How Much Money Do You Need To Trade For A Living? Part 2

Here we are, in the second part of the answer to this very crucial question.

It is so important that we needed to split it in two. If you came here accidentally, reach out to Part 1 to get very crucial info behind the concept.

If you skipped Part 1, it is suggested to reconsider your choice, so that you can fuel with strong will your desire to trade for a living.

In this section, we will know the most convenient amount of money to start from. Moreover, we will explore the main tools to make the most out of it.

But first, it will be revealed what is the true key, the real boss that will permit you to reach your goal and beyond.

Let’s jump into it.

Part 2: The Practice

His Majesty, Compound Interest

It is the one key that opens the big doors of wealth and shows you a practical path that leads you to your aspiration.

Compounding is a magnificent invention of the Creator himself, which guarantees a beautiful life to all who truly commit to learning and becoming better and better over time.

The more they take advantage of time efficiently and commit to improving, the more their growth will be consistent and exponential. Being consistent is, in fact, utilizing as much time as possible in a productive way.

So, what does it mean compounding?

In very simple words:

Compounding is the magic of obtaining ‘reward’ on the principal amount PLUS its previous ‘reward’, over and over. 

But wait, if this is not enough simple, let’s get Benjamin Franklin to describe it.

Therefore, the more you compound a principal amount, the more it grows as an exponential curve.

If you want to grasp the concept with an easy practical example, try to look up to the wheat and chessboard problem.

As you probably have already guessed, compound interest permits, to the maximum extent, that capital as tiny as a singularity can become of an immeasurable amount.

The only things you need are TimeSpace (like a market or multiple ones), and relative constancy of direction.

The most convenient starting capital amount

We finally acknowledged that any growth is possible, because numbers are infinite, and time also seems to be infinite, or at least infinitesimally large. Unfortunately, what is not infinite is our individual life. More specifically our time.

Therefore, we need to associate the most appropriate growth environment with our time environment.

In other words, any growth is indeed possible, but we cannot wait 20 years to make some serious revenue. Hence, there is also a limit, which comes from the human lifetime perspective, to how small your capital can be while still being reasonable.

Pay attention: how small it can be, not how much large.
The most convenient starting capital in terms of time requirements and financial impact in order to start trading for a living is approximately $1000 to $5000.

This estimation has taken into consideration the potential profits and the impact of potential losses, to guarantee both nice gains and a sustainable total loss in case of a fiasco.

Important note: if you trade stock and equities, you may be subjected to Pattern Day Trading (PDT) rule. Invest some time to deepen into that.

Again, It is possible to start with less than that and reach the same goal, but in such cases, you must activate your “bargain” radar and seek very profitable sources that can push you high.

But remember: any tentative in this matter without being worthy of the success you demand, is going to be either in vain or bearer of temporary satisfactions only.

The market is powerful, and it knows exactly what to give to whom.

Choose carefully the environment in which you want to trade

As we must define a convenient starting capital, we need to identify an associated market to optimize the potential profits. Otherwise, any previous effort becomes invalid.

Two main environments are efficient and volatile enough to be traded in this case.

Stock Market

The stock market represents a valid choice for your capital if you’re going to use non-PDT brokers and you like trading shares.

Volatility is very differentiated: a trader has the freedom to decide trading into low, mid, or high volatility environments, from blue chips to penny stocks.

It is needed to remind that the higher the volatility, the riskier the trading, and you should be very careful and manage your risk, always.

Generally, the stock market is pretty much safe, because it is highly regulated.

The only “impediment” is that is not continuous — it is available 5 days a week. Moreover, your time zone can limit you depending on the environment you choose, because of its opening and closing time.

Crypto Market

Crypto is a powerful path to learn quickly, because it is de facto the most difficult market at this time, plus it is 24/7.

It is very volatile: a trader can witness high percentage movements intraday. This kind of volatility can teach a lot, reward a lot, but also punish a lot, and this is mainly why crypto is such a complex environment.

Since it is relatively newborn, it’s not very safe to trade — there is little to no regulation, and this gives a huge green light to scams and malicious projects and people.

Furthermore, the value of the assets mainly relies on given trust, since crypto has not yet found an active role in the global economic structure. As a matter of fact, speculation is the main mover.

Other main environments

It is possible to try other environments, but they could result to be not very convenient because of some specific attribute missing.

For example, Forex is the largest market in the world for trading volume, but it is among the less volatile. In addition, it is a very difficult market to trade: a retail trader majorly competes with algorithms and large institutions, especially in small timeframes, where they have huge velocity advantages.

Similarly, ETFs are very appealing for investors, but they do not guarantee sufficient volatility.

Regarding options trading and CFD trading, they might be not preferable at this stage.

Set a periodic goal and treat it as pay-check

As we stated before, constant profits are the feature that is going to ensure your wealth.

The approach of your mind here is crucial: you want to be as clear and specific as possible. Your trading has to be developed around the main goal, which represents a recurrent income.

The recurrence can be weekly, monthly, yearly, etc.

Try to find your balance between risk and reward, and establish your method.

An example could be fixing a goal of $100 a day. You can also choose to set weekly or monthly references, to have a wider vision over time.

As your capital grows, along with your confidence in the method, you will be able to increase the numbers and aspire to higher incomes.

It appears obvious that whatever method you’re using, commitment and sacrifice are key to make the most out of it. You may need to trade multiple times a day, or simply spend hours and hours in front of your charts. But don’t get discouraged: this is all accumulated screen time that will always return to be beneficial.

However, good traders end up realizing that trading is a 1-hour daily activity and that all the work is done by keeping the mind fresh and clean.

Using leverage

Leverage is a very powerful instrument, and can surely give a huge help in trading for a living and maximizing profits, especially with a relatively small account. Some may say that it is indispensable.

While this conception is not completely agreeable, it is needed to say that leverage is a very dangerous instrument.

Being unskilled and still using leverage is going to lead almost surely to a disaster. Any inexperienced trader is strongly advised to not use it.

The concept of leveraging develops around the amplification of the trading process. Positions amplify, as well as your potential profits and losses. A bad trader is going to be an amplified bad trader, and he will lose money faster than before.

A skillful and knowledgeable trader, with powerful self-control, discipline, and risk management, is provided with the necessary qualities to use leverage and amplify his efficiency.

In Conclusion

Everything we have analyzed together was necessary to determine what should truly be the starting capital of an aspiring successful trader.

We have discovered that there’s a lot of factors behind this simple question and that the amount of money is the least of the problems.

Being crystal clear about goals, knowledge, method, and the unmovable laws of the market is the very first rewarding achievement. From this point, a lot of obstacles have been removed.

It is common for new traders to be confused in this matter, especially when they don’t have the instinct and the strong will to gather as much information as they can.

The best initiative is to be ready to learn, both from theory and from the market itself, and the best source of strength is your aspiration, crucial to reach the rewarding goal of trading for a living.


Everything described in this article has the sole purpose of being informative and providing general information. The author has no intention of providing any financial advice, legal advice, or tax advice. Do not rely on this article to make investment decisions. Seek professional help before making any such decision. The author does not take any responsibility for loss or damage of any nature. The use you make of the information contained in this article is your sole responsibility.

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