How to become a forex day trader

How to Become a Forex Trader.

Steps to Become a Forex Trader.

Anyone with a little money and patience can become a Forex trader. However, the skill and patience required to become a successful or profitable trader requires limiting losses while identifying good trade set ups with a positive risk: reward set up. Despite the ease of getting into the business, there are a few steps you should follow. A hasty entrance into Forex trading can lead to the poor house very quickly.

Forex traders do not need to have a lot of capital to trade due to being able to trade on margin. The average Forex broker requires at least $300 to open an account and start trading. A good rule of thumb is to have at least $1000 to open a mini account, preferably $2000.

This number might sound a little high for beginners, but this will allow you to trade with a bit of a buffer in case of losses. You're not looking to risk the entire amount but rather just have a higher cushion so that you're not forced out of a trade, which can happen with smaller balances. More.

A forex trading demo account is an a trading account with monopoly money in it that is connected to the live market. Trades can be placed in real time and represent what would be true losses and gains if the money were real.

Before you put 1 penny on the line with trading, you'll need some practice. A demo account will give you the ability to practice trading without the pressure. More.

Aside from practicing, you may want to seek some trading advice from a forex trainer or forex books. As a trader you will need to develop your own style and trading ideas, but in the beginning, it can be helpful to have some professional direction and recommendations. Forex is very daunting in the early days and some guidance can really help. More.

Before you actually commit to live trading and money on the line, you should be able to profitably trade on your demo account or with paper trading. Your track record should be more than a few weeks, at least 3 months, preferably 6 months.

It will be difficult to refrain from trading after you make those first few profitable trades, but experience really counts in forex trading. It's something that you cannot work around, you have to get it the old fashioned way, hard work. More.

After practicing for several months, doing a little training, and getting some forex education and becoming consistently profitable, it's time to start making live trades. You may find that it's a little different to have actual money on the line, but if you stick to the same practices you used to be profitable while trading the demo account, you will be successful. More.

How To Become A Profitable Trader With A 9 To 5 Job – 12 steps.

Contents in this article.

If you still have a 9 to 5 job, becoming a professional trader in your spare time can be quite a challenge. Pursuing the goal of quitting your day job to become a profitable trader often seems like an unrealistic task for most people. But there are certain steps that can help you improve your trading while working 9-5 and finding time for hobbies and your family at the same time.

Here are our top 13 steps and tips that will help you improve your trading while still working in your regular 9 to 5 job:

1. Find a trading style that suits you.

It’s so important to have a trading style that fits your personality AND your schedule. The two broad categories and trading styles traders have to choose from are swing-trading vs. day-trading .

Usually, swing-trading is better suited for traders who have limited time and restricted access to charts throughout the day. As a swing-trader, you do your chart analyses during the weekends and before/after work and you manage and execute your trades when you get back from work. Swing traders also don’t need to observe the markets all day long which can free up even more time.

If you are a Forex trader, you could easily fit in a few hours of day-trading in the evenings since you’ll usually always find some active currency markets at any given time – but make sure that you can remain focused after an 8 hours working day.

ForexFactory offers a great tool that helps you understand which markets are active during different times and it also shows how liquidity changes during the day so that you can find the best currency pairs based on your schedule:

Tip 1: Decide whether you want to be a swing trader or a day trader. Audit your weekly schedule and your personality to see which style suits you best. Then, choose the markets and instruments accordingly.

In our premium course, you get access to both a swing trading and a day trading system at the same time.

2. Don’t ride the learning curve.

This is the cardinal sin of trading; “system-hopping” refers to traders who frequently change their trading method every few weeks or months. Those traders usually never see any real improvements in their trading and profitable trading is impossible if you don’t fully commit to making one thing work.

No system will work right from the start so be prepared to go through ups and downs. This is very normal so do not fight it and don’t try to avoid this necessary step on your way of becoming a profitable trader.

Tip 2: For the next 12 months, pick one system and make a contract with yourself that you will not change your method again. No matter what.

3. Why I only trade 1 hour per day.

Your weekend should be your most important day of the week. I personally do 80% of all my trading work over the weekends and then do very little throughout the week. During the week, I do not spend more then 1 hours infront of my charts.

Every Sunday, I sit down and go through all the markets that I consider trading and perform a detailed chart analysis. I adjust and re-draw my support/resistance levels, I study my indicators, review the last trading week and cross-check with my previous Sunday analysis.

Then, throughout the week, I just wait for my price alerts to get triggered and I update my “if-then” scenarios based on what happens during the day. This approach takes up a few hours of time during the weekend, but it frees up so much time during the week and it is ideal if you have a day job.

Tip 3: Price alerts are the ultimate time-saver and the most overlooked trading tool. Use them after you have done your weekend analysis.

4. Active improvement as a trader.

We mentioned that you should avoid system-hopping at all costs, but the question that then naturally comes up is: “how do I turn my current (losing) trading method into a winning one?” Here are 2 tips and things you should focus on to improve as a trader:

#1 Identify your biggest problems and take responsibility.

Traders often mistakenly believe that their lack of trading success is caused by their trading method which then usually leads to system-hopping. However, failure typically comes down to undisciplined trading, a lack of professionalism and a pure gambling mentality.

Thus, the first step for you should be to identify your greatest problems and your most commonly made mistakes. Traders who always try to blame their system avoid taking responsibility and look for excuses instead of doing the work that is necessary.

Tip 4: Over the next weekend, review your past 30/40 trades and see what caused your losses. Then come up with a top 3 list with your most commonly made mistakes.

#2 Process-oriented thinking.

Most people act from a goal-oriented mindset where they automatically connect winning trades with good trades and see losses as failures. Such a way of thinking shows an amateur mindset. The professionals, on the other hand, act from a process-oriented mindset where they look at how well they have executed their trades and how disciplined they perform. Thus, for a process-oriented trader, a loss does not necessarily equal a bad trade if they have done everything they could.

Tip 5: Avoid monetary goals and for the next 2 months, stop looking at your P/L. This will be tough but the impact will be huge.

5. What do you really want out of life?

There is an interesting survey I came across and it shows how people structure their day. The average employed American spends 7:45 hours at work on a regular work day. At the same time, the average American watches 2 hours and 9 minutes TV each day and only invest 25 minutes per day in education.

Also, the average sleep time is at 8 hours and 48 minutes which exceeds the recommended 8 hours per day by almost 1 hour.

When you are working towards becoming a profitable trader, you have to be clear about your priorities and make sure that your actions align with your goals. Are you willing to wake up one hour ahead of schedule every day, stop binge-watching random TV series, skip a night out with friends every now and then and re-invest that time back into your trading? Granted, those are tough calls to make and you might say that “you still need to live a little”, but putting in the work now to reap the benefits in a few years will take your life to new heights.

Tip 6: Audit your week and identify time wasters. Then, just eliminate 1 such time-waster and use it to work on your trading.

“The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term, is the indispensable prerequisite for success.”

6. Don’t focus on the when and the how much.

I often get the question of how much you can make and how big your trading account needs to be to live off your trading profits. When I then counter with the question how much those people are currently making as traders, it becomes obvious very fast that they are focusing on the wrong things at the right time and they are not even profitable yet.

Especially at the beginning of your trading journey you should not worry about how big your annual return can be and how much capital you need to save before making the transition to trading full-time. Focusing on those things will get you off track and keep you from making progress – it can also demotivate you when you see how much work is ahead of you. Instead, focus on your problems and struggles that you have RIGHT NOW.

Tip 7: Focus on the immediate task ahead and work on your current problems. Small improvements over time add up.

7. Spending vs. Income.

This is another very overlooked aspect when it comes to full time trading. Most people only focus on making more money, whereas there are two sides to the equation of being able to live off your trading:

The regular view – focusing on making more money: Income > Spending = Enough.

The opposite view – controlling your expenditures: Spending < Income = Enough!

I sometimes get critiqued for this point, but mainly because traders have a completely wrong perception of full time trading and they believe that all full time traders live on yachts, drive the latest sports cars and go Rolex shopping each weekend.

Tip 8: Controlling expenditures can often help people make a transition sooner. And then, you can still up your lifestyle later on!

8. The dangers of demo trading.

There is a place for demo trading, but most people stay on demo too long.

What I have seen in my own trading and from the traders that I helped in our premium course is that demo trading often lets people adopt negative behavioral patterns that are then very hard to unlearn. When your actions don’t have any real consequences, you are more likely to repeat mistakes and engage in bad trading behavior. I typically suggest staying on demo for the first 6 – 12 months until you have a good understanding of the nuts and bolts and then take your trading to the next level.

Tip 9: The pecking order is: Demo > small live account > decent live account > an account where your winners are impactful.

And make sure that you learn your lessons from the first trading account(s) you lose!

9. 4 tips for growing a trading account.

If you are like most traders, you probably don’t have the capital to start with a trading account that allows you to generate a decent income right away and that’s totally fine. But you have to make sure that you follow the right path.

Here are our top 4 tips that will help you grow your account and enjoy the process:

#1 Patience and expectations.

Let’s start with the most important point. Having unrealistic expectations very quickly lead to frustration when those expectations aren’t met. Always keep in mind that what you are doing is creating a new life and a new career for you. You have to get away from the get rich quick mentality and accept that this is a long-term play.

Traders want “to trade for a living” but then act like they need to retire next month. Stay patient, learn the basics, manage risk & enjoy.

Tip 10: Adopt realistic expectations and avoid monetary goals.

#2 Recognize your true edge as a part-time trader.

This is often your greatest advantage over full-time traders. When trading is not your only source of income, you can eliminate a lot of the pressure that often causes traders to make mistakes. Also, when you are not glued to your screen all day long, you are less likely to make bad trading decisions just because you are bored or haven’t taken a trade in a while. Maybe you don’t even have to become a profitable trader and just trade a few hours every day and grow your savings or up your lifestyle?

Tip 11: Understand your motives and become self-aware about how you perform best while achieving your life goals.

The cold, harsh truth is that, in the end, no one cares if you make it as a trader. That’s why it so important to be honest with yourself and with your current situation. Analyze your approach to trading realistically, your level of professionalism and whether you are serious enough about it. The failure rate in trading is somewhere around 99%, but it’s not necessarily that high because trading is so damn hard, but because most don’t give it their full attention and just see it as a quick way out.

Tip 12: Are you serious enough about trading? Be honest with yourself and evaluate your current approach to trading.

If you are ready to make the next step in your trading and take things seriously, take a look here: Our Premium Forex Course.

Below is a message from David who is one of our pro members. After joining our course, he is optimistic again about reaching his goals and becoming a full-time trader.

Disclaimer.

Testimonials appearing on this site are individual experiences, reflecting real life experiences of those that have used our products and/or services in some way or another. However, they are individual results and results may vary. We do not claim that they are typical results that consumers will generally achieve. The testimonials are not necessarily representative of all of those who will use our products and/or services. The testimonials presented on Tradeciety are applicable to the individuals writing them, and may not be indicative of future performance or success of any other individuals. Tradeciety cannot and does not guarantee results.

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3 comments.

Another great article – Thank you – Doug.

“You’ll see that those problems are usually always of personal nature and not a flaw in your method. Traders who always try to blame their system avoid taking responsibility and look for excuses instead of doing the work that is necessary.”

A very good read. Many thanks.

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How to Become a Day Trader.

“How to become a day trader?” is one of the most common searches I see going through on this site. Prior to becoming a day trader in 2005, I faced this question myself. Day trading is in my blood, and maybe you’re feeling like it’s in yours too. Here are a few simple things you need to know about day trading. After that we’ll get into the finer details of these points.

You don’t need to be a “finance/math person” to be a day trader. You don’t need any formal education at all. Day trading is mostly self-taught or you find yourself a mentor–someone willing to show you the ropes–and then you apply yourself to the day trading…just like an apprentice. You can day trade for someone else, who may provide a training program, so you don’t need to fund your own day trading account and thus you don’t need much capital to get started (more on this below). Most people think of day trading stocks , and while that’s one choice available, if you are going to trade on your own, the Forex or Futures markets are likely better alternatives since you can leverage your account more extensively than with stocks. This means it takes less capital, and you can therefore hopefully make a living off a smaller amount of capital. For more details see How Much Capital to Day Trade. When you start day trading you still need to live. Money isn’t going to flow in immediately, or consistently. You need to plan ahead for how you’ll cover your bills until the point where you can make a living off your day trading. That could be six months to a year away. You’ll need to find or come up with a trading strategy, and then stick to it through good times and mediocre times (hopefully there aren’t too many BAD, BAD times). If you don’t think you have the mental fortitude to handle the roller coaster, do something else with your money. Day trading can be quite boring compared to what you might think. You have a strategy and you wait for opportunities to implement it. That means a lot of the time you are sitting around doing absolutely nothing except staring at your screen. A day trader opens and closes positions within the same session. No holding overnight–this is relevant if you trade stocks or futures.

Now let’s go into these points in a little more detail.

How to Become a Day Trader.

Education? Proprietary Trading Firms?

You don’t need an education, you don’t even need to be smart. If you have watched the documentary Floored: Into the Pit it discusses how trading provides opportunity for almost everyone, and doesn’t discriminate. No matter what your background you can be a day trader…although it will take a lot of work. You’ll need to teach yourself, or get a mentor to teach you how to become a day trader. Very few people who attempt day trading are successful.

If you join a proprietary trading firm, they’ll provide you with (hopefully) good training as well as capital to trade once you have completed the training. Generally you don’t get a salary with a proprietary trading firm. Instead, they train you and provide you with capital. After that it’s like you are trading for yourself. They’ll keep a cut of your profits, but you didn’t need to fund your own account. Proprietary firms are a good option if you don’t have the money to fund your account, or want hands-on guidance.

If you’re new trader, which this article is directed at, and you decide to join a ‘prop firm,’ make sure to ask them if they teach you a strategy. If they only teach a general trading course, you’ll need to come up with strategies on your own, which means it will likely take longer to become profitable than if they teach you a consistent trading method.

How to Become a Day Trader From Home – Stocks, Forex or Futures?

Stocks aren’t the only game in town; forex and futures are excellent trading alternatives, and in my opinion are superior. Stock and futures exchanges are regulated in each country, so the requirements for each will vary. Here we’ll look at the US.

If you make more than 4 day trades a week in the stock market you are considered a pattern day trader in the US. This means you must maintain a $25,000 minimum stock trading account at all times, otherwise you won’t be able to day trade . For more on US day trading requirements look at this Securities and Exchange Commission (SEC) pamphlet: Margin Rules for Day Trading.

If you trade futures you’re not held to the same rules. Therefore you can open an account for about $3500 to $5000. To trade one S&P Emini futures contract requires $500 in capital/margin. For each tick the market moves you will make or lose $12.50. There are 4 ticks to a point–or $50–and most days you are going to see at least 10+ points moments between the high and low of the day (normally more). So if you can grab a even a point or more day you’re making a great return (increase the account slowly and you can trade more contracts) assuming you can keep your commissions low . You’ll need more than $500 though since you need to accommodate for losses and intra-day fluctuations on positions. Therefore, $3500 to $5000 will get you started. Although starting with $10,000 to $15,000 is recommended.

This is assuming you have a proven winning strategy. If you don’t have a proven strategy you’ll likely blow through your account capital quickly. No strategy? Trade a demo account until you are consistently profitable. You should be profitable in the demo–over and above commissions and costs–for at least 3 months before trading real money.

Forex also provides great leverage, up to 50:1 (higher in some countries), therefore, similar to futures trading you can start with a smaller amount of capital than stocks. I would advise starting with $2000, or more.

If you want to practice stock trading you can start a free account with TradingView and practice on real-time data with fake money. For futures trading I recommend using Ninja Trader.

Funding your account isn’t your only cost, and even if you day trade for a firm/another person (they provide capital for you to trade and pay you based on performance, but there’s no salary) you face costs. You won’t be profitable right away. Assume at least several months–6 or more–before you start making consistent income. Likely a year or more before you can live on that income. If you are a workaholic you may be able to reduce this time estimate. If you work another job, and are learning in your spare time, you may need to expand this time estimate. And remember, many want-to-be-traders never make it to the stage where they’re consistent or can live off there day trading.

Anyone can become a day trader given enough time and dedication. Yet some people are not ideally suited for it. If you have a gambling mentality, then you will likely lose everything. I used to love gambling yet managed to curb it, so all is not lost if you are this type of person. It will just take work to overcome these impulses. You also need to be highly disciplined, at least when you trade. Losing your discipline, especially when trading a leveraged account, can be mean your account is wiped out rapidly (see Why Emotional Discipline is Key to Successful Trading).

Day trading is be very boring at times. There are slow times in the market during the day and sometimes there are months at a time where the market does very little. With few trading opportunities most of your time is spent just staring at your screen. Being patient is key during such times, as trying to make trades when there aren’t high probability opportunities can bleed your account dry.

Summary on How to Become a Day Trader.

Ask yourself if you have enough money to fund your account and pay your bills until day trading pays off. If you have the money, you can go at it alone trading from home. If you want instruction or someone else to provide you with capital, search out proprietary trading firms in your area. Ideally you are a disciplined and patient person, otherwise you’ll likely need to do a lot of internal work to be successful at day trading. You should also want to day trade because you like it, not just to get rich. If you do it for money you’ll likely fail (see Trading Mindset – Your Purpose for Trading Affects Your Results).

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2 thoughts on “ How to Become a Day Trader ”

How does one get to day trade for someone else? I don’t need their training because I think I have a very good strategy. I found a good firm but they wanted me to make at least 100 trades before I could begin to earn, all the time paying them $97.00 per month. Since I only trade the higher time frames this would not suit me because I would need at least 15 months before I would make that many trades. Also I trade strictly PRICE ACTION using two or three moving average and structures and this firm wanted me to use indicators. I am definitely NOT into indicators since they are lagging.

I think if a firm wants somebody to trade for them then they should make them trade a practice account to see how they do over say three months, before funding the account.

I wouldn’t mind paying the $79.00 then, with the profits shared on a fair basis.

You can google firms in your area. Most that I know of are day trading firms, so they want you to actively trade; this is especially true for stock trading since holding overnight leaves the traders susceptible to price gaps.

Paying $100 to $300 in fees a month is not uncommon while working for a firm, as these cover data feeds and trading platform expenses, although firms may wave these fees until you’re making money.

If the firm has training, and they have a contingent of successful traders, take the training. Trading isn’t only about strategies…there is a lot more to learn. Also, moving averages are also lagging indicators. I understand what you are saying, I don’t use any indicators either, but that doesn’t mean indicators can’t be used to produce a profitable system.

Firms typically will have you in a demo account for a brief time but then will transition you to live trading quickly, but with very small positions. Only once you show consistent profits with small amounts of capital will they give you more.

There is a lot of variability between firms. Basically have to google “proprietary trading firms YOUR CITY” and then see which one works best you. Of course the next step is to try to get hired on by the ones you like. Like a real job, there is usually a lot of competition and traders who are’t profitable are typically released since they draining firm capital.

There are also firms which allow you trade remotely. You trade from home, and there is no physical office location. This usually reserved for traders with a successful trading track record, and that are willing to put a chunk of capital themselves…the firms will will just leverage it.

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How Much Money Do I Need to Become a Day Trader (Stocks, Forex, Futures)

Day Trading Requirements for Stocks, Forex and Futures.

“How much capital do I need to start day trading?” is one of the mostly frequently asked questions I receive from people who want to start.

day trading stocks, forex of futures.

How much money (capital) you need depends on the style of trading that you wish to do, where you trade, and also the market you trade (stocks, forex or futures).

Day Trading Requirements in US and Abroad for Stock Traders.

To day trade stocks in the U. S. you’ll need to maintain an account balance of $25, 000. You should start with at least $30,000 (but likely more) if you plan to make more than 4 day trades per trading week (more than 4 day trades per week gives you day trader status and you’re subject to the $25,000 minimum account balance). If you’re account drops below $25,000 you won’t be able to continue day trading until you replenish your account to more than $25,000.

You can day trade other global markets without this account minimum. You should open a day trading account with at least $10,000 if you are short-term trading outside the US (each exchange may have different requirements). With smaller accounts than this, fees can become a very large obstacle to overcome.

While these minimums are in place to enter the market (regulation in US, guidelines in most other markets), it’s important to remember that one of the common errors traders make before even starting to trade is being under capitalized. Keep in mind that losses do occur, so you need to account for that. After taking losses you still need to have enough money to keep trading.

I recommend only ever risking–at most–1% of your capital on a trade. Your risk is defined as the difference in price between your entry price and and your stop loss level, multiplied by the number of shares of have. For example, you buy a stock at $10, place a stop-loss at $9.75 and take 500 shares (position size). Your risk is $0.25 x 500 = $125. To make trades like this you need $12,500, as $125 is 1% of the account ($12,500). In the US you need $25,000 but in other markets you may be able to get away with less, as the example shows.

For more on stock trading requirements in the US, read this pamphlet from the SEC: sec. gov/investor/alerts/daytrading. pdf. Here are the main points in the pamphlet:

Minimum Equity Requirement : The minimum equity requirement for a customer who is a pattern day trader is $25,000 [four day trades per week]. This $25,000 requirement must be deposited into the customer’s account prior to any day trading activities and must be maintained at all times. A customer cannot fulfill this $25,000 requirement by cross-guaranteeing separate accounts. Each day trading account is required to meet the $25,000 requirement independently, using only the financial resources available in that account.

If a customer’s account falls below the $25,000 requirement, the customer will not be permitted to day trade until the customer deposits cash or securities into the account to restore the account to the $25,000 minimum equity level.

Day Trading Buying Power: A customer who is designated as a pattern day trader may trade up to four times the customer’s maintenance margin excess as of the close of business of the previous day for equity securities. If a customer exceeds this day trading buying power limitation, the customer’s broker-dealer will issue a day trading margin call. The customer has five business days to meet his or her margin call, during which the customer’s day trading buying power is restricted to two times the customer’s maintenance margin excess based on the customer’s daily total trading commitment for equity securities. If the customer does not meet the margin call by the fifth business day, the day trading account will be restricted to trading only on a cash available basis for 90 days or until the call is met.

In the U. S. day traders can leverage their stock market day trading capital up to 4:1, so a $30,000 account actually allows the day trader to hold up to $120,000 in day trading positions.

How much money do I need to day trade Forex?

In the forex market, accounts to be opened for smaller amounts of money. Forex provides leverage up to 50:1 (higher in some countries). Increased leverage means increased risk…and reward. Discipline is always paramount in trading. To determine how much leverage you need see: How Much Forex Leverage.

The Foreign Exchange (Forex) market is based on the simultaneous buying of one currency and the selling of another. Currencies are available for trade 24 hours a day, 5 days a week. Being that the currency market is the largest market in world, with daily volume of $5 trillion being bought and sold, the liquidity makes it an attractive day trading alternative.

Accounts can be opened for as little as $100, but you’ll want to start with at least $500 in order to be able to place trades with decent stop loss levels.

With that amount of money you aren’t going to make a living from the markets. You may make a few dollars a day, which will grow your account over time though. There is a lot of opportunity in forex, but if you go in under capitalized you likely won’t make it. Start with at least $1000, and preferably $3000 to $5000. Opening an account with $3000 to $5000 allows you start building a secondary (or primary) monthly income, which is what most day traders are after. For more, see How Much Money Do I Need to Trade Forex?

How much money do I need to day trade Futures?

Futures contracts are a popular day trading market because futures day traders don’t need to maintain the $25,000 account minimum that is required of US stock day traders.

Futures contracts are traded on all sorts of products, such as oil, gold, natural gas and stock indexes.

To day trade futures most brokers only require a minimum deposit of $1000. In order to day trade an E-mini S&P 500 (ES) futures contract–one of the popular futures contracts for day trading–most brokers require you have at least $400 or $500 of available capital in your account to take a one contract trade–this is called day trading Margin.

Opening an account for only $1000 isn’t recommended.

Open an account with at least $3,500, and preferably $7,000, if trading ES futures. For other contracts your broker may require more available capital/margin, so you may wish to start day trading with at least $10,000.

Using a risk-controlled strategy you can start to build a secondary (or primary) income off of $3,500. That is the minimum you ideally want to trade with though (so you can keep each trade below 2% risk), therefore depositing more than that is recommended.

How much money do I need to become a day trader? — Final Thoughts.

Day trading stocks is capital intensive, as you’ll need to maintain at least a $25,000 account balance. Make sure to have enough capital before commencing day trading. Being under-capitalized is a big mistake as a few losing trades can cripple a trader, making it hard to win the capital back and thus creating a downward spiral.

Forex provides a less capital intensive way to day trade. While the capital requirement is far less trading forex, traders still should not start trading unless they have enough capital to do so. Starting with $1,000 or more is recommended, $3000 or more is preferable.

For futures trading, if you trade a contract like ES, start with an absolute minimum of $3,500. Ideally you should start with $5000 or more, and depending on which contract you trade this could be much higher since each contract has different margin requirements.

Work out a strategy and make sure you can handle a string of losses. Only when enough capital is available to sustain a string of losses, and a strategy is outlined (in detail), should a real money account be opened (see How to Day Trade Stocks in 2 Hours or Less).

Trading takes time to learn. If you are going to day trade trade full-time (no other source of income) you should budget for at least 6 months to a year to learn how to trade consistently. This is an additional cost to funding your account. Therefore, you will need more money than just what you put in your account. Don’t expect your day trading to start paying off immediately or consistently. Money and consistency take time, so have AT LEAST 9-12 months or more of savings to pay your bills.

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10 thoughts on “ How Much Money Do I Need to Become a Day Trader (Stocks, Forex, Futures) ”

Where do options traders fit in, in regards to starting capital? I realize that options trading is not an ideal vehicle for day-trading (due to time-decay/expiration’s), however some people pull it off. I stumbled across your site (literally, from StumbleUpon) and you all have some excellent articles and sound advice.

I thought I had written something about this, but can’t find it at the moment. Basically, the calculation for how much capital you need would be (assuming you risk 1% of your capital per trade):

typical premium x 100 shares (which is one contract) x 100 (because risking 1% you can lose 100 times before your capital is gone) = min. capital required.

So if you are trading options where the premium is typically about $1, then you need at least $10,000 to start (assuming, you want to risk 1% per trade). Because you are a risking about $100 per trade, which is 1% of 10,000.

If you risk 2% of your account capital per trade (you can lose 50 trades in a row before your capital is gone) you need:

typical premium x 100 shares x 50 = Min capital for trading one contract.

If the typical premiums you pay are higher, then you would need more capital. If the premiums are lower, then you could buy multiple contracts (equiv. to 200, 300, 900 shares, etc).

ok if i’m not a US resident and never been in the US be4.

do i have to pay any kind of taxes ?

will it be every time i trade or just when i try to withdraw the money ?

through what company can i trade if i live outside of the US and want to buy some shares from the US market?

(can i use american company like E*TRADE or.

Some US brokers accept clients outside the US, and others don’t. But you should be able to find several brokers that service your country.

Interactive Brokers (IB) provides accounts for many different countries.

Here are the accounts Scottrade opens accounts for: research. scottrade/knowledgecenter/Public/help/Article? docid=fa9b1ef5fc074f1d94a5091aae2fe46f, so unless you live in one of those countries, Scottrade isn’t an option. Couldn’t find info on foreign accounts for e-trade either.

What do you think of Vantage Point Trading System from Market Technologies? Have you tried it and how do you rate them? Thanks.

I haven’t used it. Not much need since I have my own strategies. From what I have heard, reviews are mixed. Some love it, but it also comes with a decent price tag which some people find hard to swallow. Beyond that I can’t offer much insight.

You mentioned stocks are traded in 100 share lots. However, my broker lets me trade less than 100 shares at a time. Are there disadvantages of trading fewer than 100 share increments when trading stocks?

Thanks for the response!

If your broker lets you do it, then there shouldn’t be an issue. Some of the big bank brokers won’t fill orders for “odd lots,” for example if you put out an order for 326 shares they may only fill the 300 and the 26 shares are left pending. Some brokers also charge a slightly increased commission on odd lot orders. These issues are pretty rare these days, but the standard is still to trade in 100 share increments.

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