Something else I hear from newcomers (and some who like to CALL themselves ‘Trading Educators’), that just bugs the ever-loving-snot out of me?
“Well, since you have to overcome a brokers commission costs … people who do not have a lot of money really can’t afford to start investing”
What a load of crap.
If someone tells you that … the first thing you need to do is punch them straight in the face. Don’t worry. You’ll be able to explain yourself. Simply tell them: “Dan said to punch you straight in the face“. And then it will all be ok. Trust me.
But I digress.
What newcomers need to know is that …
- Trading is a skill based endevour. So it’s probably a good idea … to not suck at trading.
- Second, and most importantly … you need a process and approach commensurate with your account size; with the appropriate risk overlay.
Obviously, if you have $500.00, you can’t start day-trading. Yes, in that scenario, your commissions are going to destroy you. But very obviously, you are not trading with a process and approach commensurate with your account size. Nor is there any risk overlay that you can apply in that scenario that will save you from disaster. As well, you are not going to earn a living trading, with an account size of $25,000.00. Those objectives and goals are not appropriate to such a tiny account.
Again, I digress.
Do not hand me this bologna that people with $500.00 available cannot start investing their own funds; due to commissions. Dear lord, though we can now find commissions under $1.00 in the present day and age, when I first started trading in 1996 we were all paying $50.00 in, $50.00 out. If you want to discuss high commissions? THOSE were high commissions. In today’s day and age? Yes, if you have only $500.00 … you can begin investing, so long as you understand what you can and cannot do.
You want proof?
The Sharpe Income project began with only $500.00. We made sure that we were using a process AND approach, appropriate to such a tiny account. We have bought, literally 2 to 6 shares at a time on quality stocks; and have kept a free diary here of every move we have made. Discounting capital contributions and including comissions the ‘Income Asset Process’ for that tiny project is up something like 13.00% this year. And now we have nearly $4,000.00 from which to build into the future.