Are you going to quit your job to start trading full time? Do you think you are well prepared for this career change? Do you think you have pockets full of money to cope with in case of failure in trade?
Buddies, Trading lifestyle can fascinate anyone! Though the trading world is more complex than it seemed to be. Understand the requirements of full-time trading before you quit! So, read how much money do you need to be a full-time trader?
The minimum capital you need to be a full-time trader is 25,000$. Though there is no limit for maximum capital. However, if you want to avoid the pattern rule of day traders you will have to keep 25,000$ in your account. Smart traders will invest 80% of the total capital and keep the remaining 20 % in the account as a safe margin.
There are many stories in which traders started below 25k and end up starting job again. The first two years are the more difficult phase of this trading type.
You need more patience and control over your other expense as your source of income is trading only. So, there is a lot of pressure on full-time traders. It’s better to stay on the part job for at least 6 months and then move to professional trading.
How Much Capital Do You Need to Be A Full-Time Trader
At first, Yes it’s possible to become a full-time forex trader. The capital of full-time traders is just like the inventory of the store owner.
If you want to be a full-time trader without following the pattern rule of day traders, you need a minimum capital of 25,000$ in your account.
For futures, 15000$ minimum is enough to get started. The minimum limit for day trading is different for different brokers. For stocks, it is less than the currency market. Why?
This is because the currency market is riskier with emotional stress. Here brokers take the advantage of ego, fear and greedy factor of traders. So, the risk of losing is always there.
That’s why to cope with the financial loss you need to have more capital in your account. With capital less than 25k you are likely to be more in the stress of daily expenditure vs trading cost.
You might have heard turning 250$ into 1Million $. All of these are promotional gadgets. The real world of trading is realistically far beyond making unexpected money out of small capital.
Why Do You Need 25k To Be A Full-Time Trader?
Starting professional trading with 1000$ in your account sounds crazy! Listen full-time trading is just like a business in which you can’t make entry without investment. Unless you have enough money to fulfil your daily needs, as well as business needs you can’t go far.
The full-time trader has no alternative source of income to live on. He makes living through trading profit.
He earns from the same place, invests in the same place and loses in the same place too. That’s why proper weekly, monthly, as well as yearly planning, is needed for this job.
If a trader starts with low capital like 500$ to 1000$, he will soon quit this in favour of a job. Despite his skills, he may not be able to reach his monthly goals. Suppose he makes a profit in the first month but does not reinvest that profit to enhance his capital he will be on the wrong side.
5 Golden Tips to Set Capital Portfolio for Full Time Traders
High capital only can never be a key to success in full trading unless you allocate your capital properly. You can even start forex trading with 1$.
Your main target is to avail all opportunities to earn money as well as minimize risk. At the same time, you will have to see your daily expenditures. Below are 5 golden tips to set an investment portfolio for full-time traders:
1- Allocate Capital to Long Term and Short-Term Trading Position
Never rely on allocating all your fund for long position trading. Experts always recommend allocating 90% of capital for medium to long term trading positions.
The remaining 10% should be allocated to a short-term trading position to ensure the flow of cash. You should start by making 100 a day trading forex and gradually increase.
For example, 2000,00$ capital and you want to make 50,00$ out of it. It’s a better idea to fix 180,000$ for a medium to the long portfolio for 6-8 months at least.
The remaining 10% you can fix for short term trading portfolio to bring cash for daily needs.
2- Say Big NO to High Leverage More Than 1.5%
If you are trying to use leverage for short term trading, it should never be too high. If leverage brings money quicker, it tends to lose money faster too.
So, for 200,000$ account, your leverage should only rise around 1.5% in a month. If you allocate some money for short term trading like 160,000$, your leverage should be around 1.5% to minimize the risk factor.
ICMarkets broker giving you option for choosing low leverage account and all the pairs spread is very low. It’s one of the reputed regulated forex brokers out ther.
3- Say NO to more than 5 Currency pairs Or Stock
Always choose a smaller number of stocks of currency pairs that you think you are proficient in trading.
If you are an active trader, it better to deal with 5 stock or 5 currency pairs in your portfolio and never exceed this number. If you chose those currency pairs or stocks that are rising in price, you will make more profit.
We have a detailed article about choosing currency pairs for forex trading, you can check it out.
4- Never Invest More Than 20% In One Currency Pair or Stock
For a long-term trading position, never invest more than 20% of your capital in one currency pair or stock. This tip will help you to minimize risk as any currency pair or stock in the market can fall in value at any time.
Suppose you have 100,000$ in your account for a long-term portfolio, divide it equally to invest in 5 stocks or currency pair. For each pair, you will invest no more than 20,000$.
5- Always Keep Enough Cash Aside as a Safe Margin
Always keep enough cash in your bank account as a safe margin for 6 to 12 months. Suppose you fail then your family will suffer. You will have to fall in trouble with the loan.
If you are investing 25,000$, you must have 10,000$ to 20,000$ in your bank account to support your daily needs. If you tend to invest all your money in trading and fail to achieve your goals, you will have nothing to restart your financial journey.
So, always plan well before quitting your jobs to become a full-time trader.
Consider Options That Require Low Capital
No need to get disappointed due to lack of fund, the financial market has so many alternative options that require low capital. You can consider the options below
The currency market is open 24 hours a day. In different time zones, it has a lot of opportunities for the high fund as well as low fund traders.
Here you can open your account with a minimum of 100$ to as much maximum as the possible amount. Depending on your trading type, you can open your account and start trading here.
This market is a good option for traders with low capitals. CFDs allow you to keep the ownership of asset or investment in your hand. In forex, it provides high leverage.
It means you can open your account with smaller cash that is 100$ or sometimes less than 100$. Though the risk factor is high with higher leverage. So, you need to follow a proper trading plan.
Frequently Asked Questions (FAQs)
How much does an average day trader make?
The average day trader makes $ 80,081$ per year in the USA. However, this amount varies with location, broker, experience, and certification. If we calculate this per hour, it is 38$ per hour. This is equal to $1540 per week and $6673per month
How do I become a day trader with 100$?
Though becoming a day trader with 100$ is tough but possible. To do this you need to follow the steps below:
- Find a broker with a minimum fund limit100$
- Decide securities you want to trade with
- Decide your trading plan
- Open an account and get started
Can you day trade with 500$
Of Course, you CAN. Even you can start with 10$. But the chances of making a higher profit with low capital are limited. It’s a better idea to start with a 500$ account. In this way, you can earn more and lose more too.
Thanks to the leverage factor but it’s a double-edged sword indeed, All you need to do is to have a proper strategy and risk management skills.
To summarize the minimum amount you need to be a full-time trader is 25,000$. It’s good to keep an extra amount if you have it in your bank as a safe margin. This extra amount will keep you away from falling into trouble with the loan.
Remember never to quit your job in favour of becoming a full-time trader without planning.
Stay on your job for at least 6 months and settle your position as a full-time trader. When you think you have enough money in your account to restore loss and daily expenditure than move to this trading type.
Share stories of full-time traders with the lowest balance! We’d love to post the top stories on your website for motivation.