Hello everyone, I've got a question about actively trading with small amounts of money. I should quickly mention here that I am very well versed in the universe of passive investing, my retirement plans are well taken care of, and am looking to try an active approach with some excess capital.
One of the things I have learned is that risk management is very important. For example, I have read that it is a good idea to risk only 1%-2% of available capital on any one trade so you have the other 98-99 trades to stay alive during drawdowns.
Is it possible to get anywhere with small amounts? I'm talking about capital of $1000-$3000 (depends on brokerage minimum deposit amount). Using risk management principles of 1%-2% risk per trade would mean anywhere from $10-$60 invested per trade. What kills me is if we assume a trade commission of $5, that means I would have to make gains of anywhere from 8%-50% just to break even! (Math: $5 is 50% of $10 trade, $5 is 8% of $60 trade).
Do you have any advice or recommendations for me about how to go about actively investing with a small amount of capital? Thanks!
EDIT: If it's helpful I'm considering a wide range of markets to get into, so I'm not just interested in the stock market. I've thought about currencies, derivatives, futures, etc.
Submitted September 17, 2017 at 01:22PM by logicson http://ift.tt/2wmtVvl
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