Funding My Getaway
Stock trading is, of course, a high-risk venture.
Not only is there a chance you’ll make no money at all, but a more
than even chance that you’ll lose everything you’ve got. Nobody
has to tell me that. I’ve lost LOTS of money in the market and
once—in one egregious trading misstep—lost just about all my
trading capital in one disheartening order-entry screw-up.
But how much dough do you need to succeed? Well, I find it’s wise
to only trade with a percentage of my life’s portfolio, not all of
my savings. Smart traders that I know keep a minimum amount in
their trading account and regularly siphon off their profits to
more conservative places. I regularly stick money in a plain, old
vanilla savings account with
But truth be told, with today’s generous margin accounts, you
don’t need a huge amount of your own dollars to make enough money
to runaway and have fun.
Most online brokerages today will let you gamble (yes, I said
gamble) on margin with amounts equaling three or four times
your account balance. That means if you’ve got $25K in your
kitty (the new minimum for
pattern day traders), you
can trade on margin with $100K. If you’ve got $50,000, you
can day trade with $200,000. That’s plenty of dough to make a
respectable showing or wish you have never heard the phrase “stock
Obviously, if you’re a
beginner trader, I wouldn’t recommend throwing around that kind of
cash, but even with $5,000 or $10,000, you can grow your account
as you nurture your trading skills. I try to keep my account capitalized with $30,000. That way, I'm seldom in danger of getting one of the nasty "maintenance calls" from Ameritrade saying I've slipped below the required $25K and would I please wire them the shoftfall. Moreover, I can siphon off any excess cash into safer investments like pork bellies or junk bonds (just kidding).
When you’re ready to run away, you might be able to generate
between 1 percent to maybe 5 percent on your account each day. If
you do the math that means with $25K you should be able to earn
$1000 a day. At minimum, that’s enough to comfortably put you up
in the deluxe ocean tower of
(room rates, $625 a night), or
Waldorf Astoria (bunk in a
standard room at $593 a night).
But, as they say, everything is relative.