Destined for ruin -- using 5x leverage and an extremely sharp trading edge? Get real dude!! I love how people who can't trade successfully project upon others... Trading is just like anything else -- put in the hard work and add the desire to be the 1% of people who are successful enough to be at the pinnacle of their profession and you will be great. Ali, Jordan, Woods, A-Rod, Lebron, Gcapman!
Exactly why I only use 5x leverage on my forex trading account Even a 200 pip loss -- which is a fairly massive move (I guess almost equivalent to a 20 point loss on ES) -- would only cut 10% of my account equity It's all about risk management via small leverage usage
There we go again... reference to that fictional "trading edge" ... and reference to the "1%"-er crowd... Oh yes. "Put in the hard work" - hours, and hours... maybe even years... and its all gone! You've wasted all those years. All that time you could have spent doing something else... at least for 99% of you guys.
How did you end up on Elitetrader?? The argument of trading being useless leeching and other jobs are "meaningful" is complete nonsense - most jobs in the modern world are useless and could be replaced by machines with ease, that's actually what's happening now. Then there are the advertising and selling jobs, explain to me how those people are needed. And let's not forget the government and bureaucrat jobs and the bureaucrats hired to watch over the bureaucracy (isn't it wonderful). I was watching this documentary on China and it showed how some American steelworkers were happy to get work again, knowing that it makes absolutely no sense since that is a government subsidized position - it wouldn't exist without outside help. Most of the people now are just baggage.
Depends on your style of trading. Daytrading can be used with high leverage, if you are good you can make 6 or 7 figures with relatively small initial capital. Long-term investing has lower returns on capital, so you need much more money to quit and go full-time. Speculation & position trading is in between. Also, paying the bills is not enough, you need to grow your capital after all taxes and living expenses. If you are a good speculator, IMO you should be able to make 25%+ per annum, and if you are a good investor you should be able to make 15%+ per annum. You could do better but I wouldn't bank on it. So, if your yearly nut is 50k, which is not exactly extravagant living, then you need to make what, 75k before tax? And you want to make double that so you can compound. So your target is 150k per annum. That means you need $1 million to invest full-time, and 600k to speculate full-time. With daytrading I would say you want about 100k to be on the safe side. You could probably do it with half those amounts if you were good or lucky. And there will always be a few who manage with even less.
It varies for the trader depending upon their income level they are use to making, debts and goals. The minimum, your starting capital needs to be more 2x than your annual one year income from your job. For example, if you're making 60k per year from your job...your starting trading capital should be 60k and than another 60k to cover your normal lifestyle for one year. However, using the 60k example, if you can't raise that much money to maintain the lifestyle you're use to having...you better make some dramatic changes in your lifestyle (lower you expenses) to keep things at equilibrium while trading an account less than your annual income. In addition, don't quit your job. Instead, take a "leave of absence" just in case trading doesn't work. Also, if someone else is paying the bulk of the bills for you to maintain a lifestyle you're use to having (e.g. spouse or parents)...you're starting capital requirements can be a lot smaller than those that have no backup plan. Mark
For anyone who chimes in on this thread about how you should be able to count on 30% monthly, keep in your head that they are pretty much guaranteed to be a small player. They are gonna try to blast me for saying it, but I don't mind. If you doubt what I'm saying then just do the math. $50K becomes $1MM after one year. Over $25MM the next year. Even if a person could do that, it wouldn't be smart to quit his job to trade full time. Let's say you draw $4K a month to make your living expenses. The above $25MM drops to $15MM. So quitting your job cost you $10MM. There aren't many people out there who wouldn't pick up a swing shift job for a year if the result would be $10MM in additional income. So in a nutshell, if you can only get normal gains of 30% annual, then $50K simply isn't enough to live on. If you are a star who gets %30 monthly, then it still isn't worth the opportunity cost. Keep you day job until you pass the $1MM mark or close to it. Then the risk and opportunity cost are quite low.