How much money do you really need to trade for a living?

Just reading this article tells you that you are taking trading seriously. Let’s think now, without prejudice, about how much money for trading you really need to sustain a day-to-day living.

Many traders start with small accounts of up $5,000 or equivalent in a different currency and they hope they will be millionaires within a year. Experienced traders already know that this is, of course, wrong. You can only blame yourself as you have unrealistic expectations that can only frustrate you. In our Challenge, we require a monthly appreciation of 10% and this is being considered a borderline. The 10% gain was chosen because it is motivating and yet achievable. There is practically no day when a Challenge is not met across our projects. Some traders will consider this reguired profit too high, however, we’ve also set 10% maximum loss. Therefore, we want the trader to earn 10% of the initial capital within 30 days, without losing 10% of the initial capital. So both the desired profit and the maximum allowable loss are in balance. Since we are also traders, we know that sometimes there are months which don’t correspond according to our plan. If you do not reach the desired profit, you are at least zero at the end of the period and do not violate any other rule, you will receive a new Challenge from us.

Thanks to a fairly large number of traders, we have an idea of what we can expect from traders who advanced into FTMO accounts.  Generally, more caution is exercised on the funded account, and as a result, the average gain is lower than in the Challenge. Profiting in tens of percent are only rare exceptions. As investors, we are happy to see a long-term appreciation of 4-7%.

Let’s compare two accounts, a smaller account of around $5,000, and an account sized $100,000 that we offer to manage. Let’s be optimistic and count on a monthly appreciation of 7%. The final profit of the $5,000 account would be $350. Our account funded with $100,000 would print the profit of $7,000, but in this case, it is necessary to deduct our portion of the profit. After taking our 30%, you will earn a net profit of $4,900 which corresponds to the salary of an experienced programmer or financial analyst in the banking sector. If this was your first trading month, we will also refund you the fee you initially paid for the Challenge.

It is also important to work with the concept of the opportunity cost. This term identifies the most profitable alternative activity you could do instead of trading. Therefore, we compare the alternative income from employment vs. the resulting monthly profit. Let’s say that instead of evening trading you could stay two hours longer at work and take an extra $8/hour. Monthly, your trading will cost you $320 (20 working days x $16), just because you are doing it. The resulting monthly trading income for your $5,000 account is only $30 higher ($350-$320), and you risk your entire deposit! In the case of $100,000 of the FTMO account, the resulting net profit is $4,580 and any potential risk of loss is covered by our company. These are a bit better numbers, don’t you think? It should also be remembered that if you ended up on a trading account for a month at zero, you will earn – $320 you would otherwise get if you did not trade.

At first glance, it’s obvious that from a small $5,000 account it’s not very realistic to live on a long-term basis without risking too much and putting trading on the side of gambling. We therefore believe that our services are of interest to all serious traders. Do you have what it takes? Make sure you convince us by completing the Challenge and become the FTMO Trader.