How to start trading with only $10,000?

Discussions about the testing and simulation of mechanical trading systems using historical data and other methods. Trading Blox Customers should post Trading Blox specific questions in the Customer Support forum.
Roundtable Knight
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Post by rhc »

Trading Leech wrote:However, I'm still confused. He is saying that he started trading futures with $600
Yes he did start with $600 but you need to read this in the context of the post.
From his post we find that he started in the early 70’s and at that time sufficient capital to trend trade futures was deemed to be $20K to $40K
This means he only had 1.5% to 3% of the capital deemed sufficient.

Fast forward to today.
You have $10,000 to trend trade with and at this time sufficient capital would be deemed to be $500K to $1mio (this is open to debate of course)
This means you have 1% to 2% of the capital deemed sufficient

It would seem that both you and Leonardo are in the same boat here (more or less)

Now from this website;
We find the Purchasing Power Calculator which compares the relative value of a past amount of dollars to a present amount (Note: calculator is current only to 2010).

Plugging in the values we see that that $600 in 1970 is equivalent to $8390 in 2010 (if you use the ‘economic power’ model) and I would guess that could be closer to $10,000 today in 2012 . . . again, if you use the ‘economic power’ model

So, once again, It would seem that both you and Leonardo are in the same boat here (more or less)

Now, what did Leonardo do?
He tells us exactly what he did in the post!!
Leonardo wrote:I decided that to build a stake I would have to find a market which would inevitably have a large trending move. And low enough volatility to start with so I could build a relatively large position quickly with little money. I settled on one market that had a very long term upward bias but had been in a sideways range for more than 2 years. Cotton.

Things turned out better than I expected.

I was only interested in an up move, so the intent of my plan was to buy breakouts at new highs and if the breakouts didn’t hold on the day of the breakout I would exit by the close and wait for a new high to enter again. I was willing to keep at this for as long as it took, even if it took 5 years.
Note also that Leonardo was working his plan for a full 9 months (experiencing “losses & much frustrationâ€
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Trading Leech
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Post by Trading Leech »

Thanks for all the great replies.
rhc wrote:Yes, you are absolutely correct it was 100% pure luck
On Luck, Seneca (4BC-65AD) wrote:Luck is what happens when preparation meets opportunity
Well, I wasn't talking about this kind of luck. This isn't actual "luck" imo :) But thanks for the nice and informative reply!

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Post by rossb34 »

Trading Leech,

You can trade with $10,000.

You can't trade as many products and be as diversified as someone with $1M+. You need to watch out for commissions and account fees eating away at your account. But you can trade!

I am in a similar situation to you. I have a "relatively" small stake for trading of around $10,000. I am only a few years out of college and into my first job that pays well, so I have plenty of time to save, build my account, and learn.

I may not make a lot of money these first few years even if I have a CAGR of 10%, but I will learn my systems, learn from mistakes, and will develop the discipline to trade systematically. It is an easier pill to swallow if I make a mistake that costs me 0.5% of $10k than a 0.5% mistake of a $100k account.

I did a trial of Trading Blox and was absolutely blown away by how powerful it was for system design. I would LOVE to purchase Trading Blox, but can't justify 30% of my account for the purchase. My solution is to build my systems in excel and R. It takes MUCH more work and is slower than trading blox, but it does the job for me. I also feel that what I have learned by struggling through coding systems from scratch is invaluable and will pay off in the future.

Look into Oanda for FX trading. The spread is 1 or 2 pips on most majors. The granularity in position sizing is perfect for us small traders. I can put on a EUR/USD trade with 1 unit and the move is $0.0001 per pip. Disclaimer: I have an account with Oanda. Check out ETFs that are offered commission free by several discount online brokerage firms. Commission free trading is very important for a small trader.

You can trade with a small account. You just need to understand the limitations and find solutions to those limitations.

Roundtable Knight
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Post by babelproofreader »

Sorry to be imprecise in the wording there. No, of course, they can't move the external market, but they do widen the spreads to catch the stops. Google IG Index and/or Capital Spreads for recent reviews. Would, in turn, be curious to know which direct access spread betting firms you'd recommend.
This is NOT a recommendation as I have had no dealing with either, except for a telephone conversation with a sales rep from one, but two DMA spread betting firms I know of are Prospreads and Fpmarkets. I suggest you do your own due diligence.

Roundtable Knight
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Post by rhc »

Trading Leech wrote:Well, I wasn't talking about this kind of luck. This isn't actual "luck" imo
I suppose you can define ANY word to mean whatever YOU want it to mean. (as can I)

President Clinton, at his impeachment trial famously defined the word ‘is’ to suit what he wanted it to mean
From wiki;
Clinton said, "It depends upon what the meaning of the word 'is' is. If the—if he—if 'is' means is and never has been, that is not—that is one thing. If it means there is none, that was a completely true statement"
(obviously taking tips from Greenspan!)

He was also able to define what the words ‘sexual relations’ meant to HIM.
(According to his definition, he did NOT have 'sexual relations' with THAT woman !!)

Personally I find the words ‘death’ & ‘dead’ a bit too hardhitting & sad :cry: and as such I prefer to use a different definition for myself . . . . “Poor old Mr Tomkins, he’s now Electroencephalographically challengedâ€

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Post by M20J »

ifyousayso wrote:Spread betting? Sounds to me like a good way to run through 10k. Not legal in the US afaik, but in the UK the main outfits (IG Index, Capital Spreads, etc) are infamous for moving the market against high rollers to stop them out. Might as well just go to a casino.
I used to be extremely sceptical of spread betting companies until I accidentally ended up sharing an office with the CEO of one of the smaller ones. I was surprised not just by how straight they were with their punters but also by how much they genuinely cared whenever one damaged their account. Generating new customers was a continual effort for them. They would much rather have had a winning customer they could make a good long term return from than just ripping them off for a quick profit and driving them elsewhere.

Of course, that's not to say that all spread betting companies are cuddly and friendly - undoubtedly there'll be some sharp operators out there. But I certainly wouldn't discard spread betting as a solution out of hand.

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