May 15: How Understanding Your Start-up Costs Can Put Your Trading Career On Track To Make Millions

by Dave on May 15, 2006

One of the most commonly asked questions that I receive is `How much do I need to actually start trading and make a full-time income from it?` This is a good question, but there are more costs to starting trading than simply setting your trading float. (By trading float I mean the amount of capital that you have to trade with.) When you first begin trading you`re going to have to pay a sort of tuition.

There`s a learning curve that you`ll encounter when you start trading. Don`t try and skip this, just make sure you prepare for it in advance. The best way to do this is to treat your trading as a business. Any business, including trading, requires start-up capital.

First, look carefully at where you`re getting your money from. Maybe you`ve been considering trading for a while and built up some savings. That`s good planning. Or maybe you`re considering borrowing money. This is generally a bad idea. Maxing out your credit cards is a quick and easy way to get cash, but the effects can be devastating. It`s hard enough to worry about making trading profits without worrying about the debt servicing on your credit cards as well. You will be too concerned with making payments to be concerned about good trading. Don Miller talks about this in Trading Markets World Meet the Traders, when he tells new traders to worry about trading well, not making money. One of the best ways to learn trading is to begin on a part-time basis. This allows you to hone your skills while you still have an income stream.

Unless you`re trading from an office, computers, data-feeds and software are all a part of start-up costs. Of course, the costs for a trader don`t end there. You also have draw downs, which are a part of doing business. There are going to be times when you lose money for a long periods, count on it and make sure you plan for it.

In terms of growth, would you expect to purchase a business for five thousand dollars, and see it turn over one million dollars in the next financial year? Yes, this is achievable. But, it`s not very likely. The same can be said with trading, particularly when you are starting out. Don`t come to the market with five thousand dollars and expect to turn it over to one million dollars by the end of the year. Don`t base your financial decisions on this idea.

However, the return you achieve does depend on what products you decide to trade. If you are trading leverage products, you`ll have a greater chance for reward, but there is more risk involved with trading these types of instruments. And, though there is no perfect amount of capital to start trading with, generally the bigger the trading float you begin with, the easier it is to trade.

The key here is to simply define how much capital you`re trading with and have it set up as a separate business. That way you`re not drawing on the profits all the time and losing your focus. Remember, your trading is a business now. With your trading float defined, and your trading system and money management rules in place, you will be able to run a profitable trading business.

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This article has been extracted from David Jenyns` Trading Secrets Revealed Course. Unfortunately this course is currently sold out. To be notified if and when extra copies are released, please send us an email and we`ll let you know when you can purchase a copy of this highly recommended course. Click Here and send us an email. and be sure to mention you want to be on the `Trading Secrets Revealed Waiting List`.

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