and go search for another business.
Now the above plan is veryyyyy hard to be followed by someone who is trading remotely, this is the guy who will definitely need more than $10k to make it.
just my 2 cents
www.stocktrading.com/TradingPlan2005.htm
(I can share last year's basic sample trading plan)...
And, I noticed that you didn't detail any strategies...pairs, opening only, Mergers, market making...etc? "Buy and hope" is not a strategy, LOL. And, BTW, all the books in the world won't be of much help (to be frightfully honest)....even after live training in a successful group it takes a while to achieve a "comfort level" to trade without supervision (there are obviously exceptions, of course).
FWIW, "simulated" trading is usually a waste of time since you don't affect the market with your trades, and you haven't shown that you can "pull the trigger" at the proper time.
All the best,
Don