A person can not day trade stocks with a low capital account. An ole trader advised me a long time ago that a jealous man can't work and a scared man can't gamble. Without a sufficient funded trading account, you are always afraid of losing. So how much money is needed to day trade? In my opinion, that is an individual decision based on your comfort level. But with the PDT rules, I don't see how one can be considered a day trader unless he can trade every day.
Why is it that unsuccessful traders feel the need to continually give trading advice? If you havenât had multiple years of six figure profits then qualify your advice by saying you are not successful yet but here is what your opinion is. I realize that if only successful traders responded there would be hardly any replies to any questions at this pretend elite trader site run by mods who couldnât care less about trading but do whatever they can do encourage multiple alias trolls to create limitless pointless threads. There are many, many stories of traders taking a small amount of money and turning it into a lot of money. This is mostly the result of luck and has never, and will never be repeatedly accomplished year after year. If they could do that they would be the richest person in the world. Ask yourself why there are no threads on this site about anything that costs money. Everything is about starting trading with the minimum amount, or getting the computer at the absolute lowest price. I am just a simple six figure trader but I feel like there is almost no one here that is an actual professional trader, yet advice flows from the uninitiated to the naïve like water. You can learn to trade with a small amount of money, and you can make a living at a good prop firm with a reasonably small deposit. You can also make outsize and significant percentage returns with the volatility we had in the dot com days and now with the vix staying above 40. You will not have those returns if we go back to a sub 15 vix though. I am not one of those traders who confuse passive investment returns (like 10 or 20% a year) with the returns a serious, experienced full time trader can generate, but what a trader can make in one year with high volatility is not necessarily what they can make every year for a 20 or 30 year career. Trading is a job, and if you are good then it can become a career, it is not a get rich quick scheme. Sorry just had to get my Sunday morning rant out of the way.
These kinds of posts do nothing but jack with the new guy's perception of reality in this business. Or in this case, the absence of reality. Keep trading.
-------------------------------------------------------------------------------- Quote from spindr0: Pick your own number but it's going to be an awful lot more than 1-2 k. -------------------------------------------------------------------------------- The 1-2 k refers to the OP's question of whether one can be a make a living as a career trader with $1,000 to $2,000 of capitalization. That's not possible. As for returns, I have no idea what kind of annual % return a typical disciplined trader makes since it's not exactly public domain info. I know a trader who sometimes makes in a week what I make in a year but his daily drawdowns can be more than all of my losing days in a month. I'm the tortoise, he's the hare and we both live off the proceeds from our trading. As mentioned by others, there are more variables to this than "How much capitalization do you need?".
I appreciate everyone's posts. I should let people know I am not entirely new to trading. I started out life in banking, but I couldn't stand the salesmanship required. I am a terrible salesman and hate all aspects of sales as a profession. I left banking 6 months after getting licensed. I do however know how to trade, and banking is literally in my blood. My whole family for generations has been in trade of one sort or another whether stock market, insurance or real estate. The difference is that I am literally starting over after loosing all my savings to getting married and raising a family, owning 3 homes, and a wife that doesn't want to venture anything we do have left. I am therefore starting out with savings I have saved from my personal slush fund that isn't taking anything from the household budget, and plan on growing the account until I can free myself from employment and work on it and my families future full time. I simply restated the question because so many people have said they can trade for a living on a tiny sum of money, but when you look at the regulations, it couldn't even be possible in most cases unless one were consistently lucky to pick stocks that swing 200% after they are picked. Personally I don't plan on scalping, I plan on doing a blend of day trading and swing trading, and on paper (I know its not the same thing), I seem to consistently do about 10% performance per week. I have had some really bad trades on paper, but in the end it seems to balance in my favor. Does that mean I can do it full time? I don't know, but that's the point of starting out small. If I can perform small, then I certain can perform a little bigger considering its harder to surmount commisions and fees with when trading under $5000. At $1000, you are stuck cash only, and fees hover around 1.3% on average, plus you can only trade once every 3-4 days on a cash only account. So you need to have picked a good stock to trade that will exceed the fees. Once you exceed $2000 after closing your positions and letting them settle, you can convert to a margin account, you still have the same fees, but the percentage is half, so its easier to surmount the fees, and you can trade 4:1 margin to cash ratio, meaning if I understand it correctly you can trade all your money 4 times a day so long as you can make your equity calls. If you can't make your equity calls, you account is forced to wait settlement before you can behave with pattern day trading activities again. Once you break the $25,000 barrier, you aren't subject to the 4:1 ratio equity calls so long as you don't loose money that forced a standard margin equity call. So..after that long winded explanation of what I want to do, and what I understand so far, the summary is...I plan on building it slowly in order to not risk so much, and prove my performance with less money so I have more confidence when larger amounts of money are at risk and I am capable of managing the risks appropriately.
Quote from hoodooman: In the nineties, I averaged 200 dollars a day with a 2000 dollar account. These kinds of posts do nothing but jack with the new guy's perception of reality in this business. Or in this case, the absence of reality. ------------------------------------------------------ What I said was reality and it could be done today if it didn't violate the pdt rule. Formost, its about the edge you have and not the size of your account. Account size is secondary. Only a real trader knows that.
I started with $90K back in 1996. I traded (and continue to trade) only equities. I am not solely a daytrader but carry position trades as well. How much you need to make (do you have a mortgage, car loan, etc.) will influence your required capital at startup. Do you have a wife, kids? The more "responsibilities" you have, the more potential pressure and stress you might feel as you trade. If you have a spouse and she has a regular paycheck that can help ease your stress to some degree.
The short answer is that with 1-2 k you don't have the capitalization to make a living from trading. But that shouldn't stop you from trying to make a career out of day trading. It doesn't matter what you trade (stks, options, commodities) or how you trade (day, swing, tea leaves). It matters what you can succeed at trading. You sound like you have a thought out plan and at this point, you need to trade and find out if you can do it without blowing yourself up. I'm not sure that I understand your understanding of PDT rules and $25,000 You can hold 4x intraday as long as you meet the $25,000 account value. Obviously, more than 25k is necessary to cover intraday fluctuations. But the salient point if you haven't grasped it is that you can turn that money over as many times as you want intraday. If you have grasped it, my apologies for wasting my time