Spencer Li

How Much Capital Do I Need to Start Trading?

how much capital do you need to start trading

 

For new traders looking to start out their journey, what is the minimum amount of capital you will need to start trading?

What is the optimal amount of capital you should use to ensure that you take your trading seriously?

 

how much capital to start trading

 

The tricky thing about this question is that it varies from person to person, there is no one correct number.

If you ask a multi-millionaire, he will think that starting with $10,000 is too little, but if you asking a student, he will say that $10,000 is his life savings.

So obviously the amount of starting capital will depend on your stage of life and your current net worth.

If you have played any game of chance such as poker, you will understand the concept of “skin in the game”.

If the bets are too tiny, no one will take the game seriously, because there is no real risk involved.

Similar to trading, if you capital is too small, and every trade gives you a profit or loss of less than 10 dollars, then you probably won’t take your trading decisions very seriously.

Hence, there needs to be a certain amount of money involved to make you take your trades seriously.

On the other hand, if the bets are too big, for example each bet is a few thousand dollars, you would most likely be too stressed about losing, and not be able to make rational decisions.

Similar to trading, if you start panicking the moment you place a trade, then most likely your trading size is too big.

So we need to tread a fine line to introduce the “right amount” of fear, so that you will take the decisions seriously, but not too much fear that it cripples you.

In conclusion, the answer to this question is quite simple – you should find an amount which is not so large that you cannot afford to lose, yet is not so small that you do not have any “skin in the game”.

 

thumbnail beginner guide to trading and TA

If you would like to learn how to get started in trading, also check out: “The Beginner’s Guide to Trading & Technical Analysis”

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Spencer Li

Should I Start with Trading or Investing?

should you start with investing or trading

 

The first problem many people face is not knowing whether to use their money for investing or trading.

Since they usually start off with a fixed sum of money, they have to decide on one or the other to start off.

 

Investing vs Trading

Many people will small sums of money then make the common mistake of “playing it safe”, perhaps after hearing stories of Warren Buffett or about how “risky” trading is, and then decide to just put their money in things like bonds or ETFs, with a low return of 1-5% a year.

The problem with this approach is that unless you have a large amount of money to start with, you will take a whole lifetime just to build a decent-sized portfolio.

For example, if you consistently grow your portfolio at a compounded rate of 3% every year with no losses, it would take you 24 years just to double your portfolio.

And what happens if you get caught in a market crash?

So if you are starting with a small sum of money, it definitely makes more sense to focus on trading at the start, which can give you 3-5% monthly cashflow, which you can then use to grow your long-term investment portfolio faster.

 

trading income cash generator infographic

As a simple rule, I would suggest for you to focus on trading until you have at least $100,000 capital before you start looking to do investing.

And once you have hit that milestone, you can continue to do both trading and investing, because trading can provide monthly cashflow, while investing can provide long-term passive income, so they both complement each other.

 

thumbnail beginner guide to trading and TA

If you would like to learn how to get started in trading, also check out: “The Beginner’s Guide to Trading & Technical Analysis”

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Spencer Li

How to Start Trading for Beginners

How to Start Trading for Beginners 1

On a day to day basis, the price of every financial product moves up and down, for example you hear about stock prices moving up, or oil prices crashing, for different currencies appreciating or deprecating against one another.

At its core, learning how to trade is simply being able to make a profit from capturing these price moves.

If you buy a stock and it moves up, and you sell it at a higher price, you would have captured that price move and made a profit.

Do this multiple times successfully, and you would be able to make a full-time living off it.

Of course, not every trade is going to be profitable, because sometimes you might get it wrong.

But after making say 50-100 trades, if you are able to consistently make money, then it means you might have a winning trading system for how to trade in the markets.

If you have ever been to a casino, you will know that over the long run you will lose money because the odds are against you.

Although the casino’s edge is very small, over the long run and over a large number of transactions, it adds up to huge profits.

Knowing how to trade is somewhat similar.

If you can find an edge (through your analysis), exploit it over a large number of trades (money management), and can do it consistently without letting your emotions get in the way (mindset), then you will have a chance to become very successful in trading.

 

thumbnail beginner guide to trading and TA

If you would like to learn how to get started in trading, also check out: “The Beginner’s Guide to Trading & Technical Analysis”

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Spencer Li

First Batch of Students from Our Beginner’s Course on Tech Stocks & Crypto!

skillsfuture feedback 140621 2

Last weekend, we conducted our first online workshop (SkillsFuture credit-claimable) on the basics of tech stocks and crypto, and it was a very fruitful session.

Thanks for the support! ?

During the session, we learn how to combine technicals and fundamentals to find undervalued tech stocks.

These are exclusive methods used by investment banks, hedge funds and industry insiders, so you won’t find them anywhere online or in books.

Here is some of the feedback and learning points from participants, after our hands-on market analysis session to find trading opportunities in the market.

At only $500 for 2 days of training, it is really a steal! (The value you get is equivalent to those $3000-$4000 courses you find out there, which only cover textbook knowledge.)

If you are keen to learn more using your SkillsFuture credits, you can check out our courses:

P.S. To ensure optimal learning, we have capped the maximum class size.

Register early to avoid disappointment!

Tech Stocks & Crypto

Tech Stocks & Crypto 2

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Spencer Li

How Much Profits Did You Make from the Crypto Crash?

thumbnail how much profits did you make from the crypto crash

Recently, there has been a lot of volatility in the Crypto market, with many bullish and bearish factors moving the market, which resulted in a big crash.

In this post, I’m going to do an overview of the crypto and forex market, review some of our recent trades, and discuss the current trading opportunities.

If you want to get all the analysis and charts mentioned in this post ahead of time, don’t forget to join our free telegram channel! https://t.me/synapsetrading

 

Covid updates

Before we go into the markets, let’s take a quick look at the Covid situation, with a focus on vaccination.

Covid updates

As you can see from this chart, the developed countries have surged ahead with vaccinations, with 50-60% of their population getting at least one dose.

For many of these places, life has almost gone back to normal, and the economic recovery has started.

Unfortunately, this recovery is going to be another K-shape recovery, because if you look at the overall numbers, only 10-15% of the global population has had at least one dose.

My guess is that by Q3 or Q4 this year, travel will resume in some developed countries.

Bitcoin: Shorting the Big Crash!

In early May this year, I started calling for a short on Bitcoin, after seeing the rising wedge pattern which evolved into a head and shoulders pattern.

Bitcoin: Shorting the Big Crash

Bitcoin (BTC/USD) is starting to form a potential reversal pattern. We need to watch out in case this price movement develops. Trade according to the trend! ??

 

Bitcoin: Buying Opportunity Now

Following up from our Bitcoin (BTC/USD) analysis just a few days ago, we accurately predicted the sharp drop of Bitcoin before it happened!

Congrats to those who followed and shorted! ???

 

Bitcoin: Buying Opportunity Now?

More recently, I noticed that Bitcoin has bottomed out for the medium-term, so I issued a buy call, which is still valid now.

 

Bitcoin: Buying Opportunity Now

Following up on our series of uncanny accurate predictions on Bitcoin (BTC/USD), it has now formed a mini double bottom (tweezer bottom), and we could well see a medium-term swing upwards, after the huge sell-down that went into oversold territory.

Though the major trend might still be bearish, this looks like a good low-risk counter-trend buying opportunity to capture a swing up.

 

Bitcoin: Buying Opportunity Now 2

Following up on Bitcoin (BTC/USD), this is the 3rd test of support (and it held), which is a sign of bullishness.

Looks like a good time to start accumulating some. ??

 

Ethereum: Profits from the Crash

Ethereum: Profits from the Crash 2

Looks like Ethereum (ETH/USD) is in for some correction as well, with the first major support at 3000. Will reevaluate when prices get there.

 

Ethereum: Profits from the Crash 2Following up on Ethereum (ETH/USD), our prediction was also spot-on, and the crash exceeded our expectations and went all the way to TP3 in just one day!

Congrats to those who followed and shorted! ???

 

Recent Forex Trades: AUD/CHF & EUR/JPY

AUD/CHF & EUR/JPY

Looking at the chart of AUD/CHF, it has tried 3 times to break the resistance to new highs, but failed 3 times.

This suggests that there may be more downside, especially if it breaks the bullish trendline.

 

AUD/CHF & EUR/JPY 3

Following up from AUD/CHF, it has broken to new lows as predicted, and is now trending downwards.

Congrats to those who followed! ???

 

AUD/CHF & EUR/JPY 3EUR/JPY remains on a strong uptrend, clearing the recent resistance, and formed a bull flag after pulling back to the 10&20-EMAs.

 

AUD/CHF & EUR/JPY 4

Following up on EUR/JPY, it has gone up by +276 pips since our last analysis.

Congrats to those who followed! ???

 

I have come to the end of this market analysis.

Now that I have shared my views on the various markets, do you think it is a good time to start buying cryptocurrencies?

Let me know in the comments below!

P.S. Check out our mentoring programs if you are keen to start your trading journey today!

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