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It depends on trading style and risk to reward ratio. The more drawdown you are likely to take, the bigger your account has to be no matter what. This is true for realized and unrealized drawdown. Traders Keep it tight and who chase smaller targets, can start with a much smaller account.
I'm hyper aware of this, most literature ive read has said similar aswell, but I feel like I need some kind of initial footing to get started.
Pulling the trigger in january to get started I think. Gonna trade super low volume and review each and every trade, so will probably have my journal here in the new year.
Nah, I could do it. Start up plane, take off, land. But I do agree this is a difference when your ass is in the seat and not a computer chair. Same with trading. Real cash will always be different than sim.
Flying is a good analogy for trading. I have flown for real. Cessna 172. The thing that makes a good pilot (a lot of things make a good pilot but as it relates to trading) is many small corrections over time. You never want to be in a position where you have failed to anticipate something and the system requires a major change to maintain trajectory (or lift in a worst case scenario).
My definition of successful trading is - 'living off the proceeds'
I therefore selected $50-$250k. $50k is too low - more like $100k minimum - depends on your lifestyle costs.
Trading with a small account isn't going to pay the bills, so you need a large pot of money off to the side to pay the bills for multiple years while the trading account increases. Which essentially is the same as trading with a large capital account. Your equity is just sitting in a different place.
Trading is about survival - letting the law of large numbers play out. And this means low risk %. Low risk % = low income if your equity is low. Drawdown tolerance is way less than what you think it is. So assuming you can handle a 30-40% drawdown in real life and continue trading the system is wishful.
Cliff Asness of AQR is always in a panic that his strategies are a result of data mining or survivorship bias. So, no, don't even think about running backtest robustness tests with risk of ruin >20%. You'll see to make liveable money, while not having a heart attack, you need a ton of different systems (to diversify the risk, and smooth return) and a lot of time to let the multitude of various equity paths play out and get near the 'average' of your backtests. And that's assuming you can rely on your backtests.
I think everyone should start with a small account and compound it up. But this isn't successful trading, as you are not living off the proceeds.
I lasted 50 days in the e-mini trading a $1500 account. Well, actually I traded until I lost $900 and $500 is required for day margin so I just stopped. I knowingly went on and violated common sense risk parameters (1%-2% rule, I was risking 3.3%/1 point/$50 with every trade the last 2 weeks, the 1st 2 weeks would be abysmal to you pros). I went on ahead knowing that the whips on the e-mini were/are too mean for my acc. size. My strategy was vague and I was undisciplined. Every entry gave me a heart attack and every winner was amazing. My approach was a form of sophisticated gambling. It was a total shit show but I got valuable experience- what it's like to trade real money, and how much I love trading (uh oh).
So it's safe to say, for me $1500 is not enough. Maybe if I had deposited $1500 more and had 10 more IQ points and and monk level discipline it would be sufficient. The answer to this question is simple, annoying and expected. Nobody knows. People can give you a rule of thumb and say the lower your account size, the higher chance of ruin. I'm not going to go balls deep (technically or mathematically) into this topic like others have and frankly I don't have the merit or motivation rn, but really there are too many variables to consider. You can't quantify a traders psychology (which has a huge impact on trading performance/outcome). Strategy, risk management, market conditions matter, there's just too many things. The reason it's hard to answer this question is exactly why trading is hard. Uncertainty is hard.
Despite seeing majority of people saying you need $10k-$50k to trade successfully, I'm gonna go ahead and trade 5k in the future after I develop the discipline and whatever else it takes to become profitable. Minimum starting funds to learn to trade = perseverance. If anyone reading this reply has become consistent with 5k or under let me know. I wanna know you.
Hey man I was LITERALLY in the exact same situation as you. I had $1500 and I was gonna try my hand at the ES. I come from trading stocks, so I have experience and I have a pretty good head on my shoulders in terms of psychology/discipline. Even with proper psychology, and a strategy, I got decimated with my tiny account. The ES is honestly just not for a small account in my opinion. You simply can’t get away with risking 1 point, you have to risk at least 2 I would say and even then... that’s $100 risk on a $1500 account. Not the greatest. I was catching the tops of big moves in the ES going short as they almost fell. I would get stopped out by 1 point and then it would proceed to collapse. That really threw me for a loop. It was mentally exhausting. I switched over to the NQ and I’ll never look back to the ES. it’s much more friendly in terms of tick value, and though it is less liquid, the chart is much “smoother” looking if you get what I mean. I’ve been doing so much better since I went to NQ. In terms of psychology, I hope you’ve read Trading in the Zone by Mark Douglas. That book changed my Trading forever. If you’re really passionate about becoming a better trader, consider going to see a psychologist to discuss your mental issues regarding it. I did that, helped me understand my behavior a lot.
That's why I was thinking about trading with $5k in the ES. I could be extremely selective with my trades via top to bottom analysis of charts looking for synchronicity: let's say the daily is bearish, the 10,000 tick chart is forming a head and shoulders and the 500 tick is mirroring the 10,000 tick to some extent. I could add more variables/barriers to enter- I could do all sorts of things to fish out higher probability set-ups/trades. I'd be able to risk 2 ticks, 2% with this slightly bigger account. Not to say this approach would work as I'm being very vague, just throwing something out there.
I've had thoughts about switching to the NQ.. $20 a point, $5 a tick. It's realistically my speed, and I probably should trade it instead. Right now I'm back in SIM and I'm testing in the ES. I've got plenty of time and I've got capital to build. I have to work on my personal life/rid myself of some bad habits and just bad ways of being. It's strange reading the similarities, as I religiously have read that book. The thing that resonates with me the most is the importance of accepting risk. I'm in the process of change and am looking for the consistency and stability in my trading, as well as intrapersonal stability. I've read that trading life and personal life are intimately connected and I believe it. As for having a psychologist, I do tons of self work. If I'm unsuccessful in my own efforts I'll take your advice. I believe I'll come out on top.
