LitheInvestor

Hi and welcome, glad you could join.

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Tekmnd

Hi again


Commissions in any market other than forex will eat up any account under $1K, and really any account under $5K.
Forex has no commissions, so you might look there. Another idea is to try and add to your account each week while you learn, so that you have more when you trade live.

Cheers
Tek

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LitheInvestor

Yup, you might want to check out Airelon's challenge project: investorandtrader.blogspot.com where he started with his "$500 challenge project" in a stock account and with small $25 weekly deposits it quickly grew to $4k+.

A great broker to go with for that level of funds would be Speed Trader. They have ~$1/trade commissions and minimum account opening is $500 I believe, whereas with most stock brokers it's $1k or $2k.

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Pippin' ain't easy!

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kkudumu

Thanks for the suggestions guys. For my account, I was going to start with somewhere between $200-$500 and add an extra $100 every month or maybe $25 every week depending. My current job pays about $800 a month so I have to budget accordingly with all bills and whatnot. So what you were saying(Tek) confirms that I'm on the right track...and I like being on the right track. However, is there anything you(or anyone) suggests I do differently with only being able to contribute 100 or so a month?

I watched the intro to the Airelon challenge and it definitely looks very interesting, thanks again for the reference, I'm definitely adding it to the watch list. Speed trader looks good too at 39c per 100 shares. The brokers I was looking at didn't have a minimum but their commissions would have been insanely high compared to what I would be paying for a trade. So thank you for that recommendation. When I finally get going, If I decide to do stocks instead of micro forex, I have a reasonable site to go to now!

Did I mention this is an awesome community?

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Tekmnd

I'll second that Airelon is worth checking out. His challenge project is an investment plan though, not a trading plan. It is a really good example of showing growth/compounding over time for even those on a fixed budget.

Cheers
Tek

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Tekmnd

(I know, I quoted your line 'out of context' lol)

One thing you have to be very careful about with a small account is overtrading, or in general, trying to quickly turn it into a huge account. Because you will only go up or down a small amount of money, it is very difficult pyschologically to follow good risk/money management rules. However, it is for just this reason that a small acccount can be a great place to start.
My recommendation is that you go through the entire money management section (and anything Airelon has on money management on his site/youtube as well) and no matter how slow and boring it may seem to only risk 2% of a small account, make your #1 priority sticking to solid/sound money management rules.

Money Management - InformedTrades

Cheers
Tek

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kkudumu

Thank you for the advice. I feel like I'm going to a library and just piling book upon book upon book into my arms to the point where it's stacked way above my head! lol

But I know exactly what you mean with the overtrading. The wanting(?) of earning money faster can make or break a person. I played poker online for 2-3 years and I experienced my fair share of this psychological battle. I grinding micros for the most part and when I had a really good run of wins, I wanted to move up higher. However, that was a recipe for disaster in that situation and I know it definitely would be in this situation.

Sorry for going off on a tangent here a bit but the psychology of trading is actually a lot like poker now that I think of it. In both situations you make informed decisions to decide if you would like to invest your money. You never know 100% if you will be correct in the future, you really only gain some knowledge of that through practice, studying and gaining experience. In both you need to have good money management skills or you risk losing your entire account. Your emotions can get in the way if you feel like you're really attracted to the trade...which is why in both you must be emotionless and let your analysis guide your decisions. However investing is quite a bit more complicated when it gets to the technical part. I enjoy the learning of it though.

This discussion opened up my mind a bit lol. I guess I needed to get the thoughts out.

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NoJobRob

I"ll add that, when people say to only risk 2%, they don't necessarily mean only putting 2% of your capital into a trade. It just means to make sure that if you get stopped out of a trade, you lose no more than 2% of your account. 1% is even better IMO... You can feasibly put your entire account balance into a trade so long as you only lose 2% if you're stopped out, but I don't recommend that obviously, and that statement is simply for illustrative purposes. LOL

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kkudumu

haha, are you trying to give me some bad habits ? I think I would be too scared to risk my entire balance lol but I get what you're saying. I think I need to study stops and position sizing a lot more. I just got past that part of the beginner course and it kind of went over my head. I need to do some demo trades with setting conservative stops while closely following the material before it sinks in. Just thinking out loud.

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NoJobRob

Position sizing and stop placement is pretty easy stuff, though very important at the same time. Here's an example: Say you have an account balance of $1000. 2% of 1000 is 20. So, risk no more than $20 on your trade. Your first step however, will be to identify where you want your stop loss, and then adjust your position size so that if your stop is hit, you lose no more than the $20. And with a micro account, that could be a pretty wide stop since you can trade for as little as 10 cents, or even 1 cent a pip...

Once you demo trade for a while and think you're getting a good handle on things, I would highly recommend trading a very small account so you can get used to trading real money, but just try to take small nibbles out of the market. You'll find that psychology/emotions are a huge part of trading, so don't go straight from your demo account to trading your life savings. Start small, and just ease your way into it. The market isn't going anywhere, so there is no need to rush things.

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