How much money do you need to start day trading. This is perhaps one of the most commonly asked
questions from beginner traders on my YouTube channel.
And im just gona break it to you. Day trading is not as easy as opening a $500 Robinhood
account, going on wall street bets on reddit, or following some chat room alerts or signals
and grow it to 500K in a month. Like, reality just doesn't work like that.
So in this video i'm going to be talking about realistically, how much money you should start
day trading, what you should focus on with your small account when you first get started,
and also, a realistic time frame and goals you should set for yourself as a brand new
beginner trader entering the market.
As always, these videos take me a long time to make, thats the time I could have spent
cruising around in my lambo, chilling on the beach, and banking on my toilet. So if you
don't mind, please remember to drop a like on the video. I’d really appreciate it.
Like i’ve mentioned many times before on this channel, day trading is a business, not
a hobby, and definitely not gambling. Well, i mean it would be gambling if you just throw
your money into buying whatever low float runner looks hot and sexy at the highs after
running for about 200% on the day.
Since day trading is a business, it takes capital to start a business and start having
it grow slowly. So trading is the same way. It takes money to start. I recommend opening
an accoutn with at least $4K to $5K dollars. Thats a small account. If you have less, thats
fine, we’ll talk more about some other options for you later on. So hold on tight
But just because you have an account open with that $4k, that doesn’t mean you should
start trading live and trying to make money. Your goal after you funded that small account
shouldn't be trying to double or quadruple it or make any money at all.
In fact, you should treat that 4K or 5k as market tuition, and expect that you’ll probably
lose at least 50% if not all of it slowly. Because like i just mentioned previously,
as a beginner strader just starting out, your focus should be on learning and observing
the markets, not trying to make money.
There is absolutely no way a beginner trader can really sit there and learn about planning
your trades, risk management, reading price action on the charts, and learning about news
analysis, if he or she is busy staring at the PNL turning from green to red back to
green on their newly funded small account.
Making profit and learning to trade are two separate goals. While many experienced traders
can multi-task and are profiting from the market and learning something new each and
every single day simultaneously, its very unlikely for a brand new trader to do so.
There's just too much going on, and too much emotions to handle. I’ve heard this from
many new traders I trade with every single day. Yes they study very hard after hours
and on weekends taking notes and trying very hard to learn from my videos and webinars,
but come monday morning when the opening bell rings, all of the material reviewed over the
weekend just suddenly disappears altogether. Out of mind and out of sight.
Many new traders are asking how much do they need to start making $100 a day. Whats the
minimum amount of money they need to start day trading. And really those are all the
wrong questions to ask. The question focuses on making profit, not focused on how to start
learning as a brand new trader.
The right question to ask is, how much money do I need to open an account to get a skin
in the game and start obersving the markets in real time.
And thats why I said to treat that $4 to $5k as market tuition. Just like going to school
or college, you are paying the tuition to learn a skill to an expert at a particular
area. You are focused on the education first so you can use that knowledge you learned
to make money from that education in 2 to 4 years. Not right away.
I did exactly just that when I went to college and paid six figures in student loans. Went
to study for four years, got a degree. And started working earning five figures and slowly
higher towards six figures later on.
But you know what the funny story is. My college actually mixed up my undergraduate degree
certificate with some other asians name, one of my friends actually. So i got her degree
and she got mine. Yes, they messed up on that piece of paper thats worth six figures,
I know you are thinking this is one of my bad jokes. But honestly this is a true story.
So every year when they call me up and ask me for donations as a alumni. I tell them,
no im not giving a single penny until you give my degree certificate with the correct
name on it, unless you hit the like button at the bottom of this video.
The point im trying to make is, treat your first ever small account as market tuition,
or as initial admission fee to participate and learn from the market volatility every
single day. But com’on, in comparison to a six figure college tuition, that can probably
only get most people only a five figure salary, and maybe six figures after many years later.
A day trading market tuition of only $4 to $5K doesn’t seem that bad.
But of course, you’re never guaranteed to make money trading, just like graduating college
with a degree doesn’t guarantee a high paying job. But the odds of you becoming profitable
day trading is significantly higher if you focus on learning first and foremost, before
focusing on making profits.
And really with that first small account, the goal for any new traders in the first
six months to a year. I really just use that as a way to learn day trading and collect
screen time. Yes I do advocate most people to paper trade first. But after a few months
of paper trading and finding a focus, it's time to start trading live with that small
account by buying and selling small shares of only 100 to 200 shares.
Will you get rich quick with that 100 to 200 shares? No probably not. Again, that's not
the point. But trading those small share sizes will give you a real skin in the game, and
you’d be able to start learning about all the emotional ups and downs of trading that
simulated trading wouldn’t provide.
While you probably won't be banking lamborghinis with these small share sizes, that also means
you are less likely to incur big losses at the same time. And by just trading small,
and keeping the bleeding small ,that keeps you in the game to continue learning.
Versus if someone starts trading big right away to make profit as a brand new trader,
he or she will likely lose it all quickly within a month or two, and it's game over.
That ticket to participate in the market is gone.
Again, the focus for any new trader starting to day trade is to stay afloat for the first
six months to a year, depending on how much screen time you are able to collect every
day during trading hours.
For me since I was trading only part time when I first started, and I only had the screen
time from premarket 8am to about 10:30am to 11am market time before heading out to work
here on the pacific west coast. It really took me a whole year just to start understanding
whats going on in the market. I was still not profitable after one year, I was red yes,
but I was staying afloat and learning a lot from screen time.
I finally learned about the differences in terms of price action, why certain low floats
will run, while others dump, and what kind of news truly matter. For both the small caps
and large cap stocks. If you are interested in my journey of how to trade part time while
working a full time job, feel free to check out this video after.
That was my personal approach. But there are many new traders in my Discord chat who dove
straight into trading full time. While I generally think that's a bad idea, if the trader has
a lot of savings reserved for living expenses for the next six months to a year, it could
be a sound move depending on each individual's situation.
These traders recognize quickly that they need to focus on learning first with small
share sizes instead of trying to make money. And therefore, they learned extremely quickly
and was able to find a focus and have a really solid grasp of day trading price action within
six months.
Now what if you have less than $4 to $5K. Yes you can still sign up with a broker that
allows less account minimums to open, but make sure they give you live data simulated
trading. My suggestion is still the same. Focus on learning with live simulation first
and collect screen time.
But at the same time, continue working your job and save up. So you can fund your account
bigger in a couple of months when you’re ready to go live. There is really just no
point of trying to make money with a $500 or $1000 account.
A lot of people think just because they are under PDT or dont have the capital to day
trade live, that means they shouldnt show up in the market. Those are the people who
only focus on making profit as a beginner trader, and not focused on learning.
You can still learn with live market data with Webull for free. While I do not recommend
using them to trade with real money, they do offer live market data paper trading, and
that's a great way for beginner traders to start learning, while saving up the capital
to fund their accounts later on.
As for the traders who already have good income and the capital to start with an account already
over $25K. Thats great. That means they do not have the PDT restriction. But my recommendation
would still be the same. In fact, it's even more important that these traders starting
out with a big account trade small first and learn.
You don’t want to be in a situation where you start out with 5000 shares chasing the
high of the day breakout and suddenly get dumped on. And your big account of $27K is
now down $10K. Just because you have a big trading account and no PDT restriction, doesn’t
mean you don't need to learn the proper steps of day trading and skip all the screen time.
I'm sure somebody will be saying in the comments, but so and so did that and they turned $500
into a “insert a very impressive figure”, in six months. Right Im sure there a people
who can do that, but those are trader with 5 to 10 years of experience. They already
know their set ups, how to read price action.
As a day trading beginner wiht 1 month of experience, it would be extremely unlikely
to mimic a pro’s trading success right away. And no, following chat room alerts won’t
work either.
That being said, if you’re interested in the steps to start learning to day trade,
feel free to check out this video on how
to
get started.