4 Replies to “How much Money do I Need to Trade Options, Stocks, Forex, Penny Stocks…?”

  1. Hello friend,
    Thank you for this post about how much one need to be able to do trade option. Actually I have heard about Forex Trading, and I have some small knowledge about how it works, but today you have really educated me, I can say I have learned some new things about Forex Trading.

    For example, I never knew that the amount of money needed to be able to start or trade a stock is quite higher than that of penny and even Forex Trading. I now know the difference, and how much I need to put in to be able to Trade any of these options. Thanks for that.

    Some time ago, I was doing research on the best and most Legitimate Broker to start Trading with and then I came across X-Trade. I even sign up with them, who told me that I can start Trading with $100 dollars, but I want to find out from you, do you know anything about them, and will you recommend them to me as good brokers?

    I will be happy to hear from you.

    1. Hey Stephen,

      First of all thanks for the comment. I am happy to hear that you learned a few new things. As sorry as I am, I have never heard of X-Trade and thus I can’t recommend them. But if you want to know which brokers I do recommend, you can check out my broker reviews and recommendations HERE! It seems to me that you are interested in all asset classes and don’t want to limit yourself to one quite yet. Therefore, I would recommend a good all round broker like Ally Invest to you. You can read my review of Ally Invest HERE.

      If you have any further questions, I would be happy to help.

      Louis

  2. Thanks for you enlightening article about the amount of money required for trading in different products.
    One question that it raises for me is that if my account starts small, say $2,000 dollars and I should only place 10% of it or less on any one trade, in this example $200. Does this include the placement fee which could be as much as $20 to open a trade and $20 to close a trade? I did a little trading in the past and discovered the lower amount you trade the higher the fees become as a percentage. So profitable trades were being wiped out by the fees. I am not sure how to handle this as I want to get back into trading shares and FOREX. Your advice would be appreciated. Alan

    1. Hey Alan,

      Thanks for the great question. The bigger your trading account, the better. Bigger accounts give you more freedom. Your commissions will be lower, you will have more rights (e.g. margin trading) and you can have bigger positions which allows you to trade in more assets/securities. Therefore, finding a good broker when trading with a small account is important. Your example with 20$ to open a trade seems like a lot to me. I have a list of reviews of recommended brokers that all don’t cost close to that. You can check out the broker recommendations HERE. To give you a perspective, one of these brokers (tastyworks) only charges you 5$ for a stock opening trade regardless of how many shares. All closing trades are free of commissions at tastyworks. 

      So summed up, yes commissions can be harder to handle in smaller accounts and in general trading is a little more restricted in small accounts. But if you pick a good broker, commissions shouldn’t eat up all your profits. If your commissions are as low as a few bucks, it doesn’t really matter if you include them in the 10% or not. 

      Additionally, I trade options and position sizing in options is probably even more I portent than position sizing in stocks (because it is not too unlikely that you lose your entire investment and more with options).

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