When starting with any business, there is a certain amount of capital you need to get yourself going and to run the day-to-day affairs. If you’re thinking of beginning as a day trader, then you should consider how much money you have available to invest in your new venture. But there are different amounts, depending on what you plan to trade. Although laws or recommendations around the world vary wildly, this article will focus on the minimum amounts required in the US market for day trading.
To trade stocks in the US, there is a minimum deposit you must make into your trading account before you can begin. Although the amount is set at $25,000, we don’t always recommend going with the minimum. Take into account what would happen if you buy and sell stocks during the same day, but you have less than the required $25,000. That is a risk that could result in your account being flagged. In that case, you might lose your trading privileges altogether. For that reason, it’s best to start out with a buffer. If the minimum is $25,000, then you could make an initial deposit of $30,000 or even $35,000 to lower your risk of being flagged.
Day Trading Forex
Forex accounts can be funded with much less money than when trading stocks. There is no minimum deposit, so you can even begin with just $100. But it kind of depends on what kind of a future you see for yourself in forex. A $100 deposit won’t get you very far and will extremely limit the number and amount of the trades you can enter in one day. A more logical starting point would be $500 so that you can trade using correct stop loss levels. However, if you want to actually earn money in forex, you should consider $1,000 – $2,000 as a base from which to begin. That amount will give you enough to enter and exit deals in the most secure way. When you get experience and realize some successful trades, this amount could actually set you up for earning real money.
Trading in Futures
The suggested minimum amount required to start trading futures lies somewhere in between the amounts needed for trading stocks and forex. With as little as $2,500 you can get started, but as we mentioned earlier, putting in only a minimum deposit will restrict your trades as well as make it nearly impossible to earn good profits. For day trading futures, a minimum deposit of $7,500 or $10,000 is much more realistic.
Whichever market you trade in, the principle is the same. You will get out of it what you put into it. Very few traders become successful by getting lucky. You wouldn’t place your first trade without spending a lot of time studying and researching. Don’t cut your chances of success by trying to begin only with minimum deposits. Starting small is OK for learning the ropes, but when you’re ready to play big, fund your account adequately.