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What is the minimum account you recommend to start day trading?

Before I even answer this question, please note that trading should not be carried out with “scared money.”

Scared money is money that a trader cannot lose because it is needed for something else; for example, money needed to pay the rent, money needed to feed the family, money needed to pay the bills, cash advances from credit cards, money obtained from loans, etc.

Day trading should be done with risk capital; money that can be lost without permanently altering the financial condition of an individual and/or his loved ones.

There are two types of people that ask the “minimum account” question. The first type does so because they have very little capital at their disposal; the second type because they don’t understand the trading business well and want to start with the smallest possible amount for fear of losing it all.

I think that both of these types of people are mislead.

The first type should not be trading in the first place. As I mentioned before: trading is for money that you CAN afford to risk. If you have very little money to your name, you should not be risking it by trading.

Despite the fact that currencies can be traded using an account with only a few hundred dollars, I don’t recommend for anyone to do this if they can’t afford to lose the money. Understand the reason why I say this; it is not because trading is a guaranteed way to lose, but because a person cannot perform at an optimum level with the dreadful thought of losing in the back of their minds.

The second type of person might actually be taking more risk by trading with the minimum amount required by the broker rather than the proper amount he NEEDS to trade with. “Wait a minute”, you might say; “Did I hear you correctly?

“If you day trade with less, you are taking more risk?” Listen to me for a minute…

When trading, you should not risk too much on any single trade (read the risk management section for more). In order for you to do this you need to be able to use only a portion of the trading capital in your account. If you hardly have any money in your account, how can you divide the money properly to efficiently size your positions?

You can’t!!!

It is better to deposit $15,000 in an account and risk $300 than risking the same amount using a $2,000 account.

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