What is the least amount of money you need to start trading?

Beginner Questions
22

you are very right on this. a friend of mine has an account with IG markets of 5 million. He is happy doing 15% a year and drives 2 porsches only from trading stocks.

And if you want the truth, that is the right way to trade. even thou he got the money from his parents after they died, he is doing it very right if you want my opinion.

That should be the target of every trader in here. get a nice ammount of money with which its enough to make 1% a month to have a really good life.

that is a really sustainable and constant way of trading.

now take it in real numbers, lets say you got 5 million and youre fully invested in stocks only. you get on a average divident payout of % only a annual paycheck of 250.000 without doing anything. take away a average inflation of 2% (100.000) and you still have nice 150.000 to live with and have absolutely no worries and never go broke.

so yes, the higher the sum the more it reaches the 100% in the graph which FXCM provided here (except in FOREX of course).

23

[quote=“TURBONero,post:22,topic:78533”]

Absolutely…which is very much linked to my reply to forum user fionacastro in her thread here:

http://forums.babypips.com/forextown/79515-how-much-minimum-capital-required-real-trading.html?highlight=fionacastro

And yet a lot of us here started this journey under-invested and are trying to do it entirely the wrong

way round… that is, not giving this ‘business’ the right degree of respect…

The other thing to add, linked to what you were saying, Turbo (and to what Jason Rogers was

so helpfully showing), is that when you trade ‘big amounts’ you can get access to brokers that

accommodate that level of transaction and may facilitate lower spreads or other advantages…

FXCM, for example, has some advantages for high-volume traders, and I am sure that other

brokers may have a similar approach…

It is the same when expecting the same treatment when opening a savings account in a bank

with a 5k deposit as with a 5m one… You do not even have to dress smart to get preferential

treatment with a 5m deposit: money talks :slight_smile:

24

If you are a beginner you should start trading with the smallest amount possible since you will lose them anyway.

25

It’s my pleasure, Dennis. Thanks for being a long time client of FXCM. :slight_smile:

The answer to this question must come down to the individual trader, because everyone has different risk appetites, trading strategies and goals. A big part of successful trading is understanding yourself.

I can’t speak for others, and this is by no means a recommendation for you or anyone else, but personally, I am comfortable having 10% of my liquid assets in currencies, and using 10:1 leverage.

Ignoring transaction costs (spreads and commissions) the horizontal asymptote is 50% because for every winner there must be a loser. When you factor in transaction costs, the leveling off point is slightly under 50%.

Another great point, Dennis :22:

There is a point where depositing funds can be cost prohibitive or where a trader wishes to keep a portion of their funds available for other ventures. It is then that our clients can look to the Prime of Prime service offered through FXCM Pro. Our institutional trading division extends a credit line to traders who can then access and trade FX without depositing all of their money in a retail margin account.

26

Thanks guys! :cool:

27

Just my little view on how much trading capital you need to have when going live…I would only go live after successfully trading 3 months consecutive profit or very sure you are now confident going live and the usual newbie errors are not occurring on demo account.Then start off with £2000 risking no more than 1% per trade with a maximum of 5 or 6 Trades live at anytime.If you have then made 3 months of successful trading/Or confident then pop another 2k in and so on.Hope this helps

28

For trader that having these amount capital they can easily to start in real account with good confident, but maybe not all trader have same wealthy in their life, many small trader called as retail trader also have opportunity in forex, some broker offer low minimum deposit they have these opportunity

29

The least amount of money should be the amount you can easily afford to lose, only if you are at very start of your career. But when you become a good trader, then you monthly requirement of profit determines your trading capital.

30

Yes although we act become investor in forex pamm account still need to investing money that afford to lose, because if get losing in investment so not disturbed overall financial family, start with small capital if trader have good skill also possible making huge profit

31

Hello,

Bumping into this thread. What is the least amount of money you need to start trading?

We’ll i would say if you start trading with no experience then trading live, give it a try with any amount for learning. There is an excitement when winning and loosing for the first time. I started live trading with $2000 with no experience and i lost all of it. Ouch! Now, every traders goes into this situation and this is a fact that based through my experience and what i heard.

After 2 years later of experience. I traded $1000 dollars, which give back my 1000 dollars profit and that counts as 100% POI for 2 weeks, but it wasn’t easy. Start a decent amount, $1000, loosing that amount is worth it to learn to trade forex. Loosing money is the key here to trade when our set up was done. Meaning, you can afford to loose a certain amount to gain profit. Good Luck for your journey in Trading.

32

You can start trading even with $5, but that is not what you should care about. Your concern should be more about trading education before entering the market and losing money.

33

Perhaps the question should be, “What is the least amount of money you need to start trading [I]IN ORDER TO MAKE A LIVING[/I]?” Because one can certainly start with as little as one dollar if all one wants to do is have fun, or to practise trading; but [I]not[/I] make a living.

If one needs to actually [I]MAKE A LIVING[/I] trading, then one needs also to have a target income in mind which one needs to reach. If one determines, say, that one needs a target income of at least $100,000 per annum, which is to say, around $400 per trading day on the average (there being realistically about 250 trading days in a year, if one takes a two-week vacation from trading every year), then one would most likely need a capital of anything between $40,000 and $120,000, depending upon what one’s percentage of profit per trading day is.

If one can consistently make 0.3% of one’s account per trading day on an average - which in my opinion isn’t impossible at all, especially if one strictly follows a proven strategy - then one could make one’s target income of $100,000 with a trading capital of $120,000 (which would yield, at 0.3% of one’s account every day on the average, around $400 per average trading day). If one can consistently make 1% of one’s account per trading day - which also is possible if one develops enough skill, at least according to professional traders such as Cory Mitchell of “Vantage Point Trading” and Chris Pottorff of “FXKeys” - then one would need a trading capital of around $40,000. I think consistently making much more than 2% per trading day is both unrealistic and unnecessary, even though I also believe it to be not altogether impossible.

But if one already [I]has[/I] an income on which to live while trading, and one only wants money from trading to [I]supplement[/I] one’s income, then one can surely start with much less, right? At least as long as one does not withdraw any money from one’s account for a few years, just letting it grow. Starting with even a relatively low figure like $1,000, and earning a relatively low daily percentage of 0.5% per trading day while letting it compound and increase day after day and year after year, one would grow one’s account to seven figures in 4 years, and to eight figures within 6 years.

So if one has the [I]patience[/I] (and [I]also[/I] the necessary income from another source) to wait just 5 to 10 years before withdrawing any money from one’s trading account, one could end up filthy rich within a relatively short period of one’s life, ending up earning something like a million dollars per annum … or even more. And realistically, who needs any greater income than that, even if it’s before taxes?

34

I am not yet thinking about million dollar from forex business, beause my capital in account only start from small money as initial capital and most my account still get from free of source like as bonus, but I like with forex because so many trader also here which they want to making money from business and this make me more motivated also

35

If you could document earning 1% per trading day you would have no problem earning a 7 figure salary plus bonus from many hedge funds and banks. 1% per month is a more realistic number and would beat many 7 figure salary hedge fund managers

36

Retail trading accounts and hedge fund accounts however have very little in common. Looking at the returns of what a hedge fund can offer against the returns of a retail account is a common misconception which is repeated time and time again on FX forums.

Lets look a real life example to justify this. Professional Football teams in the under 21 category score far more goals on average per game than professional football teams in the over 21 category. Yet both categories involve professional players, the only difference being the age group. So would it be fair to say that both have to perform exactly the same because the game is identical…no it would not because although it is the same game being played by both teams there are other direct and indirect influencing factors.

With a hedge fund account and a retail account the main direct influencing factor is the size of the account being traded and the liquidity of the market. You simply can not trade a hedge fund sized account on a retail trading approach, just like you simply can not apply a retail trading approach to a hedge fund system.

So stop comparing the returns of a professional hedge fund with what you should be expecting in a retail FX account. There are professional retail FX traders who fully understand how to exploit the higher returns while they have accounts which fit comfortably within the day-to-day liquidity on offer by the brokers.

37

Excellent points…thank you!

38

It’s a common perspective, in trading forums, and one that’s sometimes misapplied and/or used inappropriately/illogically, certainly. Not this time, though.

It can also be a useful way of providing some discussion participants with a much bigger picture than the one they’re currently looking at, by offering some context: many aspiring traders have very unrealistic expectations of what’s going to be feasible for them, and there are countless threads here in which members express, as their expectation, targets to which even the most experienced and successful traders on Goldman Sachs’ trading-floor don’t aspire.

I strongly suspect that that’s partly or even largely because the defence they encounter tends to be comparatively inexperienced, which is why it also may not quite be the most appropriate analogy for this context.

This part, of course, is perfectly true and valid, but nobody stated or even implied that you could.

39

For me alone, because only as retail trader which use small capital hence will choose broker that offer low minimum deposit, and I think as retail trader will different with profesional trader which might already managed huge funds in account trading, most essential is how to manage our account to always grow up

40

In this example, all be it not trading related i was assuming two professional teams were playing each other - so the “defence” as you said would be equally as good on both sides of the game.

More to the point though, under 21s score more than over 21s on the simple logical reason that the size of the goal remains the same size in both games, yet the goal keeper is younger and has a shorter arm span than an over 21 year old goalkeeper (according to game stats). So the fixed variable here is the size of the goal, hence the FX market in general because both retail and commercial hedge fund traders are trading the same price. The non-fixed variable is the age of the goal keeper, hence the account balance size which we are trading.

Anyway, a loose example to fit around the context of comparing retail and commercial expected returns.

41

Hedge fund managers can never get the kind of leverage we small traders get. So the comparison doesn’t hold, in my opinion.

As for documenting 1% per trading day, it seems achievable by professional traders, and has been documented. To illustrate, consider this passage copied from “FXKeys”, whose founder is Chris Pottorff, a professional trader:

[QUOTE]

Trading was introduced to me about 23 years ago by a close friend who was (and still is) a great stock trader. People were used to invest in stock market since tens of years ago, but they could not do it through the computer and the Internet because almost nobody had a computer at home and the Internet was not accessible to the public yet. We heard about forex trading I think a few years after personal computers and then the Internet found their ways to the homes. Not that people could not trade currencies at that time at all. There were so many companies, banks and… that were used to do it, but ordinary people like us could not do it, and did not even think about it. Personal computers and then the Internet changed everything. We could sit at home and trade stocks and currencies.

By that time, I became familiar with several investors and we made a big team of stock traders who many of them started trading currencies later when forex trading could be done through the personal computers and the Internet. Our team grew and we made a lot of connections. We helped each other, shared our experiences and knowledge, and even our trade setups and signals and this benefited a lot of us, so that we grew our wealth.

Since the very first days, trading with a shared account was the idea of many of us. Trading with a shared account, not for the purpose of making a shared profit for each of us, but for the purpose of charity. Each of us had his/her own account, but we wanted to have a shared account also to trade our trade setups, grow it and use the profit for the charitable purposes.

That was a great idea, but there was a question about the size of this account. Some of us wanted it to be a big account, but some of the others disagreed. Finally we came to this conclusion that we open a $1000 account for the beginning, just to see how it goes. We did it. We opened a $1000 account and then started trading with it using our shared trade setups. The account turned into $100,000 in 14 months.

[END QUOTE]

Now 14 months is about 300 trading days; and if this group off professional traders turned $1,000 into $100,000 in 300 trading days, compounded, that’s a growth of a tad more than 1.5% per trading day. Well over 1% per trading day.

You can find this entire story if you search the 'net for the words “A Great Money Management Strategy We Have Been Following For Years”. I see no reason to believe that the author is lying.

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