============= Lt. Dan ; I wish all traders were as well mannered/professional as most real estate brokers, owner agents I have dealt with. Some of the delivery was perhaps juvenile & actually have done some of that myself while attempting to warn of the much higher probability of losing money in stocks or derivatives, as compared to real estate. Trading/investing Stocks,[ and not to be negative, but facts are facts]; the more leverage /position size someone uses @ first ,usually the quicker one will empty an account. Yes; Jack Schwager 3 top trader books are among the best. May click ''books'' @ top green line this page
LTD - First thing you need to understand is that 90% of the people on this board are unsuccessful traders. Deriding you for starting with 20k makes no sense given that most of these people tried to start with 5k. My advice: Start with 20k. Begin PROP trading to take advantage of intraday leverage (25x or so). Strart trading 100 shares at a time. Then, move up to 200 shares, so on and so forth. You won't make any money and will likely loose between 5 and 10k in the first 6 months. After that, you'll spend the next 6 months making back what you lost. If you can last the first year, then you'll like last much longer than that. But again, don't get into huge size. Don't get caught up in indicator mania. Seek out REPUTABLE prop firms (this is hard unless in NYC or Chicago - and even then, still difficult). Learn from experienced traders and be able to support yourself while learning to trade. You need to go into it with your eyes open and part of that is recognizing that trading is VERY HARD - why do you think it's mostly young people who are most inclined to be successful? They have less to lose and nothing but time on thier side. If you are accustomed to a comfortable lifestyle, then day trading might not be for you, unless you are willing to shake things up a bit.
Fader: I do not think people were on him for starting with $20k, the negative comments were to a newbie asking how to use $20,000 to make $3-$5k a month, which is completely unrealistic for a newbie to be able to do. A does of reality is always the best precursor to giving good advice.
Fair enough. But just to be clear: Expecting to make money initially IS unrealisitic, but to have 20k in a Prop account leveraged 40x intraday would give him 800k BP. After his initial losses (1st year) and slowly building the account back up without withdrawls, expecting to NET at least 1k per day should be his goal - assuming he's getting into 1000-2500 shares. There are plenty of guys at my firm who regularly take home anywhere from 20k/month on the low-end to 70k/month on a very good month for the very best trader.
Fader: what percentage of newbies would you say actually survive starting a prop trading account? I guess the same question could be how many newbies survive any type account? From books I've read- it seems many good traders have initially lost it all before they learned to trade...maybe they learn to respect the market or at least understand at that point it isn't easy to make money trading. 14 or 15yrs ago I blew out my 1st account. Now I'm back ready to do it right. Money mgt. risk mgt. and system trading. Is your suggestion of a prop account because of the amount of money he wants to generate? I am asking because I never knew about prop accounts(until your post) so I googled it. Now that I have read and understand them a little I wonder how much you think is enough to day trade...I will be day trading full time starting in Feb. (setting up my computers,account & office now) and the idea of having a prop account seems appealing to me....but I probabaly have enough to make sure I am profitable first.... please don't misunderstand the tone of this post - I am honestly asking the questions --not doubting of your post .....I'll put some smiles here at the bottom .......that should do it..... jeff
First, let's recognize that not all traders are created equal. There are professional traders who go into trading in thier early 20s - they eat, sleep and drink the market and they learn at a rapid pace. It's this group that has the greatest chance of success if for no other reason that thier risk/reward is favorable. They can afford to clerk for $10/hr at the MERC. They can afford to execute orders for some A-hole trader at some obscure hedge fund. They can afford to go to a prop firm and make no money for 6 months. The other type of trader is the average schmoe who socks away his paycheck and then decides to "Trade for a Living" ala Alexander Elder. This trader is facing a much steeper uphill battle than the former and it's this guy who's most likely to fail. With that said, you need to understand what prop trading actually is. Prop firms exist to provide a platform and place for traders to trade. They, in turn, charge commissions and usually have no vested interest in your account not blowing up (hence the revolving door at many prop firms, arcades, whatever you want to call them). I'd first ask you why you're spending money on setting up an office? I assume you're spending something on the order of 5-10k on this. Why?? Take that money and go trade at the office of a Prop firm. Let's assume you have 20k. Deposit 10k with a GOOD prop firm. This buys you Class B shares in the LLC. You use thier leverage on your money, anywhere from 10 to as high as 80x intraday. The money that you pull from the market, goes into your account and you make withrawls at your request. If you blow your account up, then you're done if you don't deposit more money. They provide all the office space, computers, etc. You really should explore this a bit more. Oh, and if you are trading with 20k, I'd advise you to only deposit 10k because if you deposit too much, you'll likely take on too much risk. Expect to lose the first 10k and then deposit another 10k, which, if you're meant to be a trader, will give you fighting chance at succeeding.
Ok Fader....maybe a little more info would help....you seem like a guy that knows what he's talking about so I'd like to run this past you one more time if you wouldn't mind... interested in trading since age 11...but never traded read and learned more through high school and college traded a single option at a time with full service broker in 84' & 85'- ..I had no idea what I was doing and bearly understood the profit structure....I would spend 3 or 4 hours a day sitting at the brokers office with a bunch of old men watching the quote board and they would explain to me what I should do with the $500-$700 I had saved over a months time...looking back it was crazy but that was how I learned saved 25K in 1993 went to chicago to learn to trade...spent a week with Alan Greenspan(not the Fed-a S&P pit trader)at something called "commodity boot camp"paid about 5K ....came home with no knowledge of money mgt or risk mgt. --i -but I did have a trading plan...a very simple system called a pivot system....traded for a while but lost it all due to lack of knowledge about risk - risked 10-20% per trade...a short series of losing trades took me out.... Started a business 1994 and another one in 1999...both are successful...now after years of working by butt off....-the businesses run on their own. They don't require my daily attention. I finally have some trading capital after years of struggling with start up businesses (85K less the 7K I've spent on the office computers and stuff = 78K) I set up the office with the best computer available, multi-screen system...failure is not an option this time....I know how to be successful ....I will do this right this time...I understand and will use good risk mgt. , money mgt. and I am currently developing a trading system to use.... I've watched and read the boards over the years and knew another 25K account wasn't going to take me where I wanted to be....profit isn't mandatory because my businesses support my modest lifesytle....I have the full support of my wife since the 90's I've read 50+ books watched and listened to the markets via TV and internet...watched the markets every day via internet ticker at my business and over the past 2yrs. I've traded a 5K account for fun and learning. My last 30 trades have resulted in a 2R return which isn't great but it was successful.....and I did this while working all day and night I have dreams of starting a Hedge fund...but I don't know how realistic that is....Prop trading seems like the next best thing...but it's probably best to start slowly and move to prop trading after successful.... now what do you think....(you and I are about the same age from what I've read on your ET bio)....prop trading.... or better not to....