Only Have 5K

[Predictor 11]

It can be done with futures. However, you have to be a highly skilled trader to do this in futures because the leverage is so high. You will likely lose 100% without training.

 

You know I started at investopedia, paper trading.. I had a knack early on swing trading on the sim. It was just really easy. But, I didn't have the skills required to trade leveraged or to day trade until many years later.

 

Let me give you an analogy to what you're asking. I've read some books, maybe several books, on racing. I'm tired of reading books, and I want to find a race car that I can jump in and push it over the red line where even most professionals drive. And, oh I don't care to get any training. Do you see any problem with that idea?

 

Starting in the futures market with less then about 7k puts one at a higher probability of blow out. Although, it can be done. The standard recommendation is 15k for futures. 15k is about 4x leverage. 5k is about 13x leverage. There aren't many people who can trade with that much leverage, if any, without extensive training.

 

You can't trade stocks with 5k due to PDT. Your best bet may be Forex where you can trade very small and work your way up. I would recommend starting with Forex with a $500 account and seeing how it goes. You could also try your hand at NADEX. NADEX has a wide range of products that can be highly leveraged. Many professionals believe that it is harder to make a profit in those markets. So, your best bet may just to be to trade on the simulator until you are 100% sure that you have it what it takes. Keep saving.. get an extra job.

 

-

Curtis

 

The Market Predictor

 

 

Ok, I've read enough books. I only have 5K and want to start trading. Can it be done with this amt? Which broker do you recom? Where should I start? Your help is greatly appreciated.

 

Thanks

Kohtro

 

PS. Not interested in paper trading

Edited July 12, 2012 by Predictor

[alwaysastudent 10]

Actually 5K is quite enough to trade future.

 

Unless you opened your account with PFG like I did :crap:

 

Actually I agree with the other posters and feel that 5K in Futures is too small even with the e-Mini YM. Don't get me wrong I love Futures, prefer trading Futures and want to actively trade Futures. However now trading mostly Fx on a mini because it give me a better handle on risk.

[prosentti 10]

You calculate the smallest reasonable K needed to start the trading from the perspective of the Risk. How much you are willing to risk (%) your funds in one position.

 

You have to be a scalper to trade futures with 5K. For example some kind of "safe" setting for your risk while scalping could be 0,5% (or lower) so that means max. $25/position. For example ES or 6E future is $12,5/pip so you have to put your stops as close as below 2 pips (commissions included). This kind of initial stoploss will need very VERY precise timing and it is very VERY hard to achieve. Not a newbie stuff at all.

 

Lets say that for the beginners the reasonable closest place for stoploss in 6E (Euro Fx future) should not be closer than 10 pips. So putting your initial stoploss to the -10 pips and risking only 0,5% of your equity you will need $25K cash.

 

But if you have to put your initial stoploss to the place of -50 pips then you can rise the risk a little a bit more because the trading frequency will be slower. In this case maybe 2% is okay. With the 2% Risk you will then need 31K.

 

This is for simple all-in/out system. If you scale in/out your positions you may have to change these calculations accordingly.

 

These values are not exact. The % is a result of yourself and your system. How much do you stand pain and what is your trading frequency. For example you trade 50 positions per day and you can easily have streak of 8 losing trades or 2 streaks close together producing for example -12R situation. With 2% risk are you able to lose 24% of your equity in one day (4 similar days and you are wiped out) ? Not

 

Again these values are not something exact but I gave some numbers so you can see what the perspective of the risk means.

[i-tom 10]

Whatever you do, don't trade Forex. I have been trading for a living for sixteen years, and I have never met a full time professional Forex trader. It attracts under capitalized newbie traders and imbeciles, who typically lose their funds then give up. This is a shame, but the Forex market is an unregulated sham and naturally attracts the dregs of the trading world.

[Predictor 11]

This is not really true. I find that setting a risk limit per day works better then setting risk limit per trade...

 

A good trader can risk up to 5% per day.. if you think the limit is 2% then you're probably just basing on what people have said. I've run monte carlo simulations and your risk-of-ruin (if you have an edge) doesn't change dramatically from 2% to 5%... you can even risk more with a big edge.. I think 5% is high though. A great trader could do 7%... I risk that much for some of my big edges.

 

A 5% risk is $250 or 5 points... let's say you go 7% (sometimes you have to risk more with tiny account) then you have $350 or 7 points of risk. That's enough to take either several "scalp" trades or try for some larger runs.

 

At 5k, you won't be able to trade overnight though.... which may/may not be a limitation

 

The better way to manage risk is your account to instrument leverage... an ES is worth approximately 67k... so if you have 5k you're at 13.4x leverage. 8x leverage is about all most can take.. unless you are scalping as author suggests.

 

You calculate the smallest reasonable K needed to start the trading from the perspective of the Risk. How much you are willing to risk (%) your funds in one position.

 

You have to be a scalper to trade futures with 5K. For example some kind of "safe" setting for your risk while scalping could be 0,5% (or lower) so that means max. $25/position. For example ES or 6E future is $12,5/pip so you have to put your stops as close as below 2 pips (commissions included). This kind of initial stoploss will need very VERY precise timing and it is very VERY hard to achieve. Not a newbie stuff at all.

 

Lets say that for the beginners the reasonable closest place for stoploss in 6E (Euro Fx future) should not be closer than 10 pips. So putting your initial stoploss to the -10 pips and risking only 0,5% of your equity you will need $25K cash.

 

But if you have to put your initial stoploss to the place of -50 pips then you can rise the risk a little a bit more because the trading frequency will be slower. In this case maybe 2% is okay. With the 2% Risk you will then need 31K.

 

This is for simple all-in/out system. If you scale in/out your positions you may have to change these calculations accordingly.

 

These values are not exact. The % is a result of yourself and your system. How much do you stand pain and what is your trading frequency. For example you trade 50 positions per day and you can easily have streak of 8 losing trades or 2 streaks close together producing for example -12R situation. With 2% risk are you able to lose 24% of your equity in one day (4 similar days and you are wiped out) ? Not

 

Again these values are not something exact but I gave some numbers so you can see what the perspective of the risk means.

[AldPixto 10]

If you only have 5K then you just have enough to meet the initial margin requirement for trading 1 contract of the ES ( $4375 ) or YM ( $3125 ),

and not enough for the Swiss-Franc 6S ( $6120 ) , Gold (full-size) GC ( $9113 ) , or Crude CL ( $6885 ). A broker can offer you Daytrading margin at somewhere between 1/2 and 1/8th of the exchange required maintenance margin.

 

What are the hours for this Daytrading margin ?

 

For ES is it the global session, i.e. 3:30pm-CT previous-day open to 3:15pm-CT close? I.E. so long as you don't hold when globex is closed you're okay ? OR is Daytrading something you do during pit hours, e.g. 8:30am-CT to 3:15pm-CT ?

 

If you're planning on trading more than 1 contract, then having a time-of-day deadline to liquidate can "squeeze" you in a market liquidation or short-covering rally.

 

The all-or-nothing all-in or all-out mindset for trading a small account gives very little flexibility in regards to scaling in and scaling out of a trade.

 

I've mostly traded CL, ES, ZB and because my account is under $100K I trade QM and QG (the mini crude and mini nat gas) instead of the larger CL and NG contracts because my trading style uses 3 lots (or multiples of 3).

 

If I had a smaller account I might look into other contracts with small margin requirements, such as the M6E micro-EuroFX ( $405 ) , QG ( $776 ), and ICE-DX ( $1320 ). These margin requirements come from the "SPAN" algorithm and can change from time to time when the Exchange recomputes them. The margins for corn, for example, were much less five years ago.

[steve46 12]

As usual a lot of commentary and very little substance

 

Risk has to be understood in the context of YOUR systematic approach and YOUR particular edge....if you have a system that is right 45% of the time but produces a significant return (that overcomes your expenses) just simply common sense says you have to have a different risk management program than a person whose system is right 60 to 70 of the time but produces less return per trade....

 

Take the time to figure out what your system performance is over a period that includes at least 400 data points. Then work out your risk management....its really not that difficult

 

Oh and good work "experts" with your advice......always appreciate the comedy act....

[prosentti 10]

These values are not exact. The % is a result of yourself and your system..

 

Again these values are not something exact but I gave some numbers so you can see what the perspective of the risk means.

 

You guys should read these messages few times more so you do not miss the point.

 

My point was that people should think this from the perspective of the used risk. This was my substance only.

 

btw.

 

Time is not relevant. If you trade once per year then your 7% day limit is only a simple stoploss. It is all about your freguency. This is why this should be seen as a position risk.

 

Risk settings of course must be based on the system as I said. In the case of me it means I calculate the win%, RR, max-DD and Ulcer (per instrument and used system) to see how it has been working and how to adjust my position risk when I know my pain limits. I do not do this too often. There must be some room to live. The sample quantity is not an easy task. I would not say you have to wait 400 samples if you trade only once per year :rofl:

[Mysticforex 13]

Listen to MightyMouse. . . he is giving you good advise . The fact that you are asking means you are clueless. Nothing wrong with being clueless . . . we were all there at one time or another.

[Jack Francisco 10]

Kohtro,

If you are new to trading - spend at least portion of those 5K on education.

You can start trading futures or FX with 2-3K. Jumping into live money trading

without skills is a sure way to lose whole account.

Sincerely,

Igor.

 

Very good advice- If you don't have appropriate skills or knowledge in this business- why don't you used at least a portion of money to invest on education first.

 

Try to learn something first about this business , then you invest 5k like a professional.

For sure- you can get at least a few profits. So keep it on

 

Don't lose hope

[Future trader 10]

Whatever you do, don't trade Forex. I have been trading for a living for sixteen years, and I have never met a full time professional Forex trader. It attracts under capitalized newbie traders and imbeciles, who typically lose their funds then give up. This is a shame, but the Forex market is an unregulated sham and naturally attracts the dregs of the trading world.

 

That is because you do not live in Europe.In the USA, the regulators do not have strict regulations so there are so many bucket shops. If you live in Europe, you will find many full time professional forex traders.

[undercover 10]

If you want to make money or a living from trading pay a professional for your trades or let them trade your account for you.

[bobcollett 10]

If you want to make money or a living from trading pay a professional for your trades or let them trade your account for you.

 

Hi undercover,

Your post has some value.If you want to eat and you dont know how to fish, go to the fishmonger.!

BUT

Your post is a too pragmatic.

Theres all sorts of other things involved

Hope

Desire

Gamble

Recognition

Status

Will to win

Independence

..............................and another 20 adjectives

And you are killing all these emotions with your post

regards

bobc

[TradeToBeFree 10]

Ok, I've read enough books. I only have 5K and want to start trading. Can it be done with this amt? Which broker do you recom? Where should I start? Your help is greatly appreciated.

 

Thanks

Kohtro

 

 

Lots of great advice here on this subject. Not sure if you have ever heard of tastytrade.com those guys have really helped me understand option strategies. They have a really good deal running on their site for accounts with TD Ameritrade. Check it out.

[Patuca 13]

Try steve46 of post #32 simplified reversion regression system to the mean. You can find his system in another TL thread. It was, of course, designed by superior intelligence. Everybody else is a dimwit and at best a comedy show.

 

I would suggest you gather up your books and throw them in the garbage. Then get on your motorcycle and race down to Barnes and Nobles or Books a Million and buy the simple glowlight NOOK ereader. This way you get read at night and not bother your mate. Then with credit card in hand go online to Barnes and Nobles and set up an account for the nook. Buy three ebooks by a Mr Brooks.

 

1) Trading Price Action Reversals

 

2) Trading Price Action Trends

 

3) Trading Price Action Ranges

 

Then go to Traderspress and buy the ebook The Taylor Trading Technique

 

Take one year and study these four books well. Study them and highlight and make notes in your Nook. Read them multiple times. Study them and re-study them. Study them until you can't stand it any more. Then takes a month break and study them again.

 

AFTER all this studying open an account with your 5000. Pick one market ...like say... the ES. Watch it day in and day out for 3 months. Try to discern price action and the price action setups Brooks discusses. Trade with a sim for 3 more months.

 

Then Sim trade both Taylor and Brooks methods another 2 months.

 

You will need no other books.

 

Do not trade with live money until you can be profitable with a sim. Live trading is harder. If you can't be successful on a sim you won't be live. IF you can make money on a sim you MIGHT make money going live. If you can't trade successfully on a sim then the Ebay option would be best as you will simply blow your account.

 

I know you probally won't take heed to this post. Too much work. Too much trouble. Authors too hard to understand. A few years down the road you ....just might...revert...regress...and buy the books.

 

At least save this post.

 

good trading

[Mark Johnson 10]

With 5K you can pretty much trade on anything, Forex, Binary options, or any other form of trading out there, However i can only advise you on binary options since that what i do, if you going to enter this world try to start with a broker that helps you to gain money, i will recommend VIP Binary, Anyoption or Nadex, specially VIPbinary since they have a very good support for traders.

 

Good trading