Why would a beginner need a large account?

I believe that a suitable comparison would be a novice stepping into the ring against a prime Mike Tyson. If they were to do so, relying on luck would be meaningless. That's why I advocate for demo trading until you can consistently execute 30-40-50 trades in a row using your trading system with positive results. Of course, if out of those 50 good trades, you encounter 3-4 stop losses, that is normal. The key is to understand the reasons behind those losses. Only then does it make sense to start with a small real account. Personally, I don't have any stories about intraday futures traders who benefited from a relatively large account, especially if they began trading on a full-time basis.

In the case of investments without using stop losses, a large account will certainly be helpful. With it you have more freedom and flexibility in managing positions
 
Greenpnl said:
Of course, if out of those 50 good trades, you encounter 3-4 stop losses, that is normal. The key is to understand the reasons behind those losses. Only then does it make sense to start with a small real account. Personally, I don't have any stories about intraday futures traders who benefited from a relatively large account, especially if they began trading on a full-time basis.
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If you have 3-4 stop losses hit in 50 trades you are going to be a very successful trader. My experience is more like 25-30.
 
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deaddog said:
What obvious reasons? Wouldn't a percentage of capital or a dollar amount be a more reasonable limit?
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The key ideas are, for a beggining equities day trader, to keep both tuition and unneeded stress low, while avoiding tiny odd-lot trading. The assumption being that the beginning day trader will have a disadvantage on the money they put in action.

A beginning day trader will usually not be be good enough to win (have positive expectation on his trades), regardless of how he has done on a simulator. On top of this, most beginning day traders will never become profitable traders.

Because of the above, it is generally advised to start trading real money with tiny positions to get used to things and see how things go; trying to keep tuition and unneeded stress low. Normally it takes a bit of time just be able to handle the equipment well, regardless of how manual or automated one is.

With equities, 100 shares is often the way to go so that you get realistic fills ( Trading tiny odd lots, like 1 share or something, does not give you a feel for what is scalable) while keeping your losses reasonable as you learn. And generally you want to avoid expensive high priced stocks while a pure beginner.
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The Mentor Method

Look... If an aspiring trader can hook up with someone who is a successful trader, who they trust, for mentoring, of course!!

Actually, this should be the goal for the aspiring day trader.

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PROPS for your great question- and of course a winning trader should think about both of the things you mentioned! Absolutely!

Both Winning Gambling And Trading Revolve Around:

Edge (positive expectation)
Risk management
Opportunity cost
Values

"Know your edge, exploit your edge--survive the game!
 
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deaddog said:
If you have 3-4 stop losses hit in 50 trades you are going to be a very successful trader. My experience is more like 25-30.
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I think that this result should be strived for in practice on the demo. Of course, the trading system should be as complex as possible, taking into account the market context. In this case, getting a stop means a lack of understanding of the market at the moment of time, the impossibility of synchronization with large participants, which a small trader needs to tail and ride on the move
 
777 said:
With equities, 100 shares is often the way to go so that you get realistic fills ( Trading tiny odd lots, like 1 share or something, does not give you a feel for what is scalable) while keeping your losses reasonable as you learn. And generally you want to avoid expensive high priced stocks while a pure beginner.
More...
I suppose it depends more on the spread than on the broker.
My experience has been that if I enter a limit order I get filled at that price whether I'm trading one share or 1000.
If I put in a market order I will usually get filled at the ask although a lot of times I will get filled at a better price. I rarely trade board lots. If the spread is a cent or two, I have no problem trading less that 100 shares. Market making is mostly electronic these days so a human doesn't have to worry about odd lots.
 
deaddog said:
I suppose it depends more on the spread than on the broker.
My experience has been that if I enter a limit order I get filled at that price whether I'm trading one share or 1000.
If I put in a market order I will usually get filled at the ask although a lot of times I will get filled at a better price. I rarely trade board lots. If the spread is a cent or two, I have no problem trading less that 100 shares. Market making is mostly electronic these days so a human doesn't have to worry about odd lots.
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Ahh .. it has been many years since I day traded but back in the day I was able to get better fills for odd-lots less than 100 shares.. and that could have changed.

Sure.. if the cost per share to trade as well as the fills on odd-lots of less than 100 shares are similar to trading 100 share lots was the same, I could see practicing on odd-lots quite a bit smaller than 100 shares a pop. The idea is to keep tuition reasonably low while being a losing trader.

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Most beggining traders would be well advised to carefully think about the big-picture ideas in my post.

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Thank you for the chat : ))
 
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deaddog said:
I suppose it depends more on the spread than on the broker.
My experience has been that if I enter a limit order I get filled at that price whether I'm trading one share or 1000.
If I put in a market order I will usually get filled at the ask although a lot of times I will get filled at a better price. I rarely trade board lots. If the spread is a cent or two, I have no problem trading less that 100 shares. Market making is mostly electronic these days so a human doesn't have to worry about odd lots.
More...

Sure.. if the cost per share to trade as well as the fills on odd-lots of less than 100 shares are similar to trading 100 share lots was the same, I could see practicing on odd-lots quite a bit smaller than 100 shares a pop. The idea is to keep tuition reasonably low while being a losing trader.

Back in the day, professional traders payed a by-the- share commission for direct access to the specialist and market makers.
 
777 said:
Sure.. if the cost per share to trade as well as the fills on odd-lots of less than 100 shares are similar to trading 100 share lots was the same, I could see practicing on odd-lots quite a bit smaller than 100 shares a pop. The idea is to keep tuition reasonably low while being a losing trader.

Back in the day, professional traders payed a by-the- share commission for direct access to the specialist and market makers.
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Back in the day. When I started the commission was 3% each way and the spreads were in quarters. Discounters eventually hit the markets and the price of trading came down.
IB came to Canada with a penny per share and a minimum of a buck a trade.
Today I trade commission free, way better than back in the day where you had to overcome a 6% loss just to open a trade.

My trades are usually odd lots as my risk contol strategy risks a percentage of my account per trade. [% of account/(Entry-Stop) = position size] This rarely equals a board lot.

When you trade commission free it doesn't matter if you buy 1 share or 1000 shares. It's still free.
 
I think it is highly based on your role and the market you wanna work, but I wont call it a necessity!
It would be better to start with a lot of money, when 1% of your account is 3$, it would be awesome if it was $100, but at the end I think everything depends on you and your system!
 
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