I've got 5K, what now?

Discussion in 'Professional Trading' started by thebullpicker, May 3, 2010.

  1. I realize I'll probably get some angry comments about a statement that makes me seem like a schmuck who knows nothing about trading but try to keep those to a minimum.

    Cliff Notes:
    I've been "paper trading" for about six month.
    I've been profitable, and feel ready to take the next step.
    very dedicated, have been putting in the effort.
    I'm a college kid, looking to trade remotely.
    I have about 5k that I'm will to risk to see if trading is the future path for me, I strongly believe it is so I am willing to take the risk.

    What are my options now? Since I only have around 5k I guess a prop firm would be the best option so that I have enough capital?
    Keep in mind I will being trading over the summer and part time during the year so this is by no means me trying to make a living off the earnings at the moment, but rather me looking for the experience, and getting some beer money :p

    I know there are tons of firms out there, but how can I locate the decent ones that aren't just taking my money with ridiculous fees.

    (the only ones I have talked to are Keystone Trading, Broad Street Capital, and Capital traders Group, but I don't know much about any of them)

    any help would be greatly appreciated, thanks guys.
  2. The sooner you lose your $5K the quicker you'll become proficient in making money from trading.

    You'll soon discover how paper trading is like holding swordplays with wooden swords, while actual trading is like you've suddenly got a real light saber to play with (which you can cut yourself if you're not careful)...
  3. risky63


    just have pre-defined rules and stick to them.
    let emotion take the trade away and bye-bye you go.
    its' that easy.
  4. My suggestion is to take that $5k and trade with a prop firm. Trading Sim and Trading live is basically two different animals. In Sim you can easily reset the account at any time, and you also do not deal with the emotional aspect of trading. You can basically double down as many times as possible and still probably come out profitable at the end of the day. This does not happen in live trading... Do not be discourage though, if you really have been profitable on the sim for 6 months, you can be profitable live if you eliminate the emotions and stick to a trading plan. I'll emphasize how important risk management and stops are. Just remember to make money in day trading, it bottles down to consistency. if you have a system that is 60% profitable and you are implementing your stops, theoretically in the long run you should be profitable. As for prop firms, I'm assuming you do not have S7? Two firms that come to mind is JC trading and CY group. Good luck

  5. ammo


    it'll be hard not to overtrade going for 50 dollar hits,even a breakeven new trader will go broke on commissions when overtrading,part of your discipline should include number of trades a day
  6. NoDoji


    What have you been paper trading (stocks, futs, fx, options)?

    Swing trading or day trading?

    How large is the sim account you've been trading?
  7. WoW, 5k, honestly... I didn't know you could open an account with that.. I'll assume you know you can... It's already been said but I believe it bears repeating..... Paper trading... the notion of (resetting) account balance.... I, for one believe in "paper trading" but I call it back testing & forward testing... When I'm asked to suggest a start up plan for a first time trader I start with the Market...
    What market ? What size? With 5k you are limited from the start !!! I trade currency futures (euro/usd) only. I started trading the D Mark several years ago and have never bought or sold a stock, and never intend to! You'll have to consider margins ( I'm futures minded) and with 5k, your (very) limited. Next is tools.
    A guy can fix most anything with duct tape and wd40, but you can't trade anything with "paper". If you paper traded using end of day OHLC data you'll be in for a big surprise when your positions and stops sit in realtime market data. I use IB for data $10.00 mo.. Ensign Software for charting $49.95 mo. and Ninja Trader for order entry $1000.00 purchase. Of course I have a computer, 3 screens all on a UPS. A modem, router, phone, printer and TV also on a UPS if I have a power dip or outage I need time to liquidate my positions. Let's assume your a smart guy, and the thousands of dollars your spending on school aren't being wasted. Let's further assume you have a goal (major) and plan on achieving that goal in the future and follow through on your career path. I would invite you to take a similar view of your trading career.
    Someone or something has motivated you this far (paper trading) that's good. However, I honestly don't believe you (or any new trader) can put up a fair fight with 5k and survive in any market for any length of time, you need screen time.
    This is my answer to your question "now what?" Borrow another 5k, 10k total (just keep reading) and open an account with IB. For $10.00 mo you'll have live data, the data is free if you generate $30.00 in comm each month. But for right now you just want the data for $120.00 a year, which IB takes out of your account at rate of $10.00 mo. Once you get the account set up you must maintain a balance of $2000.00 (I think) to keep the account active. So take $7800.00 out of the account and payback the 5k you just borrowed. Ensign Software is a monthly (lease) deal, you download the program and they charge your CC each mo $49.95 so for $600.00 a year you'll have a charting program that is incredible. Then, and I feel this is the most important piece of the setup, "paying for" Ninja Trader. I think you can get NT mo by mo but I feel making a commitment to yourself and your trading career by paying the $1000.00 is a bonus! The importance of NT is it's analytics. NT offers analytics such as MAE, MFE, efficiency of entry, efficiency of exit equity graphs by trade, day, week, month, year, % profitable time to recover and on and on and on......on simulated accounts as well as your funded account. And you have $1200.00 cash in your hand (to put back in IB account).
    Now you can LEARN TO TRADE in the REAL world!!!! You can do ALMOST anything and track your progress. Your goal is to develop a trading system (edge) that's yours and you will know every parameter of every indicator.... you can backtest a day of data @ 10x speed and foward test realtime... You will learn (for instance) that 78% of the time if you let your profits run and wait for your system to tell you to close the position (instead of taking profits to early) you will maximize your profit potential. Knowing a system that YOU built and knowing when it gives you a buy signal (even when it makes no sense to you) is profitable 75% of the time will take A LOT of emotion out of your trading.. You will KNOW your maximum drawdown (if any) for the month BEFORE you put your first trade on..Oh did you realize you can do all this for over a year and not invest ANY MORE MONEY until your ready to start extracting money from the market. There's only one reason to trade TO MAKE MONEY not for fun, not for excitement, not for something NEW to do... For me trading is very boring I putter around my office waiting for entry signals to go off then sit and wait for the exit signal. The way to make money is to KNOW your going to make money BEFORE you start. It's not an easy task building a system, but I believe it's the only way to be consistently profitable in this business.
    Stay in school you might need it. It's a hell of a lot of work designing a proven edge, most traders never do! I'll close by mentioning books, even though your computer will do all the math for all your indicators. Buy the books written by the guys who built the indicators you're using, most developers share "their babys" strengths and weaknesses, And take the time to learn the math, even though you'll never do the math, learn what the indicator is doing, you'll probably want to tweek the parameters a bit so it ain't like everyone eleses . There are a FEW great reference books that need to be on your book shelf. Keep your nose out of all the Psycho babel books, if your heads f'dup your system is f'dup. If you develop a proven mathematical edge that you trust from opening bell to closing bell your trading will be effortless.

    Good Trading
  8. Buy pennystock precious metal miners.

    Some of them still have 1000% potential when silver goes to 50$ and gold to 2K and higher.
  9. That's good advice.
  10. What's your performance like, week over week? How many trades have you made in the past 6 months?

    Consistency is everything. High trade sample + consistency = money.
    #10     May 4, 2010