You really have to look at the nature of your "edge" or setup and slice up how you get to that 5-10% number. To successfully earn a living on a single setup, I would imagine it would need to occur rather frequently, with each profitable trade making up a small portion of your monthly total gains (I'm lacking the proper vocabulary for each of these terms, I'm sure someone will step up). You can't rely on your numbers if you achieve them with only a handful of setups each month. That being said, if you've done all (I mean ALL) your homework, and if you are trading futures with an edge that is applicable on a daily basis, you really don't need that much money to earn a steady living. The amount really comes down to how, for lack of a better word, good your edge really is. Can it earn you a decent living if you're trading a single contract? If not, how many contracts would it take? Multiply this number by the minimum overnight initial margin required for your market, then triple it -- I'd say that's a rough estimate for a minimum.
Nope. The amount really comes down to how much your living expenses are, and what is your achiaveble monthly net gain. It is that simple... Net monthly gain has to be equal or bigger than monthly expense, thus: 100/ X => Z X is monthly gains in % after commissions and taxes Z monthly expense End of story....
25%+? Based on what? Margin? 3 times margin? Return figures are meaningless without knowing the leverage. If I have a strategy making $3,000 trading ES futures per year per contract, what is my expected return per year? Well, based on margin of $3,000, that's 100%, but of course, that is quite unrealistic. Based on 3 times margin, that is about 33% per year, and so on....
I'm wondering if I could squeeze some more profits out of the markets using my system. I noticed that I am leaving a few big moves too early. At the moment, I may trade each market around 30-40 times per month (90-120 times per month). I read on About.com that day traders can typically pull out an average of 1% per trading day. Yet, reading books such as 'Trading for a Living by Dr Alexander Elder', he states you'll be lucky to pull out around 40% annually. I am learning something new every day and constantly optimizing my 'edge'. I have a demo account running in the background where I will test my new strategies, whilst trading my main strategy using my real account. This is how I have been able to adapt and improve. What is the typical returns for a successful day trader?
I think this is one of the most realistic statements on the thread thus far. Under capitalization is a killer. The amount necessary to get started in trading is really a generic question. It will vary wildly from person to person. I think the main question is whether or not you are relatively streamlined in your personal expenses or not. I got started with 0 debt other than a mortgage and the usual recurring living expenses such as food and utilities. Remember, you really are starting a business after all. You need to have sufficient knowledge and a developed edge for your trading style. I think that if you have a minimum of 50K plus living expenses for about 18months, you can make it if you really are as good as you think. Of course this figure will have to be adjusted up depending upon where you live. Trading from someplace like TN or IL isn't going to entail the same living costs as trading from CA or NJ. So you see, the ability to trade for a living and how much is almost as much a lifestyle question as it is a capitalization question. 50K minimum 100K ideal. But as always, TO THINE OWN SELF BE TRUE! It isn't easy no matter what your starting capital is and only embark full time if doing it full time will maximize your results. Good luck and as usual, just my .02 from over the internet.
Realize too, James, because I am just ahead of you, that when you trade real money it won't be the same as trading a demo account. I am having challenges executing on set ups that I know are high probable winners. I watch them pass me by so I work on the psychological aspect when the market is closed. I say this not to project negativity just to make your goals a bit more realistic. We are humans not robots or black boxes and are subject to imperfections. With time, I am completely confident that I will become the emotionally detached trader I need to be as you will as well. Good luck on your venture.
I am and have been trading with 'real' money for six months, I only trade a demo account to test new strategies. The only reason I ask this question is just for a nice conversion to see what others believe is an appropriate start-up and how they started. I even stated within the OP that I understand it is subjective and the reason for asking. But thank you
You really are asking two questions. One is how much money is needed to make a consistent living income. The other, and far more important, question is how much should a relative newbie devote to trading. The answer to the first is "it all depends." To the second, "not much."
I started with $90K back in 1996 with no other sources of income. I've traded retail 100% over the past 10 years. Given that cost of living has risen over the past 10 years I now start a year with $110K or so in my account. I'm a hybrid trader with swing trades making up the majority of my profits and day trades maybe 35% of profits.