As women, we probably know the cost of the next pair of shoes or handbag we want… but as a new trader is it unlikely we know exactly how much money we need! How much money is an important question asked by every beginner trader at the start of their journey. “How much money to start stock trading”?
I am going to explain how much money you would need to start trading. Plus, what steps you can take to save money for your first trades.
Technically, you can start your trading business account with just £100 (even less than this in some cases – depending on the trading platform you are using). Then you would ask yourself, is it enough to invest or do I need more? The answer depends on what you’re trying to do.
You can actually start off stock trading with just £100 in your account.
How much money is needed to start stock trading?
As i’ve said, £100 is a minimum for most stock trading platforms. It may be good enough to start, but will the returns be worth the effort? Or can you actually ditch your 9-5 job and depend on trading with such investments?
You cannot set up a trading income that brings in a £££ yearly revenue to live off from £100.
However, starting with low amounts can help you learn the techniques of trading, make yourself understand how and when to invest, improve your trading skills and polish your decisions based on previous wins and loss.
If you are just starting off, then stick to a minimum budget. This will allow you to grow gradually while preparing you for the trading market. Once you have grasped the idea of how much money to start investing in big trades, you can excel in the trading business and can earn big money over time.
Should I Save Money to Trade?
To be successful in the trading business, you need to understand some of the most significant points about how you can save money for investment. Because, you cannot play as a small fish for your whole life, to play big you would need a significant amount of money. So, it is vital to save money for trading. Let’s dig in and how you can play smart to cut off the extra costs and save money for trading.
- To save money, you will have to start small initially, consider the money jar approach where you will put in at least $10 per day in the jar. This may sound way too small to start, but at least you are starting. It is always important to start small in order to learn the mechanics of trading rather than going all in and losing everything at the expanse of no knowledge about the trading market.
- Always go for a trustworthy and reliable trading broker. One of the most critical decisions in the trading is to select a broker or a trading company that is worth trusting. The best online stock brokers are here and the best trading platforms are here. Make sure to complete your research before investing in your hard earned money into the trading company. Because, if you are going to invest your money into a company that is not established and has a bad reputation even if you win, you may lose your money.
- Interact with other traders, it is important to keep contacts with fellow traders as they can share their experiences with you as on how they started, or how much money they initially invested in Especially, if you are starting off a beginner, you must communicate with other experienced traders. Since, in the beginning, things seem quite confusing to let me investment amount, trading practices or risk management factors.
- Cut off unnecessary costs from your monthly budget – If you are good with your money management skills, chances are that you are going to save a sufficient amount of money for investing. It is crucially important to stay vigilant about your daily expenditure, make note of the daily costs and see which items can be cut off from the list. For instance, if you are spending extra amount on luxury items that are aren’t a need, then stop spending your money on them; can be clothes, makeup or other things.
An extremely important point to consider is that you should never invest or bet your money in trading that you cannot afford to lose. Always save up for extra money that can be used for trading. Because if you will invest the money that you can’t afford to lose then chances are that your personal and professional lives will be affected.
Another important aspect to look upon is whether you want to start trading as a full-time business or you just want to do it on a part-time basis? Your investment will be different on both scenarios. The demand for the different amount of money for investment, skills, time and risk management skills. If you’re wonder what time availability suits what trading styles, look here.
Recommended reading for new traders:
5 Ways to Save Money for Trading
Have you thought about using different money saving techniques to deal with unforeseen events? If not, then read along to learn about some of the proven money saving techniques:
Cookie Jar Savings
It’s the basic yet the most impactful savings technique. This technique comes in handy for sudden expenses. Consider this scenario, you need money repair your car in middle of the month – but you don’t have extra money. So, what would you do? Here comes the cookie jar savings technique, you will save at least £15 every day by keeping them aside in the cookie jar. You will save £450 per month. Using this approach, you can pay off such expenses, when needed. More so, what you don’t pay off for emergencies you have for investment!
Pay Yourself First
It refers to concept of savings before doing anything else. It’s a great money savings technique. Pay Yourself First means that every month a lump sum amount of money is deducted from your paycheck and automatically transfers to your savings account. This could help you save money for future investments and trading.
Spend Swap Save
Don’t underestimate the power of savings by avoiding extra expenses and making small changes to spending patterns. You can swap your spending habits and save considerate amount of money for retirement and potential investments. For-example, don’t dine out regularly, instead make food at home. You can also save money on groceries by shopping from local stores.
The idea behind this challenge is pretty simple: You start your year by saving at least 1 dollar each week for the rest of the year. After the completion of 52 weeks you will be able to save 1,378 dollars per year. Wouldn’t that be great? Try using this technique to save more.
Saving Rounding Up
Another basic method to save money for trading or investments is to enrol in automatic savings programs offered by banks. Such saving programs helps up in rounding your debit purchases to its next nearest dollar and then transfer all the extra money into your savings account.
Going “all-in” as a Full-Time Trader in The Market
If you plan to become a full-time trader then you need to have a solid base and a huge amount of money for investments and to make potential profits from it.
The amount of capital for trading depends on the trader as well. But, if you are going to replace a full-time income, you need to have at least £10,000 to start off. However, it is still advisable to ONLY invest in such a big amount when you are:
- Sure about how the market works
- Know what risk factors are involved
- Know how the trading system that you are investing in works
- Be well-prepared you are for the risk factors
- Understand fluctuation rates of the market
- Have time management skills
- Know the duration for which you plan to keep your money in the market
- Trading rates and fee etc of trading platforms
Once you have this knowledge, you’ll be able to identify how much money you will be needing for future investments. Furthermore, which techniques and strategies you can adopt to be success at trading.
When a beginner wins he feels brilliant and invincible then he takes a wild risk and loses everything.
As a beginner you must not feel over-confident about your trading skills and investment techniques since the trading market is always fluctuating and trends keep on changing.
Always go easy with your investment, don’t get overjoyed by your initial wins.
Most of the beginners fall in the trap of early wins and consider trading as a piece of cake. Always make a smart move. Don’t rush an abrupt move as it can cost you a lot, losing big money in seconds and emotional strain.
Patience and Timing – Not Rushing Money to Start Trading
Trading is a game of patience and right moves at the right time. Improve your patience skills, consider how you can manage time and mitigate risks.
You can master the skills of trading over time by investing sufficient time to learn about the mechanism of the trading platforms. Stick to one trading platform initially and understand its processes, look for the reliable and trustworthy brokers to start with.
Lastly, doesn’t matter if you are a beginner or an experienced trader. You can never be 100% sure about the trading market. Although, with the right skills, patience and trading tricks you can excel as a trader and earn the profits you dream of! Just keep your head in the right direction and learn gradually.
You may enjoy these trading platform reviews:
You can also get a free demo trading account on Plus500.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.