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How Much Money Do You Need to Start Day Trading?

Writer's picture: Anthony SpecialeAnthony Speciale
Speciale Analysis

Hey Trader,


How Much Money Do You Need to Start Day Trading?


One of the most frequently asked questions I get from new traders on my YouTube channel is: "How much money do I need to start day trading?"


I've been day trading for over a decade now. Let me tell you, day trading is not as easy as downloading an app, depositing $100, clicking buy, and waiting to get rich.


I wish it were that simple!


In this article, I'm going to realistically discuss how much money you should start day trading with as a beginner. We'll break down three key factors you need to consider depending on your situation, so you know exactly how to get started.


Overview


Let's start with the basics. Generally speaking, when opening a brokerage account to start trading, there are two groups of people: those with over $25K to start and those without. This is the #1 factor to consider when planning to start day trading.


When I first started out, I definitely didn’t have $25,000 lying around. Trust me, I checked. I fell into the second group. For now, let's focus on the 90% of us who didn't have $25K to start. If you’re one of the few who does, please stick around because the tips I'll share are crucial regardless of your starting capital.


1. The PDT Rule


If you're in the United States or using a U.S.-based broker, you might be subject to the Pattern Day Trader (PDT) rule if you're trading with an account under $25K. The PDT rule limits how many trades you can place if your account is under $25,000, allowing only three day trades in a consecutive five-day period.


If you're starting with less than $25K, this rule applies to you. It can be frustrating, but there are ways to navigate around it. However, if you're trading outside the U.S., the rules may differ. For example, in Canada, using brokers like Interactive Brokers, TradeZero, or Questrade, you won't face the PDT rule even with less than $25K.


2. Market Tuition


Instead of asking how much money you need to start trading to make $100 a day, think about how much you need to learn about the markets in real-time. Day trading is a lucrative career but only for those who are experienced and educated.


From my experience, new traders should start with a minimum of $4,000 to $5,000. Anything less than $2,000 is too little. This initial capital is your "market tuition," used to learn and gain experience, similar to paying for college to learn a skill.


Consider this money as an investment in your education. You will use it to cover commissions, live market data subscriptions, short locate fees, and small mistakes that cost $10 to $20 each trade. It's essential to focus on learning first before thinking about making money.


I highly encourage new traders to find a mentor or join a community of traders to learn from, just like you would in college. Check out the Speciale Analysis Family of Traders.


3. Do Not Start Trading With Your Entire $25,000


This advice is for those who do have over $25K to start. While it's great to avoid the PDT rule restrictions, you should still start small. Risk small amounts at first to learn the ropes. The worst thing you can do is start trading with large sizes and suffer significant losses.


Even with a big account, it's crucial to follow proper steps and maintain risk management. Brokers like Cobra Trading, CenterPoint Securities, and Interactive Brokers are good choices if you’re starting with a substantial amount of capital.


There Is NO Substitute For LIVE Market Experience


Learning to trade and making profits from day trading are two separate goals. As a beginner, your focus should be on learning and observing the markets, not on making money immediately. Whether you start with $4K or more than $25K, the key takeaway is to focus on learning before earning.


Day trading is not easy, and you will NOT get rich overnight.


If you're serious about this career, be ready to put in the hard work and treat it as a business. By investing in your education and approaching trading with discipline and proper risk management, you can set yourself up for long-term success.



Happy Trading,

Anthony Speciale

Speciale Analysis

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