I want to get started with stock trading and I was wondering what is the best amount of money to start with. I was wondering if $100 would be good enough to begin with. Also which would be better to make more money from would it be the forex market or the stock market. Thanks
If you're going to pattern day trade in the US, you'll need to keep a minimum of $25k in the account to do so. http://www.sec.gov/answers/patterndaytrader.htm I'd consider an index fund with a discount broker if $100 is your starting point. And add to it as much and often as possible.
$100 is no where near enough for trading, as the commissions alone will eat out all the money you will have a chance to win. If you are at $5 per order, you'll already lose 10% of your capital on just the fees. Even with $1000 (where the commission has less effect when talking about percentages) you are pretty much limited to doing one trade at a time and everything you have will be in that one trade... constantly.
So what would you guys say is a very good recommended amount for a starting trader to begin with because whatever there amount I think that I will be able to save it over time so that I can begin trading so if you are able to give me a figure then think that I will be able to work toward saving it.
I'm not really the trading type so it's hard for me to put into perspective the amount of diversification traders usually use. (if any) It also depends on the amount that you pay commission for each trade. Commission should definitely be under 1%... so if it's $5 per order then don't start with less than $1000. That is $1000 per trade.. so you probably want that 2 or 3 times so you can grab multiple stocks/instruments when needed.
If you'd rather let your money sit and make slow gains, then you can put in $500 to $1,000, but you can't expect to see major gains because you won't own that many shares. I once turned $100 into about $300 in a few months when I had very little to invest. I use a discount broker with no fees (Loyal3), so I can invest whatever I want from $10 and up without worrying about losing money to commissions. However, you can't short sale or make tons of buy and sell orders too often. I'm not big on investing, so I'm fine operating with relatively little money. Real investors will tell you that you need to start with a lot more than a few hundred, and they're right in most cases.
So basically I should try to save more then $3000 to get started then because if I start when I do not have enough funds then I would be limited in the amount of trading that I could do right?
Pretty much, if you're short on funds it doesn't really matter if you are thinking properly or not because you'll not be able to invest.
To put it plainly, get started with whatever you are willing to lose. If those $100 make you think twice, don't even think about investing them, use them for what you need, but if they are just play-around money then it's enough to get you started and testing the waters.
