Capital Required?

[monarch]

I post this thread to gather ideas and opinions of traders who are trading already to help us guys looking to start.

I am intending to start trading the Nasdaq. Level 2, Direct Acc etc.
Having listened to a talk by a current trader, he advised that a minimum of $20,000 was required to trade the Nasdaq. This is due to new rules in the states.
He also advised that we should have capital of at least £25K-£28K to cover losses while we learn and make mistakes. He did not expect anyone to make money regularly for the 1st 12 months.

Do these figures seem correct and realistic? and does anyone have any other opions on the level of capital needed to trade?

Thank you.

 

[flea]

Account min

Hi monarch, you need a minimum of $25,000 to trade intra day in US stocks and you also will need a cushion of $5k-$10k to cover losses as you learn. Once you fall below $25,000 your account will not be allowed to day trade.

 

[JonnyT]

Is this true of futures accounts aswell?

Thanks

JonnyT

 

[monarch]

Thanks Flea

It does appear that the figures quoted are correct.
The only other way it was suggested you can trade with a smaller level of capital is by trading futures.
Any thoughts.

Nick

 

[flea]

Futures

For US futures as far as I can see with my broker IB, they require a minimum of $2,000 to open an account, but they do point out that margin requirements for certain contracts may be higher.

Nasdaq E-Mini requires $1500 initial margin and S&P E-Mini requires $1969 of course if the value of the contracts fall by certain amounts whilst you are holding they expect there to be enough money in your account to top up. These are intra-day margin requirements and the margin requirements go up substantially if you want to hold outside US futures markets official trading hours.

IB have a policy to close out positions if there isn't enough margin in your account to cover the position, they won't issue you with a margin call.

IB offer a no frills service that is cheap but their biggest draw back is their telephone support which is awful by all accounts although I haven't needed to us it so far (touch wood). Obviously different brokers will require different levels of minimums for account opening, but the margin is set by the CME. I believe IB are the single largest suppliers of liquidity in the E--Minis.

http://www.interactivebrokers.com/index.html

http://www.cme.com

I am not trying to push IB, it's just what I know and there may well be better brokers out there so you'll need to do some research.

All the best

flea

 

[Giggsy]

* Moving post over as it seems relevant .

Certainly seems its possible to trade sp mini a bit cheaper than the general consensus .
The obvious prob v SB is the tax position . ( + ex. rate )
Although it might be a case of paying tax on profits with a broker as against not paying tax on nothing as the SB companies continue to try anything they can cook up to take our money .


Taken from a post on adfn (spit ! ) about a US broker..

`Take a look at www.daytrade4less.com. This is the website of Global Futures. Excellent company, superb PATS trading interface, low minimum account size (only $2500), low margin (only $500 to trade one emini S&P contract), reasonable commission ($12 r/t).`

Looked at Pats trading system . Looks top class and was designed for large traders as opposed to min. stakes .

Take a look if SB are getting you down ;-)) ( i have no connection ) .

 

[JonnyT]

Giggsy, interactive brokers have a round trip less than $6 for emini's.

Effectively the emini's can be traded with a .25pts spread but around 0.37pts including broker costs.

Deal4free quote a spread of 0.5 which is also heavily biased so the effective spread is much more.

I therefor believe that it is easier to turn a profit trading emini's.

If you are trading fulltime, or you profits become significant compared to your earnings then the Inland Revenue will for tax purposes decree that those profits are income and tax them accordingly.

In my opinion if you get serious there is only one way to go, and thats certainly not spreadbets. These companies are out to fleece you pure and simple.

I've voted with my feet and opened an account with IB which I will be trading the emini's from next week.

JonnyT

 

[Miki]

Good luck with e-minis, JonnyT.

A word of warning, don’t be in a hurry to place your first trade – find you winning strategy first.

Don’t trade unless you have one!

Who is your charting provider?

 

[JonnyT]

Hi Miki,

I beleive I have a winning strategy but ultimately there is only one way to find out.

For the charts I'm using the Sierra/MyTrack option but soon should be able to hook Sierra to IBs feed for free (due before Sept)

I think this is a little bit cheaper than Qcharts with better facilities.

JonnyT

 

[Miki]

It is very useful to have two independent data feeds.

You’ll find that during the fast market either IB’s or MyTrack feed will lag.

I will only trade if the both feeds are “in sync”.

 

[bkbigfish]

Another word of advice: don't quit your day job (or night job) yet. Almost every successful veteran trader has gone bankrupt, or close to it, at first. Even if you have excellent coaching, and show significant paper trade profits, the pressure of having to earn your living through the markets can force you to do stupid things you would never imagine yourself doing otherwise. It may sound unreasonable, but it is true in most cases that you will burn through several thousand dollars and several months to a year before you become consistently profitable.

U.S. regulations require $25,000 minimum equity for a day trade account. Trust me, you need a lot more than that, because you will panic if you ever get close to that magic number, and you will lose at first. One of the biggest novice trading errors is being undercapitalized - you need enough of a cushion not to worry about the money (rather, you have to focus on the trade, and when you've mastered the trade, the money will come by itself).

Remember the song The Gambler, by Kenny Rogers: "You never count your money while you're sittin' at the table. They'll be time enough for countin' when the dealin's done." This is an apt phrase, because trading is a lot like poker - there's a lot of random chance involved in the short run, but in the long run it's almost pure skill, emotional control, and most important of all, money management.

Lastly, the golden rule of survival (and profit) in the markets - cut your losses fast. It'll take you a while to fully understand what this means and how to use it, but believe me, you should tape it to your forehead (or rather, the foreheads of your wife, children, and dog) or glue it to the inside of your eyeballs, it's that important.

 

[pssonice]

pleaze, poste some rt-entries based on your winning strategy !

interesting to know, that there is some1 with a winning strategy