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Trading with Small Capital
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Trading with Small Capital

  #1 (permalink)
Trading Apprentice
San Clemente California
 
Futures Experience: None
Platform: etrade
Favorite Futures: stocks
 
Posts: 4 since Nov 2012
Thanks: 0 given, 1 received

Trading with Small Capital

As a struggling student money is often quite thin in my pocket. As ive been trading for the past year (prac acc in optionXpress) I feel as if I've made it to the point where im making pretty consistent profits and it has brought me to the point where im finally ready to load my account and take it to the next level. With all this in mind it hits me, I have only $1,500, how is one supposed to trade when it costs so much to even place a trade with all the fees. Since i have a small account I'd have to risk bigger percentages to make enough profit for it to be worth the initial risk. I guess what I'm asking is what securities do people with low amounts in their account trade? My forte is stocks and I was thinking of doing more research on the OTC market and then stake my claim there. Thanks for all the advice and help its much appreciated!

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  #2 (permalink)
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  #3 (permalink)
Elite Member
Los Angeles, CA
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: CL ES
 
Goldstone15's Avatar
 
Posts: 239 since Jul 2012
Thanks: 49 given, 188 received


Forex is one way to go. Enables you to trade positions that would suit the account size you mentioned.

Before you attempt to beat the odds, make sure you can survive the odds beating you.
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  #4 (permalink)
Trading Apprentice
San Clemente California
 
Futures Experience: None
Platform: etrade
Favorite Futures: stocks
 
Posts: 4 since Nov 2012
Thanks: 0 given, 1 received

Thanks, ive been looking into forex it just seems as if there are so many outside stories that impact the price and that playd to a downside as i am more of a technical trader. Idk i'd love to learn forex its just taking me such a long time to get to the level where im comfortable trading stocks.

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  #5 (permalink)
Membership Temporarily Revoked
toronto, ontario/canada
 
Futures Experience: Beginner
Platform: ninjatrader, mt4
Favorite Futures: TF, Currencies, ZS
 
Posts: 133 since Oct 2011
Thanks: 100 given, 57 received


sgtrades View Post
As a struggling student money is often quite thin in my pocket. As ive been trading for the past year (prac acc in optionXpress) I feel as if I've made it to the point where im making pretty consistent profits and it has brought me to the point where im finally ready to load my account and take it to the next level. With all this in mind it hits me, I have only $1,500, how is one supposed to trade when it costs so much to even place a trade with all the fees. Since i have a small account I'd have to risk bigger percentages to make enough profit for it to be worth the initial risk. I guess what I'm asking is what securities do people with low amounts in their account trade? My forte is stocks and I was thinking of doing more research on the OTC market and then stake my claim there. Thanks for all the advice and help its much appreciated!

Are you trading stocks or options? If capital is a concern you are better off trading options. You can trade spot forex with as little as $50 for your initial deposit but you need to shop around. The MT4 platform is free and provides pretty good charting. You can also trade indices, gold, oil, etc using MT4 but you would have to look into the margin requirements for trading these instruments.
If you want to trade futures your best bet is forex futures contracts where you can trade the M6E which is $1 per tick or E7 which is $6 per tick but most of the brokers have a minimum funding requirement of $2500, and then again as you mention there are commissions and fees on each transaction.

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  #6 (permalink)
Elite Member
Philadelphia
 
Futures Experience: None
Platform: corded black telephone
Favorite Futures: ticker tape
 
Itchymoku's Avatar
 
Posts: 2,892 since Apr 2012
Thanks: 1,681 given, 3,622 received

It would be nice if futures could be scaled down to a dollar per tick and still be as liquid as their counter parts. Really you want an account that is >= 10k to trade 1-2% efficiently. I started with a couple thousand and winged it. Eventually you want to add more money.

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  #7 (permalink)
Elite Member
Waco TX.
 
Futures Experience: Advanced
Platform: Robinhood
Favorite Futures: STOCKS
 
quantismo's Avatar
 
Posts: 214 since Jul 2011
Thanks: 305 given, 145 received

Where you can and cant learn to trade...

I used to be a penny stock flipper back before the 08 crash and there was some serious money to be made because there were tons of new small companies starting up around that time or at least hanging in there. After the crash it wiped out many many of them (I still hold a few hundred thousand shares of ones that no longing in existance) since 08 there is maybe 25% of the amount of decent penny stocks to trade and decent meaning might be a good flip.
Anyway you cant technical trade them like regular higher priced stock in the $15 - $ 800 range with penny stocks you trade them based on news releases and have about 10 seconds at most to get into a real good explosive news trade.
where to get the news? you can pay about $95 a month for equity feed and that is the best one I found. Now because you dont have the $25k to make more then 3 day trades within five days that will limit you alot with that .
If you open a Micro account with a forex broker and trade only 1 lots you can get tons of practice there swing trading and will risk very little of your account per trade, and It will help you gain the knowlege and skills that can be carried over to futures trading at some point. In contrast to what I just wrote you wont learn anything trading penny stocks that will be very helpful in the other markets.

Just my to cents worth

Quantismo..

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  #8 (permalink)
Membership Temporarily Revoked
Toronto Canada
 
Futures Experience: Advanced
Platform: excel
Favorite Futures: stocks
 
Posts: 10 since Nov 2012
Thanks: 0 given, 4 received

i've been exactly where you are right now. a student with a bit saved up, looking to get into trading. here's my advice to you:

firstly, if you're comfortable with stocks, stick with stocks for the time being. if comms are high, try to find a cheaper broker.

i wouldn't necessarily go into options. options can be attractive because you can really leverage your gains. but spreads and illiquidity can be a killer in the long run, plus comms tend to be higher for options. it might be better to use a bit of margin with stocks rather than options.

whatever you do, just make sure that you don't place trades that are too big to lose. you should be able to close down a position without losing sleep over it. like you mentioned, you're trading with a small amount of money, the trades take up a bigger percentage of the account balance. nevertheless, that's the biggest point i'd like to make - thanks and good luck.

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  #9 (permalink)
Elite Member
Buckeye Nation
 
Futures Experience: Intermediate
Platform: Ninja Trader
Broker/Data: Amp/CQG, TOS
Favorite Futures: CL, 6E, YM and ES
 
Posts: 199 since Jul 2010
Thanks: 142 given, 234 received

My advice to you is, stay on SIM, save up some more money for later. The market will always be here. I think the one biggest mistake we make when we get started in this trading business is rushing into it while we are underfunded because we think we are "missing out"

Again, the market will be here when you are ready. Besides, use this time between now and when you get well funded to learn and perfect your edge.

I would also think that anything less than $25K for stocks is not enough. However, I think you need at least $3K for options. Don't trade penny options either, trade liquid instruments like QQQ, SPY, DIA that have small spreads. Stocks like AAPL, GOOG, BIDU, NFLX, GS, WYNN, PCLN, and AMZN are great option stocks, but you definitely need more than $1500 for those.

Hope this helps and good luck

Kulu

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  #10 (permalink)
Membership Temporarily Revoked
toronto, ontario/canada
 
Futures Experience: Beginner
Platform: ninjatrader, mt4
Favorite Futures: TF, Currencies, ZS
 
Posts: 133 since Oct 2011
Thanks: 100 given, 57 received



kulu View Post
My advice to you is, stay on SIM, save up some more money for later. The market will always be here. I think the one biggest mistake we make when we get started in this trading business is rushing into it while we are underfunded because we think we are "missing out"

Again, the market will be here when you are ready. Besides, use this time between now and when you get well funded to learn and perfect your edge.

I would also think that anything less than $25K for stocks is not enough. However, I think you need at least $3K for options. Don't trade penny options either, trade liquid instruments like QQQ, SPY, DIA that have small spreads. Stocks like AAPL, GOOG, BIDU, NFLX, GS, WYNN, PCLN, and AMZN are great option stocks, but you definitely need more than $1500 for those.

Hope this helps and good luck

Kulu

I agree with you on the stocks, you need alot of capital. Don't agree on the options though, it really depends on your broker but you do need to trade options on instruments with high volume and lots of volatility to do well.

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