Trading for a living - how much to start with?

J

James Daniel

Ok, this is to the traders who are making a 'real' living from their trading activities.

How much did you first start off with at the beginning of your trading activity when you finally decided it was about time to you could "trade for a living"?

Why do I ask such a subjective question, you may ask. Simple. I am looking at making a living from trading using the edge I have been testing since December (studying markets p/t for 3 years), currently averaging 5-10% per month and I feel I could milk it even more as I continue to optimize it.

I am interested in how you got started, what your monthly averages were (percentage terms0 and how much you considered were enough to keep you going with little/no other income streams.

Only positive feedback required, so no time wasters with their doom and gloom stories, or kids thinking they know it all.
 
Take 5K, go to a prop firm in your area and trade your system (very small for awhile so that you can get things down pat). Most likely it will take you a year, possibly 2 years, before you can make a livable income from trading.
 
Quote from James Daniel:


currently averaging 5-10% per month
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Well, first you forgot to mention what you are trading. Beside that, it is really a simple math question, supposed, that you can do it with real money what you have been doing in test.

Although there is a huge difference between 5% and 10% monthly, let's go with the 5%, just to be on the safe side and I will do the math for you:

If your monthly expenses is X, after comission and taxes you have to have 20 times X on your account to start with. I divided 100 with 5% that's how I got 20, just if you want to know...

So if we throw in taxes and comissions, I would say 25-30 times your monthly expenses is a safe bet to start with. Thus if you can live on 2000$ a month, as a minimum you need a 50K account.

Now, that wasn't that hard, was it?? You might think I am condescending, but really, your question was rather obvious, and I did answer it in a positive manner....

Or if you don't like math, more money to start with, the better...
 
Those returns are what I am making with 'real' money, and have steadily been rising.

I trade EURUSD, GBPUSD and FTSE100 (primarily), although I don't see why you would need this information.

I know it comes down to maths, but it was a general question to see what others have done also.
 
Quote from James Daniel:I know it comes down to maths, but it was a general question to see what others have done also.
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5% is good. To make 5% put cash into ING Direct and it is fairly secure. Or buy US Treasuries.

You'd need maybe $1,000,000 capital and the 5% thereon would be $50,000 enough to pay the bills...

But if a trader wants to earn say $100,000 to $300,000 per year he'd need to make 25% consistently on a starting amount of capital of say $250,000 to $500,000.

OR if you mean the training years, BEFORE making a living, I'd say $50,000 to $100,000 would be okay, if the trader was lucky emough not to lose it all in the first few months. i.e. the problem with asking sucessful traders here what THEY started with is not a good sample. Those who lost all their money and quit are not in your sample universe.
 
The average is per month, which I have calculated over a six month period (since I started with 'real' money).

Is it really possible to reach an average of 25%+ per month day trading?
 
Quote from James Daniel:The average is per month
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Sorry, I missed the "per month." Obviously IMG Direct and US Treasuries pay closer to 5% per year...

I should be realtively impossible to make a consistent amount per month. Expect some much poorer months and much better months. Also the rule of liquidity will factor in as your capital grows at such an expotential rate, so expect the percentage returns to decline over time.

Out of the box @ 5% each month, gee, I say starting with $50K or $100K and you'd have a shot at making a living. But starting with $10K or $25K and it would be a tougher road to hoe, from my observations.
 
Quote from James Daniel:


I trade EURUSD, GBPUSD and FTSE100 (primarily), although I don't see why you would need this information.
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For 3 reasons at least:

1. Commission calculation. In Forex there is no commission, thus you don't have to worry about that.

2. Tax treatments. Different instruments have different tax status.

3. The possibility of working at a prop firm. If you can get a decent leverage there, your starting capital can be much less than if you start with your own. Let's say you trade stocks at a prop firm that will let you use up to 100K with putting down only 5K, there you go. With your record you can start out with 5 K....
 
Ok, thank you for the advice.

I figured it maybe improbable to maintain such a consistent return.

I gather not many private or prop traders could maintain an annual return of +100%, or is this sustainable?
 
Common sense dictates that truly "trading for a living" requires a six-figure account. Now I know there's a huge gap between $100k and $999k, but what it does is rule out trying to make a living with only a five-figure account.... for those with day jobs or trading part time instead.
 
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