This is a controversial topic, due to the fact there is no right answer. Some people will tell you to throw everything you possibly can into your account and others will tell you to put the bare minimum. So who is right? None of them are! The reason behind this is due to the fact we all trade differently and we all value money differently. What might be cheap for me and you could be extremely expensive to others. That is why the idea behind funding an account can be a very difficult task to take on.
First off you should know that you should not risk anymore money then you can lose. Trading with money that is needed for bills and every day expenses is one of the worst mistakes you can make. Not only because of the mental toll it will take on you but you are financially setting yourself up for a huge downfall. trading is all about preserving capital. Only risk what you can loose and have it not effect your mental state of your lifestyle. That is rule #1 no ifs and's or buts about it. Gorilla Futures and those who associate,work for and or own Gorilla Futures are not liable for what you do with this information, by continuing to read this blog you agree to this 100%.
The bare minimum
Many traders will fund there accounts with the bare minimum need to trade. Take for example the Micro E-Mini S&P 500 you need to keep a minimum of $50.00 per contract to day trade the MES. The only issue with this is one losing trade and you can no longer trade the MES. Essentially it will be a flip of a coin and if your wrong you will get a margin call and possibly a fine depending on your broker. The main issue with funding with the minimum is you don't get enough swings at the ball before your out. As we know buy now we wont win every single trade and we need to make sure we have the capital to keep on fighting. Funding with the minimum can be great for your checking account but not so great for trading in the real world.
Meeting in the middle
Don't fund your account with the minimum of the maximum, meet somewhere in the middle. If you have a maximum of $1000.00 you can lose would you put it all down at once? No, you would break it into smaller pieces and hopefully come out on top. You could fund you trading account with $500.00 and take 25 4 point losing trades before you are at zero. Now hopefully we wont have 25 losing trades in a row but if we do we know we get an ample amount of chances to figure things out. The best part of this is, if we lose all $500.00 we still have another $500.00 at our disposal. Hopefully you journaled all 25 of those losing trades so you know exactly what you need to fix next time.
As stated above there is no right or wrong answer when it comes to funding your account and this is why we at Gorilla Futures never recommends an exact dollar amount because each situation is different. Only trade with money you can lose and make sure you set yourself up with the best chance of coming out on top.
What do you think, is this good advice for funding a new account? Let us know below!