Thank you for your insight. The monthly costs include: Briefing.com $300 IBD $25 Pristine $50 Quotrek $50 I'm not sure if that is way out of wack for his capital size.
That is $5,100 a year in expenses. That will require a 41% "gain" during the first year in order to break even and 65% gain to make the $3,000 return. To state the obvious, it makes things more difficult.
This is a very important point, and something that the original poster should take careful note of. I personally feel that trading should be approached as a business if one is looking to do so part-time or even full-time, and costs are a huge factor in whether or not you will be successful. For example, I too am undercapitalized. That is fine for the moment, because I am trading right now for the sole purpose of gaining some practical experience while I'm finishing up uni, but it is a major obstacle for me in terms of becoming profitable. Once I am done uni, do I want to be devoting as much money as possible to building up my trading account, or do I want to be paying large sums of money for things that I may not need? For example, one issue that I identified early on, and devoted a great deal of time to, was the cost of quote feeds. I did quite a bit of research, and was concerned because I was seeing that a "good" feed appeared to cost roughly $200-$300/month (depending on features), which is $2400-$3600 per year. Sorry, but that money is far better off building my account than going into Esignal's pocket. Point is, I finally stumbled across QuoteTracker, found a low cost quote feed (IQFeed), and now pay a fraction of what Esignal would cost me for what I need. I would suggest that your friend consider this carefully as well, particularly the $300/month news feed. Heck, I'm carefully considering right now if I should subscribe to the AP news feed, and that is only $15/month or so.... Beyond that, if your friend has it in him/her to be a good trader, he/she will succeed regardless of capitalization, it is just a matter of finding the right strategy. I can't quote it exactly, but in Reminiscences of a Stock Operator, the character talks about being able to win at games that are clearly rigged against him (bucket shops). I'm currently undercapitalized, I have a crappy, expensive broker, and I have to pick very good trades to even have the possibility of breaking even on a trade due to the above. I lost a small amount of money (15% of my account) during my first 5 months trading (Summer 2004 to end of year 2004), and this year I am solidly in the black.
Hi All, A down to earth consideration. As by popular wisdom 95% of the participants don't make money - figure NEVER seriously disputed - it follows that 'Undercapitalization' must be widespread. The moment that one becomes aware of this condition depends mainly on how fast and often you trade. nononsense