Hello all. I'm new to trading but I'm very interested and want to learn and find out if it's something I could be good at. I'm wondering if it would even be worth trying to start day trading with only $200 (with $4.95 commission on each trade). If I had to guess, honestly, I'd guess that it would be next to impossible to make a profit with such a small investment. Should I even try with this amount of money or, if not, how much should I have in my account before I start trading?
dbphoenix
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$10,000, at minimum. In the meantime, you can study the market, work on a trading plan, and practice.
NVP
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thats a little high personally - you can start with less than that
and you can certainly practice in the meantime ....use demo's and perfect that trading system before you risk real $$$....remember you will always struggle even with a good demo performance ..........the real world is much much harder
N
and you can certainly practice in the meantime ....use demo's and perfect that trading system before you risk real $$$....remember you will always struggle even with a good demo performance ..........the real world is much much harder
N
Chalky_trader
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Try spread betting, trade demo for a short period then move to real money and you will find it becomes a different game altogether.
You will almost certainly blow up your first account, if you start with £500 and trade to make say 20 per day it makes it real, if you screw up you only loose £500, you can blow it 2 or three times and will learn a hell of a lot in the meantime. If you double it then you just may be on your way....
I have a friend who started with 70K, he blew it in three months, fortunately 70k whilst painful for him wasn't the end of the world, but when you have a 70k account you are not interested in making £100..... Fact is he didnt know what he was doing and its an expensive environment to learn a new set of skills in..
Trading Demo other than in the very early stages is a waste of time thi IMO
Good luck
Chalky
NVP
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Can, yes. Should, no.
interesting why $10,000 ? ...whats wrong with micro accounts ?
N
Chalky_trader
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Poorly educated and unprepared!
Id say it was the clever & prepared person that traded with a very small amount of money when it is clear he doesn't have much trading experience, and considering the fact that most new traders blow their accounts up it is therefore odds on that the first account will get wasted.
Your advice is for fools and their money, and we know where that ends....
I am also new to this game but i found a website reallifetrading which has great video classes and has a swing trading section (what i have been looking at) and also a DAY TRADING section. They are both totally FREE. The guy on there Jeremy talks (and has written a book) about starting day trading with only $2500. I think this is a realistic figure when opening a leveraged account. I have learnt so far that your risk on any one trade should not be greater then 2% of your total account. therefore if you start on a $200 account your risks and rewards in dollar terms would be very small and not worth the commissions. This website is worth checking out before you begin trading to help you make a trading plan and impliment safe risk management strategies. By the way i have no connection to this company it is just that they have taught me a lot so far and i think would help to answer many of your questions.
priceactionking
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i started with a $10K and risk only 2% per trade
sminicooper
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I'm an enthusiast of micro accounts. To be successful with them my belief is that you have to be very careful, very risk conscious and very patient – funnily enough these are qualities that have served me well for quite a few years now. If you can successfully develop these qualities with a micro account it can be a very cheap way of learning. However, in my experience it's nowhere near as easy as you might think. If you are a novice, before you even think about doing it for real my recommendation would be to do it on a demo account just to try out your methodology – once you've got that straight you can go on to the real thing and then ascertain the size and resilience of your gonads. You don't even have to open a demo account – make your own demo account with a spreadsheet and just get prices from your broker or one of the many trading websites. One of the problems I found with demo websites is a restricted range of instruments unless of course you're doing FX. Could it be that brokers would prefer beginners to start on FX?
As an experiment, 6 months ago I started a micro spread bet account (US S&P 500 shares ) with £1000, to see what I could do. I've now just about doubled it and managed to keep drawdown no greater than 16%. So, a grand in 6 months – doesn't seem to be the way to untold riches and the easy life: you could get more than that stacking shelves in the local supermarket! But what did I learn? Well actually, nothing new. Just all the old lessons that have been around for ages and are available free. E.g. Keep an eye on risk at all times; don't let losers run away i.e. cut losses – very easy in theory but very difficult to do for real; don't rush – think about everything and study your charts carefully; one or 2 basic old-fashioned indicators can be helpful but it's no good following them blindly; with such a small account it's important to grab profits when they're there – wait too long and they disappear in a puff of smoke and counter-trend . Running your profits (for too long) can be an expensive mantra to follow in my experience. Keep an eye on the market index and get a feel for any rhythms which may develop.
These trades usually lasted from 1 to several or more days – perhaps up to 14 when on occasion, I didn't have the sense to get out earlier. So maybe not a lot of use to the short-term or FX trader I'm presuming. I don't do FX, it all seems a bit too fast and risky to me - but who am I to say? The last 6 months has reinforced all the old lessons which are so easy to forget; made me remember that thinking and patience are very important; reminded me that it's the trade that is important and not the potential riches and down payment on a yacht. The common advice is to expect to blow up one or more accounts during your apprenticeship – very easy to do I have no doubt, but if you tread carefully and start off on the beginners slopes (others can say whether that should include FX) I don't believe that necessarily has to be so. Minimum leverage as part of your risk-controlled financial diet goes a long way to keeping you healthy and in the game.
But do NB: all this is a waste of time if you basically haven't got an edge – you'll just die gradually instead of a merciful quick demise. So make sure your demo trading does demonstrate an edge and keep at it until you know you've got one – if you're not sure that you have one, then you haven't got one.
itspossible
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^^good post-how long have you been trading?
itspossible
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I think that a lot of experienced traders who have been around the block will NOW trade small having learnt from past lessons.Years ago when just starting i traded with a 20k account when spreadbetting.I had decent risk management but didnt know sh--t really(still dont).i had a few bad moves and gaps whilst spreadbetting and it taught me a lot.I managed to make money but in the end i would say that i was lucky to do so.i walked away and have tested stuff again but i always seem to just grind and either make a little or break even(not worth the stress)If i was serious about it again i would put maybe a grand into an account and just top it up or withdraw.just trade for the fun of it. hybury fx stated that some people can make good money but usually give it back(i think he said that
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I'm an enthusiast of micro accounts. To be successful with them my belief is that you have to be very careful, very risk conscious and very patient – funnily enough these are qualities that have served me well for quite a few years now. If you can successfully develop these qualities with a micro account it can be a very cheap way of learning. However, in my experience it's nowhere near as easy as you might think. If you are a novice, before you even think about doing it for real my recommendation would be to do it on a demo account just to try out your methodology – once you've got that straight you can go on to the real thing and then ascertain the size and resilience of your gonads. You don't even have to open a demo account – make your own demo account with a spreadsheet and just get prices from your broker or one of the many trading websites. One of the problems I found with demo websites is a restricted range of instruments unless of course you're doing FX. Could it be that brokers would prefer beginners to start on FX?
As an experiment, 6 months ago I started a micro spread bet account (US S&P 500 shares ) with £1000, to see what I could do. I've now just about doubled it and managed to keep drawdown no greater than 16%. So, a grand in 6 months – doesn't seem to be the way to untold riches and the easy life: you could get more than that stacking shelves in the local supermarket! But what did I learn? Well actually, nothing new. Just all the old lessons that have been around for ages and are available free. E.g. Keep an eye on risk at all times; don't let losers run away i.e. cut losses – very easy in theory but very difficult to do for real; don't rush – think about everything and study your charts carefully; one or 2 basic old-fashioned indicators can be helpful but it's no good following them blindly; with such a small account it's important to grab profits when they're there – wait too long and they disappear in a puff of smoke and counter-trend . Running your profits (for too long) can be an expensive mantra to follow in my experience. Keep an eye on the market index and get a feel for any rhythms which may develop.
These trades usually lasted from 1 to several or more days – perhaps up to 14 when on occasion, I didn't have the sense to get out earlier. So maybe not a lot of use to the short-term or FX trader I'm presuming. I don't do FX, it all seems a bit too fast and risky to me - but who am I to say? The last 6 months has reinforced all the old lessons which are so easy to forget; made me remember that thinking and patience are very important; reminded me that it's the trade that is important and not the potential riches and down payment on a yacht. The common advice is to expect to blow up one or more accounts during your apprenticeship – very easy to do I have no doubt, but if you tread carefully and start off on the beginners slopes (others can say whether that should include FX) I don't believe that necessarily has to be so. Minimum leverage as part of your risk-controlled financial diet goes a long way to keeping you healthy and in the game.
But do NB: all this is a waste of time if you basically haven't got an edge – you'll just die gradually instead of a merciful quick demise. So make sure your demo trading does demonstrate an edge and keep at it until you know you've got one – if you're not sure that you have one, then you haven't got one.
That is a VERY good post imho. As stated in NB above, to trade with any degree of success, you need an edge of some sorts (can be absolutely anything), to develop an edge needs experience and staying alive with small accounts and gradually building that experience is the keys to the kingdom if you have the staying power.
sminicooper
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Quite a few years now – certainly before the inception of T2W. So even though I would class myself as experienced, I'm still learning and it is a big mistake to automatically equate experience with expertise. Remembering what it was like as a beginner – knowing nothing then and nowadays being at the mercy of the wallet-emptying get-rich-quick brigade, I just wanted to give hope to beginners and help them to realise that although it isn't straightforward you can succeed if you apply yourself sufficiently.
There are a couple of other things I would recommend to beginners. Firstly, get your life-philosophy clear in your mind: what do you want from trading? Why are you trading? Do you eventually intend to go full-time or is this just a dalliance to brighten up an otherwise dull life? These are the sort of things you need to think about and get very straight in your mind. As an example, I'm just fascinated by trading and always looking to accomplish the perfect trade – much in the same way as a sportsman is always looking to perfect his art. So for me, even though I like the money as much as the next person it's not the be all and end all – in fact I treat my trading account a bit like a private cashpoint machine and it enables me to indulge in luxuries that I otherwise might feel rather guilty about. Now if I were a part-time trader with a dependent family I would probably have to rethink all that.
The 2nd thing I would commend to the beginner is to become proficient in spreadsheets – if you think about it, accountants are pretty good with spreadsheets: do you know of any accountants on the breadline? As far as I'm concerned, being a trader and not proficient in spreadsheets is like trying to run a marathon in your wellies! I'm pretty fortunate in being able to understand many things computing but if you can do schoolboy arithmetic you can certainly learn the basics of spreadsheets and formulae. There are loads of free tutorials on the web and once you start to exploit the possibilities of spreadsheets I promise that you will never look back. How you proceed to use your spreadsheets is another entire subject and will become a project in itself if you take it seriously.
I think it must be pretty daunting at the outset for most beginners. Many vendors tell you that it's just a question of doing a bit of study and/or attending the course, religiously following a set of rules, (& most importantly don't forget to hand over the dosh that you could otherwise use in a trading account) and "Bob's your uncle". Unless you are lucky – and there are some good trainers out there – it won't be like that. It's a long hard slog with loads of setbacks and it will test your determination and perseverance to the limit.
priceactionking
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