Start With a Small Stake

Discussion in 'Professional Trading' started by chewbacca, Mar 23, 2006.

  1. For all newcommers that ask how much to start with, a lot of guys here say 25k or higher. I disagree, I think you need to start with as small of a stake as possible - like 5k or less. Because the more your start with - the more you will probably lose - which messes you up mentality and you start overtrading and lose more. Commisions, spreads, fees alone will kill you over time without the edge, experience, and system you need. So start as small as possible and if you blow it, take at least a month of before starting again. With prop firms, you don't need to put up much to get going. Of couse if you have 100k+, you can trade patiently and conservatively and still make decent money - but that's a lot of money to put on the line for a new guy and one losing streak is enough to mess you up with that much on the line.
  2. I agree- a good place would be YM futures contracts(dow 30) . A person with a smaller account can start with $2200. There is no pattern rule if you trade frequently. Also you can get a YG contract for 650.00 (gold futures).

    I think that a lot of people suggest 25k because of the pattern rule , but if you are a newcomer to trading 25 will likely head toward 20k.

    learn the mechanics of the markets- if you intend to daytrade , try a simulator if you can't be at it all day while learning. So that's my condescending .02 cents:D
  3. Most new start up businesses fail because they are not adequately capitalized. Trading is no different, IMO.
  4. When I look back at how i traded with my first bank roll(about $3,000) i'm glad that's all I had. I mean, I had no idea about TA or anything. My idea of investing was look at the most actives that went up and buy them. I had no idea what shorting was, just going off crap i heard in the Yahoo message boards. I look back now and just say to myself, what the hell was i thinking! So from my experience, it was a good thing that I had a small amount to lose. You live and you learn and nothing makes you learn faster then losing money.
  5. I used to go to this investor's club and it was sickening how much these retired and semi- retired people were losing trying to actively trade the market. One lady was a retired cpa with a successful practice and bragged about how she was down like 30% in two weeks and $100k on PCNTF. A few weeks later she started working as an accountant again. Very few people had even rudimentary knowledge of trading despite having large trading accounts. Many did not even know what basic concepts like shorting were. Nevertheless, they were keen on making the market pay for a new yacht.
  6. More money does not help you make money if you you don’t know a hill of beans what your doing :confused: :eek:

    Same thing goes for management of account... IF you can’t make money with one contract your not going to make money with 10 IMO
  7. Yes being adequately capitalized is a huge advantage for any business, but I think new traders should start with as small as a stake as possible. Huge drawdowns are common for new guys so could you imagine taking a 50% hit on 300k as opposed to 3k - %wise its the same but the mental stress of losing 150k as opposed to 1.5k. And you don't need a lot to make it either. Remember Bruce Kovner, I think 2k credit card loan was what he started with or Richard Dennis (400 dollars I beleive).
  8. what happend to that post I just saw, did you delete it? it explained it well.....
  9. I hope this doesnt come across the wrong way but the thing I guess ill never understand about newbie blowups is why anyone trades anything bigger then 100 shares when they are brand new, if you arent profitable on 100 why do people kick it up to anything bigger, anyone care to enlighten me on why newbies blowup??? seems like extremely simple logic, and this was not meant to offend anyone, sorry if it did, but i see a post like this almost every day about "how much to start with," or "just blew my account" and dont understand why they need someone to hold their hand. I think itd be EXTREMELY TOUGH to roll even a 5000 dollar account on 100 share lots, your allowed 100 shares of a 5$ stock on this kind of account how do you let 100 shares get away from you on a 5$ stock.


  10. LowRisk


    Right on. I've been a proprietary day trader for over 5 years now and I have seen people come and go. Ones that played big right away because they wanted to make it big all failed quickly and completely. I never paper traded and I don't know any successful traders that started off by paper trading. I believe one has to play with live ammo to experience the emotional ups and downs associated with trading. But please play it small if you are new. Too many new traders wanted to make money right away and few realize there is no easy money in trading. Many trainees asked me how to make a quick buck in trading. My reply has always been "VERY SLOWLY". The first goal in trading is not how to succeed but how not to fail quickly before you have a chance to succeed. Big bank roll helps but small bets make even a small stake last a while.

    Happy trading
    #10     Mar 23, 2006