I voted for 250k+. This is because for me to trade my specific strategies, methods, and portfolios to get the type of returns I am looking for. Maybe you can make money with less, but it would not be viable to do it the way I trade. Honestly I probably could not do it for anything less than 1M. Sounds arrogant but its true. I would have severe position limitations that would destabilize my portfolio and have adverse results on my returns due to lack of risk capital.

I would stick to the rules of 1% max and if possible to risk even lower do it if you can.
Why because you want to be able to trade as much as you can to sample your results as much as you can.
Also what product are your trading?
What time frame?
What are your fees per trades?
For example (in my case):
Trading time frame : 1 min
Average stop size: 4-5 ticks
Product (for example):M6E
Average loss:5 ticks x 1.25 = 6.25 + 2.5 commission = 9
9 dollar x 100=900 dollars
So you can trade the M6E with 1000 dollar

I would also add that I would highly recommend that in this case you don't have more than 2000 dollar as safe guard to not blow more than needed
Revenge trade etc..
can harm you more than you expected.
The goal is to protect your capital first .



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Setting a risk limit of 1% is only one aspect of money management. What percent of your trades get stopped out at 4 to 5 ticks? Your expectancy is what will determine if you have a profitable strategy. If you don't win more than you lose, in the long run, you will wipe out your account. You can have more losers than winners and still make money as long as the amount you win per trade, on average, times the percent winners exceeds the amount you lose per trade times the percent losers.


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bradhouser 

Setting a risk limit of 1% is only one aspect of money management. What percent of your trades get stopped out at 4 to 5 ticks? Your expectancy is what will determine if you have a profitable strategy. If you don't win more than you lose, in the long run, you will wipe out your account. You can have more losers than winners and still make money as long as the amount you win per trade, on average, times the percent winners exceeds the amount you lose per trade times the percent losers. Sent from my iPad using NexusFi

100% of my trade get stopped out with 4-5 ticks max.
The question was the amount to start trading.
The expectancy is to be determined after a series of trades live.
The expectancy on sim and live are two different thing,emotions are different.
I gave a example of my situation,
If your trading time frame is higher of course your stop will tend to be wider.


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I'm not sure where being under capitalized ranks on the reason traders fail but I'll bet it is in the top 3.

I agree that the poll is confusing. What is trading successfully? If it means having a profitable system then a trader with an edge doesn't need a lot of capital. If it means being able to live off your trading gains then I think the more capital the better.

Maybe someone with a lot of experience can answer this situation. What would be the differences with starting with a 6,000 account as opposed to a 12,000 account? This would be for someone just trading the ES for the purpose of preserving and increasing capital. It seems to me the advantage with the 12,000 is that I can trade more contracts and be just a little less worried about drawdowns to margin call. But, when starting out, is trading more than one contract a good idea?

johny1971 

Maybe someone with a lot of experience can answer this situation. What would be the differences with starting with a 6,000 account as opposed to a 12,000 account? This would be for someone just trading the ES for the purpose of preserving and increasing capital. It seems to me the advantage with the 12,000 is that I can trade more contracts and be just a little less worried about drawdowns to margin call. But, when starting out, is trading more than one contract a good idea?

I don't have much experience but I don't see why anyone would want to trade more than 1 contract while starting out, no matter how big their account is.

The beginning stages of a trader's career are going to involve heavy losses and the priority should be on capital preservation. Trading more than 1 contract does nothing good for you in regards to capital preservation.

SoftSoap 

I don't have much experience but I don't see why anyone would want to trade more than 1 contract while starting out, no matter how big their account is. The beginning stages of a trader's career are going to involve heavy losses and the priority should be on capital preservation. Trading more than 1 contract does nothing good for you in regards to capital preservation.

I actually disagree. Size management is a very key lesson for new traders and it can only be done by practicing trading with more than 1 lot.
While it is possible one find an edge by trading one lot and successfully scale up with all in all out style, the restriction on potentials and possibilities is not worth the capital saved.

There is many other ways to achieve the purpose of capital preservation in the early stage: trade TST combines or trade smaller tick size contract like YM.



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I think most people underestimate the amount of capital needed that it takes to trade successfully if trading is your only source of income.

I have attached a spreadsheet of a trader making 100% per annum on a $100k account who wishes to withdraw $5k a month to live off. First example uses linear returns, i.e. compound interest at 6% per month which adds up to just over 100% per annum.

The second example uses more random returns, I assumed losing months of -1% and just increased winning months by 1% per month. Final month returns were obtained using a goal seek so that annual returns would be 100%. In the second example the account will have less capital in at than it had at the start of the year. The trader returned 100%, but is still down for the year! Remember that in real life monthly returns can be subject to big swings. It would be unwise to assume no one will ever have big losing months.

So, for each individual to determine whether they are sufficiently capitalised to trade full-time, anyone can just take their trading statements for the last 2 / 3 years and populate the spreadsheet I have provided with their monthly returns for that period, their current starting capital and their desired monthly withdrawals. Once that is done, they still need to have an extra withdrawal for taxes which may happen once or twice a year and perhaps consider reducing the monthly returns to add a level of robustness.

Once that is done, anyone can see how much capital is needed to trade full time. In my own case, I would not consider trading full-time with less than $500k, even if I average 100% p.a. for 2 or 3 years. Even if I could survive off my capital, I want the account to grow and $500k would be the minimum for me to entertain going full-time.

johny1971 

Maybe someone with a lot of experience can answer this situation. What would be the differences with starting with a 6,000 account as opposed to a 12,000 account? This would be for someone just trading the ES for the purpose of preserving and increasing capital. It seems to me the advantage with the 12,000 is that I can trade more contracts and be just a little less worried about drawdowns to margin call. But, when starting out, is trading more than one contract a good idea?

Your risk of ruin goes down a lot when you start with $12K vs $6K. Even if you have an edge, you still need a big enough cushion to stay in the game during inevitable drawdowns.

Here is a simple example... Say you start with $6K or $12K. Your system trades once per day, wins $500 fifty percent (50%) of the time, and loses $400 the other fifty percent of the time. Over the course of a year, on average you'd more than triple your money ($12,500 profit per year) - in other words, you have a solid edge. Let's say your quit (ruin) point is $4K ($2K loss from the $6K start).

If you start with $6K, you have a 32% chance of falling below $4K during your first year of trading. In other words, 32% chance of being ruined.

If you start with $12K though, you chance of ruin drops to 2%.

(my example is always just trading one contract)


That is why large enough starting capital is so important... if you are lucky enough to have an edge, you need to make sure you stay in the game!