Why would anyone starting out in a prop environment want to risk 25k to start, when don says 90% fail. With the idea of risk management in mind wouldn't it be wiser to start out with only 5/10k and trade small. After all, you do want this field/market to be open to all equity classes, I think the average joe whos interested in an occupation like this doesn't have 25 grand sitting in their checking acct. i could c some one telling them selves i was gonna buy a plasma tv or a newer car why dont i take this money i was going to blow on a frivolous object and give trading a shot. another addition of my thoughts.
Do you guys have any idea how expensive it is to start any other kind of business? Most people have to take out loans on their homes to get started. 25k is nothing compared to the kind of money you'd need to start a store, bar or restaurant these days. 25k is a car loan these days. It seems like every day there is a thread here about how someone wants to get started on short money. IMO, anyone who can't come up with a starting stake in the 25k range probably isn't going to do well at it just for discipline/motivation reasons. Traveler
OK, let me put it this way. With 25k, the failure rate is about 90%. With 5k to 10k, the failure rate is 100%. Does that make you feel better? Yeah, I would go with the plasma TV buddy. Much better odds of seeing a return on your money. Some people just don't get it.
I have to jump in here. Most traders do fail, I do agree. There is no reason why a trader needs to have 25K. You can start with 5K and have success. I do highly agree that it is nice to have a bigger cushion. The most important thing by far is DISCIPLINE! If a trader starts with 5K he has to have the discipline to trade 100 share lots until he becomes consistent. Not many will be able to trade in 100 lots cuz they will feel the need to push for more. The failure rate for people with 5-10K is 100%??? It must be 99.999999999% cuz I started with only 10K. Trade well.
a chance is a chance no matter how small the chance is. The best always rise to the top. but jesus christ dont tell the individual making minium wage hes gotta wait 10 years and save 25 grand for that chance. mav iv liked most all of your posts over the past years. but dont say i dont get it. because you disagree with my viewpoint. Once a person gets that so called chance what he or she does from their is up to them no excuses like i was undercapitilized, my broker screwed up the trade, the market was wrong etc etc... I hope someday I might be as good of a trader as you but hey thanks for quik reply i do appreciate that. your still alright by me.
I'm sorry, I disagree. You need to understand something. If we use very conservative numbers here. And I'm really reaching here. Let's take 5k. And let's say that it takes a trader 6 months to become consistent. I believe it takes closer to a year now, but let's go with 6 months. That's 120 trading days correct? This allows a trader to lose less then $50 a day net (including commissions). I'm sorry man, no way. Most new guys, even trading 100 share lots ( I use to be one of those guys) can easily drop $300 to $500 a day net. It's not that hard. But no way a guy can last 6 months with 5k if he is dropping $50 to $100 a day, forget $300 to $500. Now your comment that you did it does not invalidate my claim. We could take 100 homeless people off the street and give them 5k and have them trade every day. I'm sure 2 or 3 of them would randomly do well and might even make money! But don't get too excited, they would probably blow out the next 6 months.
Hey bud. I disagree with what you are saying. We can debate this forever and there will be no winner. If someone is new and losing 300-500 per day, they are probably not cut out for this biz. There are many different styles of trading. I happen to scalp the naz. I like to scalp anything in play and I prefer stocks in the 3$ to 10$ price range. For a newbie to learn this style is not to difficult. To master it will take a very long time. The key is not to make to many trades and to have fairly tight stops. The trader will never make that much trading 100 lots but they will not lose alot either. If they are patient and don't smash keys all day, they can easily survive. The key is to get consistant profits over time. Then they can slowly increase size. Even going from 100 to 200 shares is a huge step. They are actually putting on twice as much size. This is one method where it could work. As far as trading pairs and opens, I would think the trader would need to put on selective trades and really define his risk tolerance. If he is going to try opens, then only put bids and offers on a few stocks so they get very few fills in the start. The last thing you want is a newbie with 5 open positions. Maybe they could put there bids and offers even a little further outside the area where most open order traders put theres. THis way they will have fewer fills. Its hard for me to really know if it would work for opens cuz I have never traded them. I am just throwing out possibilities. As for my method, I know it can work. To start with 25K and being prepared to lose it sounds nuts to me. I think it is better to go in very light and just install major rules into your makeup. Just my opinion. Happy Trading.
Some of the numbers attributed to me are not quite correct. First off, 90% of "all" business ventures fail. 50% of our traders are not with us in year number 2, and we lose a few more that year. Why more money...?? Simple, the reason most businesses fail is undercapitalization, right? You need enough money to get past the learning curve. You need a certain bankroll to insure success in blackjack card counting, you need a bankroll to start a "Payday Loan business" (talk about scumbags, eh?)... In trading (as mentioned above), we have a low barrier to entry. No "franchise fee" (which is spent, not just transferred from one bank account to another)...trading is a serious business, and (once again), I agree with Mav...the chances are much less with just a few grand, and the firm's that let you come in and drop $5K or $10K are probably doing a dis-service. We have tried many different variables, and the best is with proper capital from the trader who is starting "his" business. All the best, Don
Some of you say, "Where can you start a business for $25,000?" You MUST have 6 months to 1 year of living expenses added to these figures. Mav says it takes a year to become profitable. Okay. 1 years living expenses on the moderate side=$40,000 Trading account=$25,000 This "business" you are starting up needs $65,000 of capital to sustain itself for one year, enough time to figure out if you will be successful. Take $25,000 and add one year of living expenses. That's probably going to be a pretty close "ballpark" figure.