Day Trading with Low Capital



April 15, 2019

Day trading is a rewarding, yet risky business. It involves the use of a reasonably large amount of capital to stay afloat. Capital is the lifeline of day trading. There are specific minimum capital requirements to start and continue day trading. However, the amount of capital needs to be optimum, and traders must learn day trading with low capital.

Day trading with low capital means that traders must trade with capital that they can afford to lose. Trading can, inevitably, go in any direction. One can earn thousands of dollars; however, at the same time, they can also end up losing thousands. Therefore, traders must always be vigilant of the capital that they are putting in each trade. Ideally, day trading with low capital means risking only a small percentage of the total capital in a single trade so that even if the trade fails, traders can preserve the capital and not go bust.

For instance, if a trader starts with the minimum capital requirement of $25,000, he must risk not more than $250 in each trade. The number of shares must be bought and sold accordingly, depending on the volatility and risk associated with the stock being traded. Traders must be well aware of risk management and money management when day trading with low capital.

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Why Do Traders Want Day Trading With Low Capital

Starting Low and Growing Slowly

For fear of losing the entire capital, traders must start day trading with low capital. Day trading small accounts is, indeed, more difficult than trading a large account as small accounts are not buffered against unexpected losses, bad trades, and other mistakes. However, when a trader is in the learning phase, he simply cannot afford to trade large accounts and has to start low.

New traders must always keep day trading starting capital low as they are susceptible to many mistakes, judgment errors, and emotions in the beginning. During the learning phase, they should start with small accounts and then grow slowly and steadily. Once they have acquired the required experience, knowledge, and skills, they can scale up in terms of capital, volumes, and risks.

Depletion of Trading Power

The basic premise behind starting day trading with low capital is that it is common to run out of trading power and trading capital very fast, especially in the early phases. For instance, when trading low volatility stocks, the approximate risk is, say, $0.5 per share. In this case, the traders can buy 300 shares and risk $150.

However, beginners may not be able to differentiate between low volatility and high volatility stock and commit to buying the same number of shares. The reality is that high volatility shares have an approximate risk of about $1 per share and trader will be risking double the capital with the same number of shares and lose a lot of trading power if the trade fails.

Leverage and Its Implications

Day traders typically get access of leverage up to 4:1 on their capital. It means that traders can trade for up to four times the balance in their trading account. Thus, if the trading account balance is $25,000, day traders can trade for up to $100,000 worth of stock. This is exciting; however, leverage is a double-edged sword!

Leveraging means that the trader is borrowing money to expand the potential return on his investment. It is terrific if the trade goes in the expected direction, but it hits harder if the trade goes in the opposite direction. Leverage amplifies losses as much as it increases profits. If a beginner trader relies too much on leverage to invest and the investment movies against him, the losses are far larger than they would have been with cash account day trading.

Therefore, it is always advisable for day traders to start trading with low capital and use cash accounts, without relying on leverage too much. Traders will be subject to a lot of errors and mistakes in the beginning, and will suffer significant losses; therefore, they must only trade with the capital that they can afford to lose.

How To Start Day Trading With Low Capital

Tradenet’s day trading challenge is a win-all solution. It does not restrict traders by having to trade with low capital, nor does it subject them to monumental losses.

Traders with excellent skills and capabilities can take the Tradenet Trading Challenge and trade on a demo account with a trading balance of $10,000. They need to adhere to the terms and conditions of the challenge and pass it by generating a net profit of at least $500 in five consecutive trading days.

The traders who pass the trading challenge of Tradenet get access to a $14,000 funded trading account. The funded account allows traders to trade without risking their own capital and retaining up to 70% of the profits generated.

Additionally, the ones who succeed also get access to Tradenet’s live trading chat room to learn from top traders and mirror their trades, along with access to Meir Barak’s best-selling book ‘The Market Whisperer’ and Tradenet’s self study course.

Thus, Tradenet Trading Challenge is an ideal platform for new traders to start day trading with low capital and yet make a mark and become professional and successful traders.


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