It’s difficult to give an answer that accurately covers [I]all[/I] people and [I]all[/I] circumstances, but here’s a “rule of thumb” answer: don’t think about trading with real money until you’re accurately collated the results of a minimum of 300 consecutive trades [B][U]and[/U][/B] results over a period of a minimum of 6 months (whichever criterion is the [U]longer[/U]) and proved that you didn’t make a net loss over the period.
Eew, I know how inconvenient that is!
Yes, this is perfectly true.
Generally, undercapitalisation is a problem because of the way people behave with it, regarding their position-sizing.
If you look at it completely logically and sensibly, of course, and do everything “pro rata” regarding position sizes, it needn’t be. But in reality, that very often isn’t what happens: people get frustrated by dealing with such tiny amounts of money and think to themselves “I’m never going to make anything work talking about with these position sizes” and of course that’s when the “accidents” happen.
What they’re failing to appreciate, of course, is that the purpose of trading with a $200/$300 account isn’t to try to make a living from it, but to gain experience, screen-time and real-money practice with it, until they eventually have enough capital to trade meaningfully.
In my opinion, those are brokers to stay [B][U]WELL[/U][/B] away from, for reasons that aren’t immediately apparent.
Genuine, ethical brokers don’t use promotions like that, and there are reasons for that. Reading the small-print of the exact terms of those “deposit bonuses” will clarify how many trades you’d need to do before ever being allowed to withdraw any of the profits.
“Brokers” who make offers like this (and there are a lot of them), without exception, aren’t genuine brokers: they’re all counterparty market-makers whose business model revolves around attracting a particular type of customer, whose lack of experience they know will make such offers appear attractive to them, because they understand very clearly that they’ll almost never actually pay out at all, on such offers, because (a) their system is more or less rigged, overall, to make it close-to-impossible for the customers to win in the long run, [B]because that’s how they make their living[/B], and (b) that’s the potential customer-group their research has correctly identified as the one least likely to be able to trade profitably over the medium-term anyway - in other words, the odds are stacked [B]hugely[/B] in the “brokerage’s” favour. :58:
These are “brokers” who don’t offer negative balance protection, and they’re “regulated” (if you can call it that) in a variety of “offshore” places, such as Cyprus, where they’ve [U]deliberately chosen[/U] to be regulated for reasons that suit themselves very nicely but - to put it mildly - are far from in their customers’ interests - in other words, they’re “brokers” one shouldn’t trade with. :23:
This is one of the [I]biggest red flags[/I] you can have, warning you [B][U]not[/U][/B] to do business with a “broker” - not because of the bonuses themselves but because the fact that a no-deposit is offered [B][U]tells you something very important about the brokers own business model, the type of traders they’re trying to attract, and why[/U][/B].
In other words, they’re not reasons that are apparent to the inexperienced, and “the inexperienced” are exactly the ones they’re trying to attract … and the fact that they’re promoting “no-deposit bonuses” tells you that, loud and clear - if you understand how to hear it.