Exactly (can't understand though what you mean saying about the disaster) Personally I think the OP, pooled with his friend, is still underfunded to trade stocks. His and his friend's failure is all but guaranteed. And so will be the failure of the firendship when things go wrong. And they most probably will initially barring beginner's luck.[/QUOTE] Why are talking about undervaluation and failure? And what's the problem with friendship if everyone is trading his portion? His best bet is to learn to trade index futures and exercise money management strategies. With $15k, he has enough to trade a 1or 2 contracts in ES(S&P emini), YM(Dow Mini), or ER2(Russel 2k emini). And he'll be able to withstand a drawdown of $10k and still be in the game with $5k if he chooses.[/QUOTE] Well, actually, usually I'm not using the full amount of money (ie $25000). And $10000 drawdown is really HUGE, I'm not going to wait so long, obviously something is wrong with strategy,MM etc. and the one needs to stop trading. Plus I can trade options, I will need much less money for them. Usually I trade 1-3 contracts. With stocks, assuming that the F&M adv acc assumptions are correct, once he loses $5k, and the master account falls below $25k, he's out of the game. [/QUOTE] To my mind, the first month will show whether you're in or out of the games, whether you have any ability to trade or not. So my first step is to stay alive for a couple of month not going down too much. I've been papertrading for about 9 months and staying in it longer without trading real money is useless I believe. You don't really grow up in trading with papermoney. How much do you believe enough for daytrading stocks assuming my regular amount 1-3 contracts (depending on price and volatility)? Thanks for your help. Appreciate any thoughts.
The disaster may manifest itself as a trust issue with your friend. That's just it, you definitely have a trust issue with your friend. IF you didn't, you'd be content with a joint account. And you could keep an accural based accounting of who owns what. But I figured there was a trust issue that's why I didn't suggest a joint account. On underfunding; you're looking to daytrade stocks with $15k. That is a recipe for failure. Unless you're really good at trading. I mean really good. Or you're not day trading but "investing." Options? Unless you're doing spreads and straddles, and you know your Greeks cold, I wouldn't touch them. True. Papertrading and the real thing are radically different. Especially with stocks. Futures may be somewhat close to your papertrading results if you were using limit orders. You mean shares. Stocks (daytrading)? Min $35k. Preferrably $50k. Futures (e-minis) min $10k, preferrably, $20k+ Options. Wouldn't bother. But if you're so inclined, $50k. This is for novices. Pros could possibly get away with less though they never do. In fact, Pros swear by being well capitalized. The object for a novice is to stay in the game as long as possible. That objective's denominator is a function of risk management and proper capitalization. I say, wait until you have more loot and open your own account. In the meantime, I would study futures. E-minis especially. There is an advantage to specializing in a few instruments. You'll hopefully become an expert in it. You'll have an initmate understanding of how they move, how they trade, and how behave under various circumstances. But in the end you have to do what's best for you. I started out in stocks (did well but a lot of work watching so many). Moved to options (first stock options then OEX). Then moved to futures (S&P) and Forex(Eur/USD). I've been trading Futures for ~9 years, Eur for ~4.
Could you please explain to me more about underfunding. My idea is you need to use your funds for MM (let's say, loss per trade). So, if you have, for example, $15000, so you can have a loss $150 per trade. Hence you plan your day. You will need to have 30 "-" trades IN A ROW to lose $4500. Where am I wrong? Just trying to understand it clearly before entering the real market. Thanks a lot. PS I traded options just as a substitute to usual stocks. Simple puts and calls, nothing about playing with volatility/time etc. PPS Posted the same question in "Trading" section.