As a full-time trader and educator, I am often asked the question "How much money do I need to start day trading?" The answer to this question is not as simple as it may seem. The amount of money you need to start day trading will depend on several factors, such as your trading style, the asset you want to trade, and the trading platform you use. In this article, I will explain how much money you need to start day trading and why you can start with as little as $100 if you choose to trade crypto.
What is Day Trading?
Before we dive into the question of how much money you need to start day trading, let's first define what day trading is. Day trading is a trading style where a trader buys and sells securities within the same day. The goal of day trading is to make a profit by taking advantage of small price movements in the market. Day traders often use technical analysis to identify these price movements and make their trading decisions based on chart patterns, trends, and other technical indicators.
How Much Money Do You Need to Start Day Trading?
The amount of money you need to start day trading will depend on your trading style, the asset you want to trade, and the trading platform you use. Here are some general guidelines to help you determine how much money you need to start day trading:
Trading Style: Your trading style will have a significant impact on how much money you need to start day trading. If you are a scalper who aims to make multiple trades within a day, you will need more capital than a swing trader who holds trades for several days. Scalping requires a high level of precision and speed, which means you will need to have enough capital to cover your trades and pay for commissions and fees.
Asset to Trade: The asset you want to trade will also impact how much money you need to start day trading. Stocks, for example, require a higher minimum investment than forex or crypto. This is because stocks are more expensive, and you need to buy whole shares. Forex and crypto, on the other hand, allow you to trade fractional units, which means you can start trading with a smaller amount of money.
Trading Platform: The trading platform you use will also impact how much money you need to start day trading. Some platforms require a minimum deposit of $10,000 or more, while others allow you to start trading with as little as $100. It's important to research different platforms and find one that fits your budget and trading style.
Why You Can Start Day Trading with $100 in Crypto
If you want to start day trading with a small amount of money, I recommend trading crypto. Crypto is a highly volatile asset class that allows you to trade fractional units, which means you can start trading with as little as $100. Here are some reasons why crypto is a good option for beginner day traders:
Low Barrier to Entry: As mentioned earlier, you can start trading crypto with as little as $100. This makes it an accessible asset for beginner traders who want to test the waters without risking a lot of money.
High Volatility: Crypto is a highly volatile asset, which means it experiences large price movements in a short amount of time. This provides ample opportunities for day traders to make a profit by buying low and selling high.
24/7 Trading: Unlike other assets such as stocks, which are only traded during certain hours of the day, crypto can be traded 24/7. This means you can trade at any time, which provides more flexibility for day traders.
With the right education, strategy and risk management, it's possible to turn $100 into something more significant but you must have realistic expectations. You will not become a successful trader over night. It takes time, patience and dedication.
Here's an example of how I turned a $100 challenge account into $1000 using the methods I teach in under 3 months.
Tips for Day Trading with a Small Account
If you decide to start day trading with a small account, there are some tips you should keep in mind to ensure your success. Here are some tips for day trading with a small account:
Manage Your Risk: When day trading with a small account, it's important to manage your risk carefully. You should never risk more than 1-2% of your account on any one trade. This will help you to minimize your losses and protect your account from blowing up.
Start Small: When you first start day trading, it's important to start small. This means you should only risk a small percentage of your account on each trade. As you become more experienced and profitable, you can increase your position sizes.
Use Stop Losses: Stop losses are an important risk management tool that can help you to limit your losses. A stop loss is an order to sell a security when it reaches a certain price. By using stop losses, you can limit your losses and protect your account from large drawdowns.
Keep Your Trading Simple: When day trading with a small account, it's important to keep your trading simple. You should focus on a few key setups and strategies and avoid overcomplicating your trading. This will help you to stay focused and make better trading decisions.
Conclusion
In conclusion, the amount of money you need to start day trading will depend on several factors, such as your trading style, the asset you want to trade, and the trading platform you use. If you want to start day trading with a small amount of money, I recommend trading crypto. Crypto is a highly volatile asset that allows you to trade fractional units, which means you can start trading with as little as $100. However, it's important to manage your risk carefully and keep your trading simple to ensure your success.
About the Author
Spitty is a full-time crypto, forex, and stock trader, as well as an educator at Spitfire Traders. With years of experience in the trading industry, Spitty has helped numerous students become consistently profitable full-time traders. He is a firm believer in using technical analysis and avoiding the use of fundamentals or news events. He also avoids using indicators and does not trade breakout strategies. His trading style is focused on scalping and swing trading using chart patterns, trends, and other technical indicators.
As an educator, Spitty emphasizes the importance of risk management and keeping trading simple. He encourages his students to start small and focus on a few key setups and strategies to avoid overcomplicating their trading. His goal is to help his students achieve financial freedom through trading and become successful traders in their own right.
