NEW: Live classes are posted - Click here to see the calendar!

Finding a Comfortable Starting Account Balance to Trade With

December 17th, 2012

Listen to the podcast:

Account Balance Amounts

There are a few different levels of account balances when it comes to trading. It can be helpful to have three separate accounts: one for an IRA, one for trading/day trading, and another for swing positions. How you manage your accounts is up to you, but there are a few guidelines.

These guidelines may change based on the price of the stock you are trading. Accounts will be different between a $500 stock compared to a $20 stock. At $500,000+ you will buy more shares of a company trading at $1 per share and you might be able to move that stock heavily. If you purchase the same $1 stock with the $0 to $1,000 account,  you will not move the stock.

$0 to $1,000

  • You may only have one account when you have a smaller amount of money available for trading.
  • You may have trouble finding brokers.
  • There is a law that states accounts less than $25,000 can't day trade and can't trade more than three trades every five days.

$5,000 to $20,000

  • This amount is what most people start with.
  • $5,000 is close to the minimal requirement for most brokers.
  • You will not be able to buy a lot of expensive stocks. You need to give them more room to play.

$25,000 to $150,000

  • If you buy a lot of one stock you could be down a considerable mount of money in one to two days.
  • You need to know how to manage your risks and trades, and you need to build up your experience before trading.

$500,000+

  • At this point you will start to move stocks slightly, especially if you are putting in $300,000 to $400,000 to one stock.

Once your account gets to $3 million to $5 million you may want to buy $300,000 of one stock. If you have 4 or 5 stocks it won't dampen your account value too much. That is when you start moving the market. You want to be careful and watch how you trade. You want to really know what you are doing when you get to this level. You may want to be gradual rather than buying everything at once. For example, you may want to wait for a basing pattern and buy in increments.

The important thing to understand about higher account values is that you start to move the market. With lower account values you need to manage your risk more. You will also pay more on commissions with lower account values.

Make sure that when you are first start to trade that you trade three to five shares as a test run. It gives you the emotional experience behind trading. You will probably lose out on most of them because of commissions  but it will be more educational than paper trading.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

Join over 31,258 regular people who are bettering themselves in the stock market.

Click Here to Sign Up

This is a community that is motivated to learn & improve their skills.
Join us and get free training lessons, freebies, and exclusive promotions.

want some helpful advice?

pay per minute coaching

I am scheduling helpful coaching sessions for people who are interested in real-world advice & guidance where you only pay per session. No long term commitment required.

Learn more
This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.