5k is enough to begin trading at a decent prop firm. Obviously the key is to start trading small until you learn to trade!! Just because a firm gives you $200k in buying power does not mean that you should use it. Any prop firm with decent risk management should not allow you to lose too much money per day. The key here is to trade small share sizes...say 200 shares in no more than a couple of positions...until you are consistenly profitable...then increase your position sizes. A lot of new traders try to immediately make good money, prior to developing good, consistently profitable stratigies and end up losing their capital very rapidly. Your first goal should be to learn to not lose money. If you cannot consistently make money trading 200 share lots (granted it will not be much with those sizes) then why move to 1000 or 2000 share lots. If you saved 20k and went to a prop firm and traded large sizes without knowing how to trade, then you still would not have enough capital.
Trader7793 Please keep in mind, from a compliance stand point. It is the prop firms responsibility to follow the "know your client rule" and make sure that the 5k is not what he needs to live on. If that is all he has they may not take him. I don't really know if that is relevent here because it is only a discussion but I'd thought I'd mention it. ot
This is a pretty valid point. It's not so much if $5K , $10K, $25K is enough or not enough to start trading. You could start with $10M or $100M and it would still not be enough! If you don't know what you are doing.. Remember those internet funds started in the year 2000. They have several hundred million to start. And all of them went down 90-95% in 1-2yrs! So, it's not a matter of capitalization. Sure, you gotta have ENOUGH capitalization so you wouldn't be playing with "scared money" or so little that a small adverse market move would wipe you out. But above that, trading skills are far more valuable I think. But how does one get trading skills? By making mistakes in the market and learning from them. Initially, you want to start SMALL. So that your mistakes will not cost so much money. If you can't make money trading a few hundred shares or 1 contract, then you ain't going to make money trading 1000 shares or 20 contracts. And I've seen that in myself as well. I've gone to the point where even a $5K acct is adequate for me to generate some form of positive cash flow. Not great but enough. So, obviously the more capital I have access to the better the results will be. But until the beginning trader get to that point, it's not even worth it to think about playing with large sums of money. They will not survive that either. Cuz they will lose it all. So, even if they scrim and save for $25K to get a daytrading acct, they will still not have the trading experience. There's really only one way to get trading experience - to trade! I would bet that if you give an expert trader a $50K account and you give a newbie a $100K account. By the end of the year, the expert trader would have more money than the newbie trader with 2x the starting capital. In fact, I would venture the newbiew would have blown-out or have his acct down by 30-50%! In fact, I would even up the stakes and say if you give the expert trader $50K and the novice $150K and the expert trader will still come out ahead. Trading is a game of skill. Those who are more skillful win and take money from the less skillful or the unskilled. misc
I'm suprised no one has suggested trading futures,certainly 5k is a good start with Ib and say something relatively smooth like ZF...maybe ER2 although I dont have experience with it..
Ntro did it again with his 3-liner(worder). I think this post is the best and the most accurate. Nitro...what are you doing these days? Michael B. P.S. Nitro is a master at bridling his tongue, why go bahbah when you can go bah.
siwash, Yeah, $5K trading futures in IB is "enough". But ONLY IF you know what you are doing in futures. If you don't , then you can blow out $5K in a week. But trading futures and the leverage nature of it, makes trading a small acct possible to generate cash flows only if you are good enough to know what you are doing. misc