Quote:
Originally Posted by mnfard
Hi Dave
Now I understand why you mention about the hype that that is all around about this business. It does all make sense now after I listend to this lesson a couple of times and tried to digest it. What you are covering here is totally different with how day trading is visualized by some companies or individuals in the web. I would suggest to discuss this more in depth as I think for people like me new to the subject there should be more weight given to this topic. At the same time how do you suggest someone with low capital realistically approach this business given the fact it is impossible to make a living at this rate of return at least in north america.
Regards.
mnfard
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Hi mnfard,
Welcome to the community.
Thank you for the recommendation to make this topic more prominent. I agree that it is not given the attention that it should be and will make it a point to highlight some additional resources related to this in the coming days in the "shared stories" section of the site which you can find on the homepage of the site.
There are really three options a trader with a small amount of capital has in order to try and make a living off of trading.
1. Swing for the fences while they are small and put on larger position sizes than proper money management techniques would call for to try and trade the small account size up to a reasonable level. If they are able to do this then when they had enough capital to make a living without swinging for the fences then scale back and use proper money management techniques.
Most people with small account swing for the fences and the large majority lose most if not all of the money in their trading account as a result. For the few that do make it to a large enough account size most of these people from my experience, because they have not been excersizing proper money management, continue to trade position sizes which are too large, and eventually give all their gains back as well.
There are however a very few who make enough money using this method to trade for a living using proper money management tequniques once they get to the larger account size and then have the disciplin to make the switch. I think most of these people will tell you however that there was a heavy dose of luck involved with getting to the point where they could do this.
2. Trade the small account balance using proper money management, develop your skills correctly, and supplement your account balance with money from your day job until you have enough money to quit your day job and trade for a living using proper money management techniques. There is a good discussion of
what it takes to trade for a living using this method here.
3. Trade the small account balance using proper money management, develop your skills correctly, and once you have a profitable track record raise money off of that track record and get the capital you need to earn enough to trade full time that way.
Those are basically the only three ways I can think of that it can be done with a small account. If there are any other ideas or questions on this one feel free to post them below.
Hope that helps.
Best Regards,
Dave