This sets up an interesting challenge. I left out the time frame i would like to get this done. If i say a year, it greatly influences what kinds of decisions need to be made compared to getting it done in ten years. I'm going to propose a one year program from the time i actually start moving the $100 around the market(s). The first few challenges have to do with: A.) Where can i open an account for $100. B.) How to overcome the handicaps unique to trading $100 or less. Because the commissions and spread are bound to be relatively high compared to dealing with, say, $1000 stock/option trades, probably this will dicate how long i ought to be holding. Daytrading is ruled out, unless it's possible to day-trade options. Even then, it would not make sense to concern myself with daytrading options unless options with at least six weeks of time can regularily move enough to overcome spread/commision handicaps. More likely, $100 start up cap (and a one year goal) dicates a swing trading approach with holding periods of three to six days. This bears on what kind of strategy i use, and what kind of data i will need to test and verify whatever strategy that will be. A $100 start up seems to dictate that i start with: a.) stocks and/or stock options. b.) forex c.) stock index options d.) free data for testing e.) free software for testing some set ups. Look at d.) and e.) I believe i can solve the problem of e.) with Tradelink. It may require me to learn some C# in addition to the VB i already know. I'm also pretty sure i can get my hands on some free data if i'm willing to settle for 1 minute bars instead of tick data. If that's not easy, i will need to get daily bars and develop initials strategies around those. Look at c.) Stock index (futures) options would potentially work if there was a broker that allowed it...and a $100 initial deposit. This is preferable assuming spread and commisions are not a greater handicap than if i were dealing with stocks and stock options and corresponding broker. Look at b.) I'm fairly certain it's possible to find a forex broker who will open an account for $100. And the leverage, if desired, could be comparable to options. But can i overcome a potentially significant pip spread (or other commission structure)? Look at a.) Pretty sure i can get a stock option account open for $100. Before i did this, i will want to have an idea of what kind of handicap this represents compared to the other options listed above. Overcoming it may have to do with what kinds of research tools such a broker might offer. If it were possible to obtain a lot of data on some liquid stocks, it might help. In order to get started sooner than later, i might consider invoking a coattailing venture. This strategy is simply to identify successful traders and copy their moves in and out of whatever market they deal with best. This is a strategy i have yet to research fully, but seems possible. It oftentimes costs money to coattail, for example, to join a daytrading room for $100 a month. On the other hand, it may be possible to coattail for less, say, for $20 a month or less. I have yet to make a decision between coattailing and verifying my own strats using my own programming abilities. Long-term i want to catch my own fish rather than be given a fish. I'm thinking, what is my time worth? How long will it take me to verify strats that are better than the strats of whomever i coattail? If i coattail successfully, i will have more capital to put into my own strats whenever they are ready to roll out. Hmmm... Ok, that's good enough to get this journal off the ground. It's about the unique challenges of starting with not much capital and working in a generally aggressive, assertive, open-minded fashion. It's not my intent to take a $100 account less seriously than a $1k or $10k. It would be easy to blow it up ten times and start over. that would be equivalant to starting with a $1K account. But then, that defeats the purpose of this thread. It's not about taking $200 to $2K much less $1K to $10K. On the other hand, a one year framework does dictate generally more aggressive policies.
Ok, after much research, i'm leaning toward the use of: a.) forex b.) ETF's of the major U.S. stock indices and their options. And having narrowed down my test platforms to: 1.)Tradelink 2.)Amibroker 3.)MetaTrader5 I'm leaning toward #3. Have begun researching brokers. Broco stands out thus far. It's an ECN with a $25 min deposit, and supports Metatrader5. I found out i can get a VSP (Virtual Private Server) with Metatrader already installed on it. It'll run whatever robots i can upload to it. I'll be able to connect it to an iPhone so that it is not entirely unattended. It appears that Broco is moving to accomadate ETF's. But i may be yet shopping for a stateside broker who has been handling ETF's well for a while with ok commisions. Nothing is settled. I have much to learn about the best way to execute trades in these markets. I want to be able, for example, to run strats on the ES and ER2 using SPY and TNA as proxies.
Ok, this endeavor is still very much a priority for me despite some months silence. First, where i'm currently at. After that, where i'm heading and how i got here. Currently: Have not yet allocated the $100. Still researching the best way to go about it. The research has only cost me time. I spent $50 on a set up someone is using successfully, but probably didn't have to. I am currently testing, and with promising preliminary results, some idea i've received here on ET from a generous giver-backer type. Tests were in Excel. I am currently migrating my programming skills from Excel and VB over to the C-like language used to script the MetaTrader platform(s). My platform of choice is MetaTrader4. I am not using MetaTrader5 because my box will not handle it. That is, the installer rejects this old configuration due to lack of power (either not enough memory or not a dual-core processor). NinjaTrader rejects it also. I've learned that my box, a Dell Inspiron 8100 (laptop) i bought new in 2001 for $2400... is worth $100 or less on Ebay these days. It runs XP on a Pentium 3 with 256MB memory (out of a possible 512MB). Yes, prices have come down and you can get a lot of power nowadays for under $500. However, the reason i am focused on starting with $100 is because my income has been destroyed. I've tried to manufacture $500 (savings) in traditional ways for over a year and it just ain't happening. I have time and a mind and reliable wireless access...and Google. How I got here: The first thing i had to do before i could even start this endeavor was to 'jail-break' out of old-computer prison, without much money. I needed to reinstall XP but my optical drive had long since died. I finally got a replacement from a seller on Ebay for $4.84 + $5 shipping. I had XP service pack 1. Using Nlite and Nlite Addon-Maker, I learned how to build a "Live CD". I slipstreamed in service pack 3, dozens (over a hundred) of hotfixes, and a couple dozen essential programs. I made an ISO image out of that, and tested it on VirtualBox. After proving it would install as asked, i burnt the ISO onto a blank CD using the library's NERO burning software. (Nothing i used on my own computer would work). VirtualBox gave me the confidence for when the time came to completely erase and reformat my (20 Gigabyte) harddrive. While i was at it, i partitioned the HD,alloting 4 gigabytes for the OS and essential programs. After the fresh install, i began building the ideal software set-up...all of the platforms, languages, IDE's, editors, utilities and runtime environments i felt i would be using (eventually if not immediately) to take $100 to $1000 sooner than later. I have completely dedicated this laptop to this endeavor, and have offloaded anything not related to external storage. I've also stored an ISO image of my hard-disk to external backup. After building up the ideal working environment (manually building on the "live CD" build/install), I took an image (ISO snapshot) of my core partition. I made another 4 GB partition and installed the image onto it to make sure that it was valid. Yes, the image functions perfectly, and so, i've managed to refresh and modernize and backup a relatively outdated PC, extending it's life a while longer. It does what i need it to do. This may sound like a simple operation, but until i began this process, i was a dumb user. It was anything but easy, but with Google (search engine), it got done. I now consider myself a kind of ADMINISTRATOR, finally in control of my box in a way that i feel i *own* it. I no longer feel frustrated like before when it was pushing me around, not understanding what was going on. I gave myself a comprehensive crash course in all things PC, ready for the road ahead. Where i'm headed: The road ahead begins with porting all my previous programming skills into the C-like language used in MetaTrader. Possibly, this is as far as i need to go. But i'm willing, if necessary, to migrate/port to the more object oriented language of MetaTrader5, and beyond that into C#, Java and/or Python. The reason is because my approach, whatever it will be, must be tested and automated by computer. It must run on my own laptop at first, and i must eventually install it on a VPS (virtual private server). I will never be a discretionary trader, sitting in front of a screen with a few rules rolling around in my head. I plan to rely more on statistics, probabilities, functions, and the "cloud", and less on this old laptop. Long term, i'd like to monitor a cloud based app from an iPhone/iPad (mobile) app/utility. I believe that to take $100 to $1000 (sooner than later) it requires broad scanning, lots of continuous calculations, some databasing, reliable uptime, and frequent trading round-the-clock. The plan is to start with what i've got and get it to generate a profit pattern. Then build on that. I will probably start generating signals that other's could follow in a way that can supplement my general efforts to take $100 to $1000. Just as the power of my computer somewhat dictates what software i can/cannot use, so does $100 dictate what avenues are open/closed for getting this off the ground. I'm currently looking at: A.) FOREX B.) BINARY OPTIONS. I have briefly researched automated online roulette betting software, but consider it a longshot, and have yet to test anything. It will probably be one of the last methods i test before deploying the $100 to one of the many brokers of Forex, or any of the "brokers" of binary options. It seems possible that certain kinds of trading methods could be applied to a binary options scenario. There is a known break-even point around a 55%-65% win rate. Any win-rate higher than that is money, if the broker is honest. I consider this a short term way to start, as a way of overcoming the problems of commissions, slippage and spread on small initial trades where i'm not wanting to risk more than $10 per attempt. With binary options, the commision/spread/slippage scenario is sort of built in to the odds. It's fixed in a way that a guy with $100 to start might be able to more precisely control money management scenarios. For example, $100 can be divided into ten $10 attempts. First of all, before attempting to win at the game of binary options, i'd first need a system that was right at least 70% of the time. A system that is right 70% of the time will rarely lose ten times in a row, although it's possible. The point is that it should be possible to divide $100 into enough pieces to insure the ability to handle a very unlikely drawdown. The trick would be to set up my software to find enough opportunities to do several binary options deals a day. The goal there would be to find a way to average 5%-10% per day. Figuring that out could take a lot of research, but would be worth it i think, because i think the game of binary options are here to stay, just as casinos are here to stay. I feel there's an opportunity there for those of us who can "count", if you know what i mean. Getting back to the Forex, is there a level of capitalization at which the commision/spread/slippage structure can more easily be managed? I predict that in that environment, starting with $500 is a lot easier than starting with $100. First off, many brokers offer bonuses for first deposits. A $500 deposit could generate $100 in bonus capital. Seems to me like an easy 20% gain with little downside risk. So that's how i'd like to start with Forex. But if my binary options research shows that i can't win there, then i'll go ahead and start with Forex with $100 (and whatever bonuses i can get on that), after eliminating the other option (roullete) i mentioned earlier. My guess is that online casinos have defenses set up against automated betting bots. The simplest defense is detection followed by a ban on an IP address. A bot could be easy to spot, imo, because of it's ability to bet at speeds that are not humanly possible. To prevent this, a bot better could set it to play at the same speed a human would play. These are all untested thoughts, assuming anybody can make a bot beat roullette in the first place! I don't know, but i suspect there is a way. Even if there was a way, it's questionable if a software developer would make that way possible to just about anybody (less than $100), even if they could. It's possible that someone promising a way to break the casino could be on the side of the casino. These thoughts probably belong in MAD magazine in the Spy-vs-Spy panels. Likewise, a broker promising direct access to the Forex may still have an unfair thumb on some transactions. All of these are challenges to overcome, imo. So we'll see.
> Where can I open an account for $100? Look up CFDs. The opening amount is minimal and you can trade several different instruments (futures, forex,etc), most of the time you pay by the spread and not by commission. If you are American you might have a problem opening an account, but use your imagination.
You forgot to mention placing bets at your local dog track as one of your investment options. At least there the commissions and spreads won't eat your $100 before you start.
You forgot "Buy yourself a small gold bullion coin on ebay and don't sell it." as part of your drive-by hit-and-run financial advice campaign. Not all of us have over $100k to buy a share of Berkshire Hathaway, sip mint julep, and look down on those who need to roll up their sleeves and find a way to make $100 work. The smaller the cap, the more a start-up program is going to look like a betting scheme. But don't think you've stopped betting just because you own a share of Ford or GM, because your money manager is called Janus, because you subscribe to IBD, or because your SEC regulated broker only charges $7 RT commission. There are lots of paying dog races that i could get involved in for little to nothing (except preparation). Bet you never thought of that. Automated Trading Championship 2010
Thanks for the tip. I hadn't thought of it. It could come in handy if multiple high leveraged instruments becomes part of an overall strategy. It may, eventually, because my general approach is to keep capital busy in high probability propositions. There may not be enough such propositions in one instrument to keep my cap busy. And yes, i'm finding it problematic to be an American nowadays relative to these other business propositions that may compete with a rather monopolistic/uncompetitive US policy toward it's sanctioned/regulated betting models (ie. the stock exchanges) under the guise of big brother.