How much capital do you need to trade full time?

[seguna]

Really?????

It depends on how big your balls are. If you are good and don't give a ****, you can make loads with about 5k. If you have no balls and no skill it makes no difference how much dosh you already have. The point is to make money not to stare at your capital size.

Really? How big are yours then?

You can actually make loads with about 1K - doing all kinds of wild make or break trades! Whether you can make a living that way is another matter.

I thought this thread was about the business of trading and not simply gambling. When you are in business, you do give a **** as the object is not just to put your capital at risk (any muppet can do that - just pop down to ladbrokes). The goal is to employ your capital to repeatedly take informed calculated risks and thereby grow your capital and make some money fairly consistently.

Of course an experienced successful trader can compound much smaller sums into much larger accounts quite quickly.

 

[combotrader]

Seguna

Did you say 5% every day - you mentioned 5% ROI - could you pls clarify this ? Anyone making 5% of their capital on a daily basis will have hedge funds breaking down their doors I would have thought....

 

[mindset]

Fastnet

Call me unrealistic but, I am currently trading forex, no more than two or three trades per day, often only one, and returning upwards of 75pips per week. Not exciting measured by the claims of some on these boards but it'll do for me.

I am currently only trading small through an SB (the profit quoted is after spreads) but with a 20pip stop at £3 per pip on a £5K account the risk is a little over 1% per trade with a return of 4.5% per week.

I haven't even tried to work out what that would compound at but flat rate assuming 6 weeks per year off it's 207%.

I don't compound but am gradually building my stake up by whatever I feel comfortable at, having started at £1 a few months ago. No doubt psychology would become restrictive if I ever tried to get to hundreds of £'s per pip but if built gradually I see no reason why I could not continue this comfortably at £20 -£30 per pip, which by most standards is a good income.

Time will tell if I can continue consistently, but i am doing OK so far.

Any thoughts anyone?

Dave

Hi Dave,

How is the trading going now?

Whats your view on compounding? it seems if you are making 75 pips per week and compounding your profits you are on your way to a small fortune? Is this something you went on to do? what sort of stake size do you trade with now?

James

 

[mindset]

Seguna

Did you say 5% every day - you mentioned 5% ROI - could you pls clarify this ? Anyone making 5% of their capital on a daily basis will have hedge funds breaking down their doors I would have thought....

I agree with what you are saying but I know there are people out there making 20-100 pips per day compounding their profits so if this is true then there must be people out there doing very well!?...although it sounds strage it makes sense, whats your view?

James

 

[seguna]

Seguna

Did you say 5% every day - you mentioned 5% ROI - could you pls clarify this ? Anyone making 5% of their capital on a daily basis will have hedge funds breaking down their doors I would have thought....

Combo, this is very achievable when talking about the smaller account sizes. e.g.
US$10,000 trading 3 emini Russell contracts @ 2points = 3 X 2 X $100 = $600 = 6% ROI. The challenge of course is to keep compounding upwards with account size growth and the liquidity issues which arise at certain levels.

Re: hedge funds, believe me, they get up to all sorts of tricks and plays but they're typically only interested in large liquid markets due to their size.

 

[Adamus]

The moral to be taken from this is that no matter how good a trading system is, you must always assume that it is luck unless you have traded profitably under every type of market condition. Unfortunately, there seems to be a natural 'law' that says that just when you have traded every type, a new one springs up that causes ruin.

Very interesting theory. Have you proved any part of this to yourself?

 

[NVP]

scalping daily using the right system professionally executed could be managed with a £10k pot............sure why not ?

 

[malaspina]

This depends on many factors. It is not a fixed figure. It should be based on your trading method, how big you trade, what you trade (the risk per trade & volatility), your living expenses, etc.

 

[hhiusa]

Assuming you only trade futures.

ICE Futures U.S. (NYBOT) USD 97.50

That means that you would need to make at least 1.00% per month to break even just to pay market data fees starting with $9,750.00 in your account.

There are many other venues.

CBOE Futures Exchange Level I USD 2.50
CBOE Futures Exchange Level II USD 4.00
CBOT (Globex) Level 1 3 USD 1.25
CBOT (Globex) Level 2 3 USD 6.00
CME Floor Based 9 USD 85.00

ICE Futures Europe (IPE) USD 97.50

Trading futures alone in two markets, that would cost USD 195.00/month. That means that you would need to make at least 1.00% per month to break even just to pay market data fees starting with USD 19,500.00 in your account. If you wanted to make at least 1.00% per month, you would need USD 39,000.00. Paying 1.00% in commission seems steep enough to me. If you started with USD 2,000.00, you would need to make 9.75% to break even.

This is also assuming you are not doing it as a business to make a living nor are you trading other financial instruments, as this would entail greater market data fees. If you trade as a business, you are considered a professional in the US and are subject to much higher market data fees.

For a business, I would want a provider like BT Radianz or SFTI, which costs around USD 1,500.00/month. You will need an OC-1 at the very least. You will need to pay your rent or have an office space. You will definitely need an accountant versed in finance or preferably a corporate finance lawyer to do your books each quarter.

 

[joshua77]

to gain something , the more you invest, the more return of money you have (assuming you're winning)

 

[NeilBower]

I recall a good post on the old traderfeed blog about this topic, which gave a full length explanation using an example of returns from a trading strategy and the leverage that could be obtained through a prop firm.

Not sure whether I'm allowed to post links here as a new member, but the post can be found on the traderfeed blog with the following

2007/02/how-large-edge-do-you-need-to-succeed.html

Some of the figures quoted in posts above some a bit wild - I would work on an assumption that a successful trader will make, on average, between 20 and 30% per year. From that you can work out how large a capital base you need to begin with in order to support your lifestyle needs.

 

[hhiusa]

If you want to make 20-30% per year, then you need to have a geometric mean each month of 1.5-2.2% in addition to the percentage that you pay out of your principal in your account. Therefore, you would need to make 2.5% per month to net 1.5% on USD 39,000.00.

I do not know how internet costs are in the UK, but in the US internet costs are listed below
T-1 - 1.544 megabits per second (24 DS0 lines) Ave. cost $250.-$500./mo.
T-3 - 43.232 megabits per second (28 T-1s) Ave. cost $4,000.-$16,000./mo.
OC-3 - 155 megabits per second (100 T-1s) Ave. cost $20,000.-$45,000./mo.

Market Data
I do not know many professionals that trade only one instrument and; therefore, you will incur multiple market data fees. Futures have the most expensive market data.

Non-professional fees
Dow Jones Global Indices USD 1.00
NASDAQ Level I USD 1.50
NASDAQ TotalView USD 15.00
NYSE Level I USD 1.50
NYSE Open Book Real Time USD 25.00
AMEX Level I USD 1.50
ArcaBook for Equities USD 10.00 USD
ArcaBook Options Depth of Book USD 10.00
ICE Futures U.S. (NYBOT) USD 97.50

LSE Level I+ GBP 5.00
ICE Futures Europe (IPE) USD 97.50

Eurex - DJ STOXX© Indices EUR 8.00
German Indices & Xetra ETFs EUR 1.00

That amounts to about USD 278.37/month.
Connections USD 500.00/month
Total USD 778.37/month (£505.00/month)

If you started with USD 38,918.50 and you made 20-30%/year or 1.5-2.0%/month, then you would break even each month after paying for your business expenses. If you wanted to net 1.5-2.0%/month, then you would need to either make 2.25-4.0%/month (30-60%/year) or start with USD 77,837.00 (£50,543.50). This obviously excludes rent, utilities and food.

Living Expenses
Say you pay £3,000.00/month for a 1 bedroom flat in SW1P and £1,000.00 for food. The average annual dual-fuel bill - covering gas and electricity - is about £1,264 per household. That is about £105.00/month. That is £4,105.00/month. If you are making 20-30%/year, then you will need to start with GBP 230,521.75 to pay your bills each month and break even. If you wanted to net 20-30%/year, then you would need to start with £461,043.50.

 

[vitaminC]

it's a good question. no money no trading!! lol

anyways give this idea a shot?

It is all dependent on the average monthly salary of the country.
First think about how much is the monthly salary where you are, and lets be blunt, with a 10% profit on a monthly basis.

So for example if the average salary monthly is $1000, you should expect that your profits from trading should gear $1000 (minimum)

So in this case the minimum that you should have is $10,000 to start as a full-time and give up your day job.

**
10% wins monthly: $10,000 x 10% = $1000

(that sounds little, but it's quite a bit, more than any other basic bank investment that your adviser keeps selling you when you visit him or her in the bank.):clap:

 

[sun11]

Really true depends on country & individual persons need.
For me $50 per month is ok, as i'm not the sole provider. $500 account might work. But required 20% per month return as need to keep 50% profit back in the account to grow it.
Or need to join prop firm...

 

[malaspina]

It is very important to come up with a number with realistic expectations.

 

[hhiusa]

It is very important to come up with a number with realistic expectations.

I am curious to know what number you would come up with to be able to trade as a business and make money, whilst paying for market data and pay your bills.

 

[malaspina]

My number to start trading the emini S&P 500 considering all details already mentioned including (trade as a business and make money, whilst paying for market data and pay your bills) is US$ 100.000 (minimum). This is my personal figure.

I am curious to know what number you would come up with to be able to trade as a business and make money, whilst paying for market data and pay your bills.

 

[seguna]

... whilst paying for market data and pay your bills.

Some brokerages include realtime data in their subscriptions and discount their data costs heavily for active traders.

 

[seguna]

E.g. Tradestation...it's Free...but only if you're designated a NON-Professional...
Shouldn't be too hard to pass that test for most private traders and investors.

 

[forker]

Isn't Tradestation free if you trade a specific volume a month