Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
With $1000 you have very little wiggle room until you are ruined. You can have a winning strategy, and if you are underfunded, you still may get ruined, just due to random chance.
If you had $2,000, and still traded 1 contract, you odds of survival (assuming you really have a winning strategy) go up a ton.
Here is an example:
Let's say you start with $1,000, and your "ruin" point is $250 (you can't open new trades if you have less than this). You win 50% of the time, and your net wins are $200, and your losses $150. Let's say you take 2 trades per day. A positive expectancy system, generating about $12,500 per year in profits. Pretty good.
In the first year of trading...
Start with $1000, you have a 23% chance of ruin (dropping below $250)
Start with $1500, you have a 10% chance of ruin (dropping below $250)
Start with over $2500, you have less than a 1% chance of ruin (dropping below $250)
That is why undercapitalization kills many new traders. They can't handle the inevitable drawdowns.
The risk of ruin is closer to 100% for someone that doesn't know what they are doing and that wants $500 or $1000 accounts.
Now what they do after they ruined is up for debate, perhaps they will learn from it... but I think most don't unfortunately.
The better question is why does this person want such a tiny account? Is it because they think they can turn that tiny account into something of value? Or do they really have a very large discretionary income and simply know that they will almost certainly lose all their money up front, and want to start small to begin the learning process?
Unfortunately I believe from experience the answer is usually the former.
When I joined this forum I didn't even have a sim account--My only experience was long term stock investing. I read all the threads about the various aspects MM, RR, psychology. They made sense and it all seemed like great advice but--
None of it really sunk in until I experienced it first hand.
So I think if budfox wants to risk $1000 trading ES - maybe money well spent
Im a beginner also, I loose my 5000$ account, after being a winner during 3 months in SIM. I've never felt that feeling in my stomach and my back and it also hurts me. I had really pain in my back during the next 2 months because my nerves. You can not understand why can win in SIM, and then REAL blow your account.
You need to feel this, better with a small account, though. But prepare yourself at SIM and had to know you will lose your money. Trading is like that, learn about theese feelings and maybe with 1 or 2 years more after loosing your account training simulated you can try again with a bigger account, 5000 or 10000$. Who knows, if we prepare well and fight again exciting and could be more patience will be winners some time...
i went through a very stressful period when I started live trading also-- i would enter a trade and I would have to get up and leave my pc--i couldn't watch it--i would go do situps--brush my teeth-- I'd be in the shower and I would hear-"stop filled" those were bad days---im over that now- so i trade mostly in sim but i do take live trades and can sit there without issue--why? risk management -- and I guess some stress management