outstanding advice PuffyGumby getting a real job or career position requires submission of on'e over inflated ideals to the reality of criticism from both co-workers and clients (those who consume your eventual departmental products) and those criticisms are never flatering. as long as one stays outside of the real arena, one can always flatter oneself in platitudes of superiority... working the corporate job is not easy for a number of reasons and most college students have no idea what they're in for when they get into the grind..... if this is a step that you, as a trader skipped, it might be worth all the character development that it really provides.... seriously consider this as a reasonable avenue to persue, you can always come back to trading or seek an MBA (only) Trader Trainee position at one of the major Banks / Brokerage firms,,,,,
Yabut....Yeah BUT....only an @#$ing idoiot would NOT put everything they had into something if they knew they were good. And with a prop firm, if you are a good trader who can use the leverage with discipline , your capital input is not subject to market risk as much at it is subject to firm risk. Those two are related sometimes. I hear you I am doing the same thing (small capital deposit relative to cash). But that's my insurance policy against a firm blow up. Has nothing to do with my skill level. If you go retail, you get SIPC protection, and you need more $$$ in there anyway to trade the same levels. If you go prop, its all up to the wind, the other traders, the risk managment at the firm, and their business model's ability to absorb change.
Buzz Swartz started with 10K, built it up to 100K, then ran his business as a trader. While he ran it up, he had a wife that obviously supported his efforts. You don't really need the wife (they are expensive) but some kind of plan to give you the time/mental space to learn the skills of trading. If you wait to have 100K or 500K to trade, you are DEAD for a few reasons. First, you build up a big wad from some other income, then you risk it by trading with little or no skills. In my opinion Joey, you were lucky you didn't blow your 500k. But you didn't mention if you were a trader before you started on your own 15 yrs ago with 500K. If you had some trading skill prior I agree that more capital is better. However, if you have no skill and want to acquire it, you gotta get started. You don't have to risk your life and financial health to do it, either. If you have a small amount, arrange your life so you can learn your trading skills and make money (hmmm..job at night, or savings...be creative) , you focus on building an account. Once you have done that, you know when the time is to become a full time professional trader. Then when you severe the ties from your real job, you have confidence that with your built capital you can earn your take.
Let me put it this way, trading on 20:1 margin is like flying a Boeing 747 at 10 feet above ground...it's doable but how long can you keep flying that low?
If you think like this, you truly have no idea of the proper use of leverage. Trading at 20:1, for example, is like having 20 fishing hooks with worms on them in the stream. Odds are that one will get a bite, and you go over and pull the fish in. Odds are that the others will still have their worms on them as you pull in the fish (risk management). That, my dear newbie, is how you use leverage in this business. You obviously have no idea what that leverage is for. By your illustration, you would put it all on one trade for an infinite timeframe. Another example, if in trading you have an edge with positive expectancy, then your objective becomes how to put on that edge as many times as possible. That is probably the best example of the proper use of leveraged capital. If you don't understand that...read Trading in the Zone by Mark Douglas, and he can illustrated it for you.
And at some point in your career, the statistical likelihood is that you will snag all twenty hooks at once on a log and get pulled into the water. Re: the other example, when you have a positive expectancy of 100% on all your open trades, it would make sense to use all the leverage available to you. Thus far, I have never come across a trade that meets that criteria.
In some cases, I would agree. But I have been using 20, 30, sometimes even 100 to one leverage on trading strategies for five years now. Day in and day out, and It has yet to put me out of the game. It all comes down to managing risk. If you are actively managing your risk, then you should have no worries. That being said, you better have a plan and be able to execute that plan when and if it ever hits the fan.