The 20 grand will not make you trade better, your focus and discipline
will make you trade better. I have seen newer traders give up hundreds
of thousands of dollars to the markets because they simply got in over
their heads. I will discuss brokers with you next and cover the
practicalities of trading a small account.
You can get more money to trade with from yourself and your development
as a trader. I urge you not to rush the process or you will loose.
Greed and fear are what ruin traders. The Greed and fear of others
creates some of our best opportunities as professional traders.
You don't need margin right now...you will be able to get it when
you do need it and when you are truly ready for it. Your credit cards
will give you a boost alright...they'll push you right into bankruptcy
if your foolish enough to use them for trading capital. You cannot trade
successfully with borrowed money, it needs to be risk capital or your
emotions will affect your trading.
--->where can I get more money to trade with?
Here is how I suggest that you handle a $2000 account. First I would
scan the market daily after the close for stocks that I can afford to
trade with such a limited account. Yes, your opportuniteies will be
limited, but that can be a good thing for inexperienced traders
(too much rope can lead to hangings).
Second, I would never risk more than 2% of my trading capital
(2% of $2000=$40). This means that you never risk more than $40 on
each trade. I would commit to never loosing more than $120 in a day
(this would be three trades a day because 40x3=120). If I did loose
on three trades in one day I would stop trading until the next day.
I would set a loss limit for the month at $300. If I were to hit this
$300 max loss I would then stop trading until the next month and use
this time for evaluation of my trading journal(I don't want to hear
anyone tell me that they do not have a trading journal). This is all
part of risk management which is a huge part of successful trading.
On the upside, if you were able to average 10% a month you would
increase your trading capital to more than 4400 your first year,
9680 your second year, 21,296 your third and 46,851 your fourth.
Now after your second year and certainly by your 4th, you would
be well prepared to do whatever you want and you will have plenty
of risk capital to do it. If, on the other hand, you get in over
your head, you'll loose it without a doubt...take your pick.
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