How much money do you need to start day trading?

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 I’m just going to break it to you.

How much money do you need for day trading
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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 article I'm going to be talking about realistically, 

  1. How much money you should start day trading? 
  2. What you should focus on with your small account? 
  3. When you first get started?
  4. A realistic time frame
  5. Goals you should set for you 
As a brand new beginner trader entering the market.

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Like I’ve mentioned many times before on this channel, day trading is a business, nota 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 ana ccount with at least $4K to $5K dollars.  That’s a small account.

 If you have less, that’s 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  trader just starting out, your focus should be on learning and observing the markets, not trying to make money.

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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, it’s 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.

What’s 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.

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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 observing the markets in real time.

And that’s why I said to treat that $4 to $5kas 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 that’s 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 an alumnus.

The point I’m 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 common, 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.

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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 its 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 a float for the first six months to a year, depending on how much screen time you are able to collect everyday 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 to11am market time before heading out to work here on the pacific west coast.

It really took me a whole year just to start understanding what’s 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 checkout 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 $500or $1000 account.

A lot of people think just because they are under PDT or don’t have the capital to day trade live, that means they shouldn’t 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. That’s 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 $500into a “insert a very impressive figure”, in six months. Right I’m sure there a people who can do that, but those are trader with5 to 10 years of experience.

They already know their set ups, how to read price action. As a day trading beginner with 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.

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