Inside
the Day Trading Revolution
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How Much Capital is Required?
Start-up capital requirements will
vary significantly according to your appetite for risk and
the rate at which you are able to learn the business. At a
minimum you will need capital for training, equipment, and
living expenses during your training period. Additionally
you should probably assume that you will lose a moderate to
significant amount of money on your early transactions as
you learn the rules of the business through trial and error.
This will add to your total up-front capital requirement.
After start-up expenses, you will need to have enough capital
left over to generate trading profits sufficient to cover
your living expenses if you intend to pursue trading as a
full time profession.
Most experts estimate that in order
to make a living at Day Trading, a trader must begin with
a minimum of $10,000 to $25,000. Some argue that the start-up
capital range should be closer to $75,000 to $100,000. Either
way, it is large amount of cash to put at risk. Of course,
most Day Traders begin with sums far less than this - which
is one of the reasons that few Day Traders actually generate
enough profits to make a living through their trading activities.
A recent study by the North American
Securities Administrators Association suggests that up to
70% of Day Traders are losing money - a statistic that leading
Day Trading advocates vehemently disagree with. However, there
seems to be general agreement that few Day Traders are getting
rich. The reasons for the marginal performance of most Day
Traders are numerous. To begin with, most Day Traders tend
to be young, inexperienced and poorly capitalized. In addition,
there is an enormous element of uncertainty and risk in trading.
And while all traders are exposed to this risk, the poor judgement
of inexperienced traders tends to result more frequently in
costly mistakes.
The fact is that anyone can dabble
in Day Trading with modest amounts of money. Most industry
experts agree that you should never allocate money to Day
Trading that you cannot afford to lose. This means that unless
you are independently wealthy, you should enter this arena
with a considerable amount of caution and financial restraint.
It is adviseable to learn as much as possible before actually
putting any money on the line. We have included links to a
number of important and relevant Web sites to assist you in
this process.
What
are the Basic Concepts and Strategies Used by Successful Day
Traders?
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