How much capital do you need to trade full time?

[jayjay121]

i guess your right, just don't want to waste my time on something that just ain't gonna work in the long run if you know what i mean.


jason

 

[jonnyy40]

For reasons of mental stability you need a plan and then work out the cash requirement from there.If you HAVE to make money you'll lose it all.better to try a sim account first and then you only lose time.I'm sure that if you have any personal/health problems then you might actually try to lose (seems bizarre but I believe it).If you feel you may have any psychological hang-ups,see a professional before you trade.

 

[FXSCALPER2]

For reasons of mental stability you need a plan and then work out the cash requirement from there.If you HAVE to make money you'll lose it all.better to try a sim account first and then you only lose time.I'm sure that if you have any personal/health problems then you might actually try to lose (seems bizarre but I believe it).If you feel you may have any psychological hang-ups,see a professional before you trade.

You think people who make lots of money in the markets are balanced individuals who have their heads screwed the right way? In fact, I think the ones who make it really big in a short time with limited capital are lunatics. I am sure hardly anyone can make enough money to make a living from trading because most people are not crazy enough to do it the right way to make money soon enough and in large enough amount to be meaningful. Those who do are exceptional. I bet everyone thinks they are exceptional.

Give me a well-balanced individual with no 'hang-ups' and I will bet fairly confidently he won't make it. Remember this is about making a living from trading. Being 'normal' is one of the surest ways to lose. Of course being a lunatic is not enough but it helps a lot. Sensible people are designed to work 9-5, have barbecues and go to Madrid on holiday and wait for pensions.

 

[jayjay121]

You think people who make lots of money in the markets are balanced individuals who have their heads screwed the right way? In fact, I think the ones who make it really big in a short time with limited capital are lunatics. I am sure hardly anyone can make enough money to make a living from trading because most people are not crazy enough to do it the right way to make money soon enough and in large enough amount to be meaningful. Those who do are exceptional. I bet everyone thinks they are exceptional.

Give me a well-balanced individual with no 'hang-ups' and I will bet fairly confidently he won't make it. Remember this is about making a living from trading. Being 'normal' is one of the surest ways to lose. Of course being a lunatic is not enough but it helps a lot. Sensible people are designed to work 9-5, have barbecues and go to Madrid on holiday and wait for pensions.

that is a wicked quote, i love it and believe it..............i don't like to follow the crowd, i prefer to be crazy and different, and if 90% do fail then by being different i've probably got more chance. lol.





jason

 

[Mathemagician]

To be fair, there is "different" good and "different" bad.

jj

 

[seguna]

To be fair, there is "different" good and "different" bad.
jj

True. A lot of wildly successful people often have a flawed streak of some kind. It's also true that a lot of people who could have gone on to do much better ending up crashing out because of some of these same 'weaknesses' that were never harnessed or channelled positively.

If you're naturally prone to taking high risks, this isn't necessarily bad. It becomes a problem when you don't know you're doing it and aren't willing to accept and live with the consequences your actions may produce.

At the end of the day, 'nothing ventured is nothing gained'. None of us can control what the market does. None. We can't make it rise, fall or consolidate. The only thing WE can control......is how much RISK we choose to take on. This is where money is made and lost.

 

[DaxDestroyer]

True. A lot of wildly successful people often have a flawed streak of some kind. It's also true that a lot of people who could have gone on to do much better ending up crashing out because of some of these same 'weaknesses' that were never harnessed or channelled positively.

If you're naturally prone to taking high risks, this isn't necessarily bad. It becomes a problem when you don't know you're doing it and aren't willing to accept and live with the consequences your actions may produce.

At the end of the day, 'nothing ventured is nothing gained'. None of us can control what the market does. None. We can't make it rise, fall or consolidate. The only thing WE can control......is how much RISK we choose to take on. This is where money is made and lost.

I agree with all my heart :clap:

 

[flizzoe]

I'm just answering this thread's topic.

I think I would need around $10,000. I'm living in Malaysia so I don't really need to target high because of the exchange rate between MYR and USD. Moreover I'm an undergraduate student, I think $300 - $500 a month is more than enough (that is around RM 1,000 - RM 1,600 - it's like basic salary for fresh graduate ).

$300 in 20 trading days, I just need to get $15 a day (15 pips for 0.1 lot of EUR/USD, GBP/USD, etc).

If I'm living on my own, I think I need to get around $600 - $1000. That should be enough assuming I don't waste my money (btw, I don''t smoke, I don't drink, I don't gamble )

 

[Mathemagician]

...That should be enough assuming I don't waste my money (btw, I don''t smoke, I don't drink, I don't gamble )

Sounds like all your money is wasted.

jj

 

[DaxDestroyer]

Sounds like all your money is wasted.

jj

:clap::clap::clap: I love that one :clap::clap::clap:

 

[jayjay121]

:clap::clap::clap: I love that one :clap::clap::clap:

u guys are crazy you know, of course you don't need 100k plus accounts........there are guys in the rumbled one's trading room using like 5k accounts and making money everyday, so why are you are defensive on this subject, i wonder...........and me personally have £25k bank but im not using it, i don't need to, i want to so bad but it's not nessasary, i trying hard to find a way to use my full £25k, but can't find one, i have 5k in my futures account and thats all i need, just my opinion of course.



jason

 

[DaxDestroyer]

u guys are crazy you know, of course you don't need 100k plus accounts........there are guys in the rumbled one's trading room using like 5k accounts and making money everyday, so why are you are defensive on this subject, i wonder...........and me personally have £25k bank but im not using it, i don't need to, i want to so bad but it's not nessasary, i trying hard to find a way to use my full £25k, but can't find one, i have 5k in my futures account and thats all i need, just my opinion of course.



jason

I just referred to the "wasted money"


I have every respect for someone who makes money without big drawdowns and if you can even make a decent living out of 25k WITHOUT really needing it, this is world class!

I have a family of 4 and some relatives I support. And maybe I'm not good enough to do it with only 25k.

My point was, that if you want to run a business and live on it, you need a small safety net for errors. So I stick to the 100k. I personally succeeded on far less, but this was luck as well.

And I repeat The poll here shows, that opinions are quite evenly spread over the whole spectrum, so just let everybody find out.

And Jason, have a nice weekend! Keep your trading at that high level! RESPECT!

Cheers Carlos

 

[jayjay121]

I just referred to the "wasted money"


I have every respect for someone who makes money without big drawdowns and if you can even make a decent living out of 25k WITHOUT really needing it, this is world class!

I have a family of 4 and some relatives I support. And maybe I'm not good enough to do it with only 25k.

My point was, that if you want to run a business and live on it, you need a small safety net for errors. So I stick to the 100k. I personally succeeded on far less, but this was luck as well.

And I repeat The poll here shows, that opinions are quite evenly spread over the whole spectrum, so just let everybody find out.

And Jason, have a nice weekend! Keep your trading at that high level! RESPECT!

Cheers Carlos

sorry carlos, not having a go.............just wanna stay in this game thats all


jason

 

[DaxDestroyer]

sorry carlos, not having a go.............just wanna stay in this game thats all


jason

I wish you the best. If you visualize your dreams, you can often fulfill them!

 

[teezeike]

The Capital You Need

Hi,

There are two types of capital in trading. Cash Capital and Skill Capital. If you have the fomer and lack the later, you will grow broke shortly. If you have the former and have the later, you might touch haevens. If you lack the former and have the later, you can still touch haevens. If you lack the later and lack the former, you will grow broke very shortly.

From the above...it turns out that qhat is really required is Skill Capital. Cash Capital is not quite important.

Get proper training. Design a trading system and back test. Test with a simulator also. Try out with little capital for at least 1 month. If all works..stick to your plan and then invest incrementally. NEVER CHANGE YOUR PLAN MIDWAY.

You Can Make a Living and may become wealthy.

Teddy

 

[luckyd1976]

I voted 25k-50k

A well versed Scalper, Modified Collars trader, and Iron Condors trader can support oneself at this level. (Now that's if your only goal is to be self employed)

But that does depend on Cost of Living and where you live.

 

[CityTrader]

u guys are crazy you know, of course you don't need 100k plus accounts........there are guys in the rumbled one's trading room using like 5k accounts and making money everyday, so why are you are defensive on this subject, i wonder...........and me personally have £25k bank but im not using it, i don't need to, i want to so bad but it's not nessasary, i trying hard to find a way to use my full £25k, but can't find one, i have 5k in my futures account and thats all i need, just my opinion of course.



jason

Dont forget fella, that we all have different costs of living- some guys have more than 1 home, famillies, private school fees. If you are young without any of these "add-ons" you can probably get by with £5k capital- geared up, and with heavy trading - you might make £5k month. I know plenty of guys whose mortgages aren't far short of that sum each month- and probably need to make £10K month just to cover living costs...

CT

 

[Richbynature]

I think this is one of those exam questions with different interpretations as to its meaning! Some of the comments directly above allude to the dependence on personal situations which absolutely determine the size of account required.

Trying to generalise, to trade for a living and to adopt an attitude and strategy that gives you the chance to weather the inevitable storms (ie drawdowns or just sheer bad luck requiring a conservative approach to trading - there are old traders, there are bold traders, but there are very few old bold traders) I'd say that you really need to have no immediate cash needs (at any time) to trade well - the pressure is just too high.

So you'd probably own (or at least nearly own) your own home and have a 2nd income to the home to assure cash flow (bills, food . . .) so that the short term needs of living don't weigh on the (very!) short term needs of the market (ie you need a clear mind to respond decisively to market movements).

So if you take that approach, living even rurally anywhere in the western world you're looking at ~ £250K capital (counting a home). If you have a mortgage too which you finance fully from trading, you're braver and bolder than I

 

[seguna]

US Futures Daytrading Example

Some good points there but £250K is too general and in my view, too much! However this is impacted on by the market you wish to trade e.g. Stocks have less leverage than Futures so more money is needed to achieve the same returns. Also daytrading margins are lower than overnight position holders so this also impacts.How many businesses need £250K to start and run successfully? Trading (or at least daytrading) certainly doesn't.

Trading is like any business in that as part of the Business Plan (i.e. trading plan) one has to look at

- HOW MUCH you want to take out on a regular basis and when you want (or will need) to start drawing this.
- The pace at which you wish to GROW your account i.e. original startup capital and how much and how quickly you wish to grow it from your trading profits
- The impact of ongoing expenses. The most signifcant figure here is of course the drawdowns or controlled losses which are part of the process.
- The timeframe you wish to trade based on time available and trading method you employ.

All of this hinges on the profitability of the trading model you are employing. I am aware of Futures daytraders in the US who are making 5% ROI on their accounts every single day without too much fuss. Depending on the instrument or market, you'd need about US$2,000 to open the account and then it's US$500-1000 per lot. Based on the assessed performance of your system, anticipated maximum drawdown, trading costs(PC, data, commissions, charts etc), account growth profile and cash withdrawal plan you can decide how much cash you need to run the business. It has to be based on the particular markets and instruments you are dealing in as there are different capital requirements for everything.

It is this overall profitability that allows you to make these assessments. Here is an example for someone who is:-

1. A daytrader looking to spend 2-3 hours daytrading daily.
2. Trading the E-mini Russell2000 contract (ER2)
3. Looking for US$1000 profit per day. Maximum risk is US$1000 per day. The US$1000 may be achieved in any number of trades but trading plan is for 1 point profit per trade based on the Russell’s trading range and movement patterns.
4. His maximum account risk is 2% per trade
5. His account costs are US$300 per month
6. He wants to start paying himself US$6,000 per month from the end of the fourth month
7. His profit split plan is 30% for tax, 30% for Self, 40% to remain in account.
8. The implicit assumption is that his trading methodology will deliver the points of profit needed in 2-3 hours of daily market activity. Anyone who's studied the ER2 knows you can certainly bag 3 points in a hour or less. The daily target assumes commissions and drawdowns will be covered.
9. The biggest assumption of all is that the trader in question has a proven methodology and is already able to trade successfully, on a daily basis.

To achieve the above, you have to work backwards from points 7, 6, 5 to obtain a capital cash indication. Since 1-4 represents his trading constraints, the cash indication can then be applied to the constraints to see how feasible it is. Ultimately, as long as the cash capital is large enough to enable points 1-4 to stay true, that's the minimum figure he will need to achieve his objectives.

US$6000 = 30% of US$20,000
Assume 20 trading days per month = US$20,000/20 = $1,000 profit per day
Max 2% loss per trade = US$400 (Theoretical 50 consecutive losers to lose all capital)
$1,000 profit per day / $400 risk per trade = Approx 2.5 trades per day
Based on ER2 trading range and typical volatility, a 1 point stop loss is used. @$400 max loss per trade, this requires 4 ER2 contracts to be traded.
Daily goal would therefore require 2.5 points per day profits, or 2.75 allowing for commissions.
4ER2 lots need about US$4,000 margin with most brokers so this is well within the size for a $20,000 account
If we allow for a maximum 40% of account size drawdown (20 consecutive losing trades @$400 = $8,000) this still equates to US$20,000 of capital
The $300 monthly account cost = $15 a day extra profit that’s needed. This equates to 1/20th of a point if trading 4ER2 lots so is easily covered in the 2.75 target above.

Assuming consistent trading performance for the first three months, then beginning with US$20,000, after three months, based on the above projections, account capital will be US$80,000, where no debits have been made. However, allowing for mediocre performance and poor volatility in the market, this can be reduced to US$10,000 per month = US$50,000 trading capital at the beginning of month four.

Bottom line is that the above represents a very credible daytrading scenario which is already being successfully applied by a number of day traders. US$20,000 = UK£10,000 and this is not beyond the reach of many. You could even debit US$2,000/UK£1,000 for a PC upgrade and broadband access etc but it still wouldn’t harm the figures and risk profile much.

If US$ 6,000=UK£ 3,000 monthly income is insufficient you can of course increase this on a percentage basis as the account grows i.e. $40,000 capital = $12,000 pcm salary or simply start with a larger account and trade more lots.

 

[FXSCALPER2]

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.