Minimum Capital Needed to Trade?

R

regulajo

Hello all,

I am new to posting on this forum, and somewhat new to trading. (Have done some, and I don't really like to hold overnight). Any trading I do is money for saving (or losing), but not for living expenses, I have a job and a wife for that.

That being said, I am looking for opinions on how much capital one needs to intraday trade with, realizing that under $25,000 the roundtrip trading is limited to 3 in five days (The NASD is saving us from ourselves ). Therefore I have to take it slow, the money I have available is less than $25,000.

I will also state I have been reading the ET forums for a while and truly appreciate the professionalism of some of the traders on this board.

Thanks for your time,
Regulajo
 
Thanks thus far,

I should have stated, I am primarily comfortable with long and short positions in stocks, and therefore am looking for a general consensus on how much one needs to start out with.

Regulajo
 
Quote from blufftrader:

You dont need 25 k you can start with as ittle as 2500 or 5k the most
More...
Indeed, if you can build up your capital starting from 2.5K or 5K, you can be assured that you know how to trade.
If you can't do this, you may be assured that you likely will blow your 25K, 250K or more.

That you need lots of capital to trade is one of the more nutty propositions circulating at ET and other places.

nononsense
 
Quote from regulajo:

Hello all,

...

Thanks for your time,
Regulajo
More...

Perhaps you don't need to thank them. Instead, they should thank you, as most likely you would get a lot of replies from a number of highly profitable traders, telling you more capital better (for them).
 
I would recommend a little more than 5K to start out if you can, especially trading stocks and/or options. With only a 5K account the commisions and fees can eat up a large portion of your profits. You don't need a lot of money to get started and even if you have more available, leave it in the bank until you're ready. If you can fund your account with enough so that your positions are no smaller than 3-4K each the fees won't drain your account near as bad. The total amount would depend on your trading plan as to how many positions would be open at once.

Its true, a small account can be a better way to learn because you need to be a lot more fussey about your picks.

just my $0.02
 
Craneman and Cashmoney,
Thanks for your reply, that is what I am wondering.

Without enough capital, can the fees have such a detrimental effect on the account, as well as risking being in a trade longer since you can only make 3 trades in a five day period, one would be more likely to hold the position longer trying to let the trade be more profitable (bigger percentage gain), therefore increasing risk.

For Example, assuming the trades cost $10.00 each.
Your trade turns against you after going up 1%, with only a 4,000 trade, you are out when it hits 1/2% gain, and your $20.00 win is at breakeven.

A $10,000 trade up 1% and turns, you sell it at 1/2% gain, you still come away with $30.00 profit.

Without enough capital, it seems it could be much easier to lose money than make it.

Also, for the record, I am not looking at going to a prop firm where I could get more leverage. Just trading from the computers at my home/office.

Any thoughts?

Regulajo
 
Well its just my opinion that you should at least get enough to trade with a margin account, that way you dont have to follow that 3 day rule. For me its 2000, but its different for others i'm sure.

- nathan
 
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