How Much Money Do You Really Need to Start E-Mini Trading?

To read some of the success stories I see being bandied about you should be able to start futures trading with $1,000 and have it transformed within a year to a sum topping six figures. I certainly am not saying that this feat is impossible, but I have never seen it done and have never met another trader who has seen it done. As a trader who is relatively new to the markets, the chances of taking a highly leveraged account that is undercapitalized and expecting anything short of a trading belly flop is delusional thinking.

I have written on this topic before and have since changed my mind on some of the ideas I previously presented. With added volatility, at least added volatility in a scalping sense, it has become difficult to trade with tight stops and widening stops ends up violating every money management rule that has ever been written. With a $3,000 account you could well end up risking 10% of your account on a spike or trading stops that exceed your trading plan’s “at risk capital per trade” rules. I recommend risking 3% and no more than 5% on any single trade. In a highly random market it’s hard to stay anywhere near those parameters with a small sized account. If you set your stops at the appropriate levels you have too much money at risk, and if you decide to go the “tight stop” route you can count on becoming the “stop-out king.”

So, how much money is right to start trading?

I used to feel confident recommending $5000 to start an account and restrict your trading to the $5/tick e-mini contracts, specifically, the NQ and the YM. After some time has passed, I believe a more appropriate starting trading balance should be $10,000. The traders who seem to have the least worries about profit and loss tend to succeed at a higher rate than individuals in small account, and the added cushion in the trading account seems take the pressure off. Trading an undercapitalized account puts tremendous pressure on the trader to win. Pressure is something you don’t need in trading.

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