Some of the things that are important so you can make profit.
The cost of business as part of your monthly profit. If you subscribe to various services like datafeed, software, news etc this is costing you money. So at the start of the month you are already behind.
The relationship between your account size to your cost. If your account is 5000 and you are clever enough to make a 10% return using a margin strategy. Even this type of return is nowhere close of beeing easy.
If we say your cost of business is 50 then we can see some figure.
Cost of business as % of account - 1%
Cost of business as % of profit - 10%
Now why is this important. The more you save on cost the higher your return is without breaking a sweat.
The more active you are as a trader the more the cost is going to be.
How much should you use as a guide. I would use months profit / 21 days. So your 500 / 21 = Total cost should not be much more than 24
There has to be some relationship between your exspected return and work put in.
Now for people just starting out. You have seen ads from spreadbetting/forex brokers that you can start with $300 /150 this is just silly. You could work your way up with this amount but what you need to keep in mind is that your return would be so low that there might not be much insentive to look at this as a bussiness like any pro trader would do. Would you be happy to put in some hard work to make a profit of 5-10 few times a week?
And we are back to the cost again with lower account size the lower your cost needs to be.
5000 max cost was 24
2500 max cost 12
1250 max cost 6
625 max cost 3
313 max cost 1
If your return was 20% per month you could double your cost but as you may have seen there are various solutions offered to traders and almost all cost more than 10 per month.
And just to keep in mind that the biggest cost of a trader is not mentioned in the text above.
More is to follow.
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