Perhaps the most frequent question we get is...
How much do I need to start?
It is one of the most popular questions and one of the most difficult to answer.
There are many facts that determine how much you will need to start. Here at Option Genius, we recommend our members have a minimum of $5,000 but $10,000 is more ideal; however, no one can say how much you need to start trading.
In this article, we will break things down some of the things you need to consider.
Let's start with a theoretical goal and work backward.
If you have a goal to make $100 per day, it is way more probable to make 1% a day than 100%, which is basically impossible to repeat over and over.
Your goal isn’t the only thing to consider.
You never want all your eggs in one basket and you don’t want your entire trading account to be at risk.
Here are two rules of thumb you can use:
1. No more than 20% of your account in a single trade
2. No more than 80% of my account trading at once.
So, with a $10,000 account, you could trade $8,000 at one time, with no more than $2,000 in one trade.
But I only have $5,000.
If you have been paper trading and you have the confidence to start, then jump in. Since most of our trades at Option Genius are require about $500 in capital, $5,000 will give you some cushion if there is a loss; so you do not have the mental pressure of having to win on every single trade. Many times, we have more than one trade working at the same time. Having at least $5,000 allows you to get the most out of the membership; you can keep 15-20% in reserve and use 10-20% of your trading capital per trade.
If you have not started paper trading and you are new to options, we highly recommend you start there. Learn more about paper trading.
Trading is risky, so please make sure you get the proper training before jumping into trading with real money. Listen to Episode 011 - How Much Do I Need To Make $X? for a more information.