How to Start Day Trading with $500
How to Start Day Trading with $500
Day trading is the best job in the world the days one makes money and the worst job the days they don’t! Traders can transition from rags to riches through efficient day trading; however, the reverse is also a harsh reality – day trading isn’t easy and is definitely not for anyone.
Therefore, it is always a good idea to start day trading with less money. In the initial learning days, there is quite a high probability that one wrong move wipes away the entire capital. So, novice traders must ensure that they invest only as much money as they can afford to lose.
Table of content:
In ordinary market situations, $500 does not seem to be enough money to start with. It is because the shares of big and successful companies cost around $100 per share and the $500 will only be sufficient to buy just about 4-5 shares. At the same time, a part of the initial capital is also to be used to pay fees to the brokers.
However, $500 is not a small amount to start day trading with. It is a smart decision to begin trading with less money. It is a common myth that best investment options require a lot of money. The truth is that there are many avenues of investment that allow a trader to start with as little as $500, grow slowly and steadily, and reach the desired heights.
start demo challenge
start 14 day trail
Fill in your details to apply for the challenge!
What Can You Trade with $500
When a day trader begins his career, he should start with less initial investment. This is because the risk of losing the entire money is very high due to the lack of knowledge, experience, and skills.
- Penny Stocks – A day trader has quite a few options to use those $500. The most apparent option that comes to mind and seems suitable is to invest in penny stocks. Such stocks trade at less than $5 per share, therefore, about 100 shares of the company can be bought. However, investment in penny stocks is not a profitable and smart choice. It is because these stocks are highly speculative in nature.Also, the worth does not depend on the number of shares. If a trader owns, say, five shares of a big and reliable company on the one hand and 100 shares of a risky small company on the other hand, the value of the investment is the same and owning big league stock is more sensible and practical.
- Giving someone private – To start trading with $500, a new trader can also give the amount to an experienced trader and ask him to trade on his behalf. This is also not a practical alternative as the trader does not learn anything for himself, and will always remain dependent on someone else’s expertise and skills to make money for himself.
- Funded account – Another option for a new trader is to use the $500 to open a funded account. Now, this option sounds like the best use of the $500.The trader will receive education and training to start trading and mentorship to assist in trades, along with the entire initial capital to begin trading. The investment company he opens the funded account with will absorb all the risks, and the trader can get up to 85% of his profits, in some cases. Thus, by sharing a small percentage of the profit, a new trader can minimize his risks and make the best use of his $500 initial investment.
What is Funded Account and Why is it Good
A funded prop trading account is an account that a trader opens with an investment firm. The firm provides him the initial capital to trade through funds in the account, hence funded. In exchange for the funds, the trader shares a percentage of his profit with the firm.
A funded account is an excellent option for new traders. It is because the inexperienced traders will gain access to mentorship, education, and training by the investment firm as they do not want people to lose their money! At the same time, they will receive a larger amount of capital to start trading, with minimum risks.
Tradenet Funded Account
Tradenet is one of the market leaders in offering funded account programs. These programs range from intro program, student program, and expert program to pro program. Each of the programs includes a study course, access to a live trading chat room, access to the trading book ‘The Market Whisperer,’ mentorship sessions, and demo training account.
After joining the programs, traders become eligible to apply for up to $240,000 funded account and receive up to 85% of the net profits they generate. Take a look at the benefits of funded account in this video.
As a bottom line, it is an excellent idea to start day trading with less money. Of the options available in the market like investing in penny stocks or giving to someone private, the best alternative for new traders is to open a funded account using this money. Funded accounts will provide the traders with access to a larger capital base, with limited downside. Among the funded accounts, Tradenet offers comprehensive Funded Account programs that include education, mentorship, and eligibility to apply for a funded account.