what financial instrument should a newbie start with?

Discussion in 'Professional Trading' started by orange399, May 18, 2013.

  1. orange399


    Hi everybody, this is my first post. I am new to trading and would like to ask whats the best financial instrument to learn trading in with a small capital ($5000). Is it forex? Binary options? Also how long will it take to get good and what can u expect to have accumulated after 5 years?
  2. mark_mm


    I would save your 5k and then keep saving on top of it. In the meantime think of some trading strategies with precise rules that a computer could follow. Once you have tested the strategies and they shows a statistically significant promise of being profitable then start trading.

    By then you should have saved 20-100k depending on your circumstances and your luck/skill/learning speed.

    Start with small amounts then increase as the live results reinforce what you saw on test.

    If you trade before doing any of this you are gambling and may as well toss a coin.
  3. Josef K

    Josef K

    Stocks. Practice swing trading stocks on the daily chart with small amounts of money. That's probably the easiest form of trading to do. If you decide to jump right in and trade forex or futures intraday you'll probably lose the entire $5000 in short order.
  4. "learn trading in with a small capital ($5000)... what can u expect to have accumulated after 5 years?"

    Agree with the wise Josef above. Generally speaking, expect a wipeout within months (if not earlier) of dealing with forex, futures, or options :eek:

    From movie Rogue Trader:
    Tony Hawes: Only a week to go. What are you going to do with all that money?
    Nick Leeson: Well, I'm not going to spend it on futures and options.
  5. 5k.

    did you pay off school yet? or even go yet.....

    car paid off?

    house paid off?

    retirement saved for...on pace?

    health emergency fund?

    6-month savings for if you lose your job?

    once all this is covered...which isn't that difficult....

    save another 45k and come back to me...
  6. Stocks +1
    Trouble is with just 5K the commission will eat you up, there may be a low commission broker with that small of an account but I don't know what it is. I'd say save up some more and get and IB or another cheap commission broker. Trade with a small risk per trade 1% or so and have several trades going so your win/loss isn't wrapped up in just one or two stocks.
  7. bone

    bone ET Sponsor

    Judging by the questions you ask in your original post it sounds like you need to develop and test a sound trading system and plan before you worry about your capitalization or what instruments to trade. My advice would be to subsribe to a cheap charting and testing platform using delayed data to sort things out first. Given your cap level stocks may be your only viable alternative.

    Just try to survive. Projecting your profitability at this point is entirely fantasy.
  8. Josef K

    Josef K

    You can open an account at OptionsHouse with just $1,000, and their commission for stocks is $3.95, flat rate.



    If you hold positions for several days or weeks, commissions shouldn't be an issue.
  9. dom993


    You can learn trading with $5000, just don't put it in any brokerage account, instead use it to buy reliable historical data, and do your homework - a lot of it - to find one or several trading strategies that you can prove to yourself would have generated consistent profits over *thousands* of trades (anything under 1000 you are fooling yourself, from 3000+ you might have something tradable).

    As backtesting platform, I would suggest trying NinjaTrader (free until you want placing actual trades) or Multicharts .NET starter edition (free, can trade live on 2 symbols). Both of them use C# for programming, which is a great choice.

    To be honest, there are a hundred ways of making money, easier & faster than in trading. The odds are stacked against you (anyone starting) - why do you think you could make money trading?
    #10     May 20, 2013