1. Only trade what you are willing to lose
2. Only trade live once you have successfully traded a SIM account with 30 days and have not blown it
3. keep your account balance minimum to trade with (live)
1. Because you most properbaly going to blow it 1st 2nd and 3rd time unless your super special
2. Because then you have proven to yourself you can do it with a proven 30 day record (NO CHEATING)
3. If you do make a huge mistake and get sucked in to a big emotional looser you let run, instead of blowing
you account with $20,000 you will only blow you account minimum value and have money left to see another day
I think when learning to trade, there is only so much you can do on SIM until you have to bit the bullet and try play with real cash
Then you feel the real emotions and greed kick in and you see how this affect your trading
Most people donít have enough to start trading with a 1% risk
so for the people that cannot achieve this 1% risk rule
I say set a daily loss you feel acceptable in comparison to your account size
and most importantly
set a daily profit too and be disciplined enough to stick to these rules NO MATTER WHAT
if you cannot stick to a plan while learning and keep disciplined
you will never make it past the learning stage
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If an idiot like I was when first started trading 100k. At least have a fighting chance before blow it out.
If smart and listen to veterans on this board could start with 5k or 10k and be okay.
The idiot comes in makes a few good trades and thinks he has it all mastered. Idiot also usually tries to give advice to veterans and attacks anyone on board who would dare question thier logic even though only been trading two days.
The smart guy comes in takes it slow and realizes he knows nothing and should learn from others success's and mistakes. He listens and absorbs.
Point being different rates depending on disposition of the student. Bottom line is who do you want to learn from? If learn from the market itself will find it is a brutal task master. You will learn by fire and hope at the end you still have funds and relationships. If learn from veterans may be a much slower path but much less pain.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
Last edited by liquidcci; December 14th, 2011 at 03:34 PM.
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Start with what you can afford to lose , of course. I would start small, maybe 3K, and just trade one car , write in your journal religiously. The emotions of trading will hit you even trading one car, and emotions are your biggest enemy learning to trade.
You cannot live from 3K, but this is the amount to learn.
Math. A gateway drug to reality.
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My first broker had a $1,500 account deactivation cutoff. So I put $2,500 in, because every time you lose $1k, you've effectively gone bust.
I'm not going to lie about it - I had to go down & wire more money a couple of times.
That trip to the bank will really make you stop and think about what you are doing, and whether you want to keep on doing it in the same way or not (or even doing it at all). This approach will also keep you from taking serious financial damage, because your losses are limited by default.
Until you have at least learned to survive, and preferably can turn a steady profit, I don't see a serious need to start with much more than that during the learning process.
Should you HAVE more than $2-3k to begin trading? Absolutely. But how much money you need to be able to support yourself and manage risk-of-ruin on an ongoing basis is a question that can only be answered when you have some kind of track record. You have to have some idea of what type of drawdowns you need to plan for, and some idea of your win-rate and expectation, so you can at least rough-out your general risk-of-ruin and form some guidelines to work within. None of which is possible if you haven't been winning consistently for at least a little while. Which, IMO, is the hard part to begin with.
If you haven't acquired the experience and built these kinds of guidelines for yourself, then I don't think that having $100k or $150k in your account is much of an advantage over having $2,500 in it. In fact, it could be a disadvantage.
I had a good friend that lost $90k in 2 days. What did she learn from it? I have no idea, but she doesn't trade anymore . . .
The following user says Thank You to ddouglas for this post:
There will be a lot of different opinions around this topic, which is fine. But you would need to provide some convincing answers to yourself on risking more than a few thousand dollars in their early stages of your trading career.
The reason people learn a lot from losing an entire account, is the psychological frustration behind that forces them into constructive thinking. It's fueled by extremely strong motivation of never experience such an event again, ever.
To me this is like almost dying of an overdose of heroin in order to understand that heron is bad in the long run. It doesn't make sense. Sure its probably fun in the beginning, just like trading.
If anyone can provide a single, reasonable sentence on why you have a greater potential to become a profitable trader, starting of with 100k instead of 1000$ in your trading-account, I'm all ears
From my perspective, your main goal as an aspiring trader is to develop a profitable system. Too big or small account will affect your strategy, either by moving the market or being undercapitalised, but I don't think this should be any issue for new traders.
This thread remind me of of a priest who wanted to start trading 4-5 years ago. If I recall it correctly he had opened an account of no more than 150k $ of his church money and wanted to make them grow - with the help of Forex trading. His strategy was rather (un)original and simple: open an position and pray that it would go into profit, since God was his ally. I'm not going to spoil a good story by telling how it went but let me share that he looked for advice on what he did wrong.
"We may not be able to control the wind, but we can always adjust our sails"
Last edited by aediaz1; December 16th, 2011 at 06:13 AM.
I'd like to mention that starting will probably be on the AMEX,NYSE,NASDAQ. And possibly DAYTRADING. I think everyone should know what this means , starting out. A clarification of this is important to newbies. I would write something more but I'm not sure what the daytrading limitations are. I'm worried that a newbie would trade alot and have his account put on hold , then learn this stuff.
I had a FINRA link here but I don't have enough points to do it.
Does this rule apply only if I use leverage?
No, the rule applies to all day trades, whether you use leverage (margin) or not. For example, many options contacts require that you pay for the option in full. As such, there is no leverage used to purchase the options. Nonetheless, if you engage in numerous options transactions during the day you are still subject to intra-day risk. You may not be able to realize the profit on the transaction that you had hoped for and may indeed incur substantial loss due to a pattern of day-trading options. Again, the day trading margin rule is designed to require that funds be in the account where the trading and risk is occurring.