Financial spreadbetting could be one way to go. It seems to be gaining popularity among people with small trading capital. In my opinion, this seems like a viable way to trade if you have small capital but you need to understand the risks as well. You can make a lot of money without putting down to much BUT can also lose a lot of money if the tape moves against you. However as always with trading, if you have a sound gameplan and good money/risk management then you shouldn't be too worried.
Having been in your shoes before, here's what I recommend (and what I did not do):
1. DON'T start trading with $1,500. Your chances of failure are super high, even if you have a method with an edge.
2. Take 6 months to a year, and read all the books you can on trading. Keep an open mind on what you read. After you read enough, you start to formulate an idea of what you like/dislike - ie, how you want to trade. This is KEY - having agreement with your psyche and your method. Use your local library, and then the costs will be minimal.
3. During this time, do everything you can (legally) to get more capital. Ideally, you want $10K or more. The less money you start with, the more likely you will lose it all.
4. Paper/demo trading is nice, but don't rely on it to "prove" your method. If you have a mechanical method, you can easily backtest. If you have discretionary method, your emotions will play a big role, which they don't with demo. I have never met a losing demo trader, but I have met a lot of losing real money traders.
I wish I had done these things 20 some years ago when I was living in Lake Forest, CA. Alas, I did not, and it took me years to recover.
I hope you have great success!
The following 3 users say Thank You to kevinkdog for this post:
You basically nailed my strategy right on the head haha, ive been reading and researching nearly nonstop to gain as much knowledge as possible. As of now I've gained an interest in forex and have been demotrading for the past month or so, I plan to keep studying until im comfortable (perhaps a year from now) and I appreciate all the great info that keeps coming in. Great to hear from a SoCal cat
I'd personally go with a spreadbetting account trading small stakes on forex, but i'm in the UK and it might be different elsewhere?
I have been trading on and off for years and years since when I was a teenager, as a hobby alongside my day job, always using VERY small stakes.
I'm talking 20p per pip! So, I could buy the EUR/USD at 1.2840, cover it at 1.2940, and only make £10.
Recently, I sometimes feel that I may be getting good enough to increase stakes, and let my mind wander off
and dream about the possibility of giving up 'working for a living' and beginning to trade instread....then I slap myself and wake up.
You can use a very small account with such brokers, though.
I once began an account with £300 and turned into nearly 4k, and soon after lost the lot!
I have had lots of accounts with lots of 'brokers' (spreadbet bookies)
This year, I began a new account with a broker because I like the metatrader platform which they use.
I put £1850 in the account, mainly trading at between 10p and 20p per pip and have made around 4k or so.
Contemplating at least increasing the stakes a little next year, and maybe even starting a journal somewhere.
Thats great that you tend to improve! At this point Im going to demo nearly all the platforms i can find haha (even though thats alot) and get my focus set on pure price action analysis as of now and then move onto the next step in my forex mission. My overall goal in forex is to make a career out of it, I feel if I start off young enough and study as much as possible and actually start trading when I'm truly ready I can possibly make it into something that I've always dreamed of!
The following user says Thank You to sgtrades for this post:
I'd avoid options, - something like over 90 something percent of beginners lose, - not very good odds. For trading purposes, "IF" you know what you're doing, (and don't kid yourself) then some decent small caps usually give the best bang for the buck. - Make sure they have good volume, ... or leave it alone.