Trading is a business and like any business, you need capital to start.
One of the questions we hear at Netpicks is literally, “Can I trade with $1000 and make money?”
You don’t want to hear a marketing pitch but you want the truth and the truth is very simple:
“We don’t know”.
Can it be done? Sure it can. There are traders out there that started with low capital amounts and were able to turn that into a profitable trading career.
Is it probable?
That answer is no.
Most traders, whether their starting capital is $1000, $5000, or virtually any amount, will never find lasting success trading the markets.
While capital does play a part, winning at trading takes more than just money. Traders often fail for reasons other than their available trading capital:
- They fail to master any trading strategy
- They fail to recognize that risk management is vital in trading
- They fail to get a handle on the psychological factors that will affect how you trade.
Now that I have that disclaimer is out of the way, I will offer you a more optimistic viewpoint.
YES, it can be done. There are steps you can take where you can trading with $1,000 and get on some type of successful trading path.
How To Trade With $1000 And Have A Shot At Trading Success
Here are 4 steps to focus on when you are starting to trading with limited capital. While it may seem to be a hard road (it will be), don’t let that deter you from following your dream.
Choose Your Market – Forex
Forget trading futures as your starting point. Trading the Forex market as a retail trader is the route you are going to want to look at for a variety of reasons.
When trading Forex with a $1000 trading account, you are not stuck in the day trading grind (trading the intra-day price movements and closing positions by end of day).
In fact, unlike Futures where you will have an increase in margin for overnight positions, swing trading Forex (carrying positions through a full swing in the market – usually 1-14 days depending on time frame focus) does not require the same monetary commitment.
The Forex market, although unregulated by an exchange, does have strict rules in place for the brokers. You will want to ensure you find a Forex broker where you can trade at least 1 micro-lot.
Micro Lot = 1000 units of the base currency in a Forex pair.
Trading a micro lot with $1000 in your account will allow you to use just enough risk so you don’t blow out your trading account with a string of losers and you may build your account. At this point though, don’t get caught up that you are trading a small position size. Getting on the right path in trading is far more important than building your trading account at this time.
Positions size = Simply the size of the position you are holding while trading a particular market.
You also want to make sure your broker is not charging obscene spread costs with wild increases in spread during volatile news events. Generally, an average of 2.5 is acceptable although with some brokers, you can get lower than that.
Invest In Yourself And Trader Training
There are key elements to success, whether you are trading small or large, that cannot be overlooked or you will skew the odds directly against you as you trade.
You have to do research and choose a trading strategy that suits you and one that you can learn. Keep it simple at this point (a simple trading strategy can work and is more robust than one with too many moving parts).
Build trust in your trading strategy through manual back testing. There’s no substitute for this important first step. I call it the ‘ditch-digging’ of trading because in order to create a strong foundation, you have to dig ditches to pour the concrete.
Back testing will give you the preliminary knowledge and understanding you need for your chosen market(s).
You need to do the necessary research to create a trade plan that gives you a winning edge in the market trading Forex. Whether you are swing trading, day trading or a combination of both, you need to have a trade plan that puts the odds in your favor on every trade. Without one, you’re dead in the water.
This is an acquired skill. You might think you can sit in front of your charts consistently, day in and day out, and follow your trade plan. It might look easy when browsing charts when the market is closed. Doing it for real is an entirely different thing.
Can you do it?
Only you can answer that and it won’t be answered with words. It will be answered only with your own actions.
Make sure you spend all the time and effort necessary to PROVE you are a disciplined trader or you will NOT succeed with a $1,000 account or even a $1,000,000 account.
So many traders fail to realize how important this is. Can you elevate yourself above your forest or are you a trader who is constantly running around among the trees trying to avoid getting crushed by those that fall. You have to trade the edge that your trade plan gives you and NOT worry about whether a trade wins or loses.
They will. Both will occur.
When you trade with $1000 in your account, you will only succeed by trading the edge
If you have achieved discipline and the proper perspective, you should be capable of employing the proper money management05 techniques required to trade a $1,000 up to a substantial sum.
Patience and Professionalism
Treat your trading as a business. Be the facilitator of your trade plan and the operator of your trade business. Learn to “lean on your trading system” and let the edge of your trade plan do all the heavy lifting. Success will take time so get ready for the long haul.
Give It A Go With A $1000 Trading Account
If you have accomplished the above, you will be in the best possible position to succeed while trading with $1000.
Can it be done?
Can YOU do it?
Why are you asking me?
Only you can answer that and that can only be answered by doing it. Forget words. Words are cheap. Your actions and deeds will reveal the answer over time. Prove it by doing it.