How Much Money to Start Day Trading?

Day trading is a very appealing way of making quick money for very little work and many people are jumping on board currently. Day trading allows you to trade in the usual office hours and you can quickly see what you have accumulated or lost over the day. The day’s business has to be concluded within the day and the commodity is bought and sold within the same day regardless of whether the price is up or down.  As you can see then, predicting a profit can be very difficult over the process of a day as you have not had the opportunity to watch or study the market. However, high risk normally comes with high rewards, which makes day trading very popular.

As you can imagine, only the glossy shine is hyped to entice the gullible in. There is definitely a market for making money but many will lose an awful lot and will turn away from day trading. To make a good living from day trading takes time, commitment, practice and expertise. You wouldn’t expect to be able to fly a rocket without any prior training yet day by day; people enter the world of day training with exactly nothing in the way of knowledge or experience.

One other thing you will need is quite a lot of money, although this small intrinsic detail is often omitted when companies are trying to tempt you in. How much money to start day trading very much depends upon the broker you are registered with and the market involved, but generally you could get started with $25,000. Some brokers would require a substantially higher amount in your account and other will not accept less than $100,000 for capital. The forex market is more accommodating and you can open accounts with much lesser money, but the potential to make such huge profits is reduced too. Do not be tempted to use money that you need for necessities. Many people think they can easily increase their money, as they are “lucky”. Using this kind of strategy is a sure way to be broke very quickly. If you can’t afford to lose it then don’t bet it.

Margin accounts
Once you start a day trading account, you are required to keep a minimum equity in there whilst trading to offset against any losses. If the account falls below the permitted amount then you will not be allowed to trade for the day until the account has been brought up to the required amount, which is usually $25,000. Therefore, you can immediately see that not only do you need to have a large amount in your trading account but also you will need to keep the account in good order to keep trading. Taking into account losses, which you will make without doubt, you will need a sizeable working capital to be able to trade. Always try to ensure you only trade with around 25% of your total capital. This will keep losses to a minimum and keep your account in good order preventing closure or prevention of trading.

Forex markets
The forex markets are relative newcomers to trading commodities but they do allow account to be opened with much smaller amounts of funds. The trading is quite different to day trading as it takes place globally.

Day trading as a career
It has to be said that some people are astute in the ways of finance and have a certain flair for interesting market trends. These kinds of people do well in day trading. However, education is the key and even the best educated or most experienced day trader will lose money sometimes, it is inevitable as with most things that involve luck. Do not give up your day job with the expectation that you will be able to carve a niche for yourself in day trading easily. It is actually pretty unlikely to happen unless you spend a lot of time studying and learning about the trading!

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