It is a simple question that each swing trader will answer differently depending
on what he or she is trying to achieve, how he or she wants to achieve that goal and how long
one wants to wait as a swing trader. Obviously, the longer one wants to hold a swing trading
position or positions, the higher the risks one is taking therefore one may need a bigger swing
trading account to defend those positions in these messy and slippery financial markets.
So how much money can you afford to swing trade with?
How much money is at your disposal to play with in the markets?
Or how much swing trading risk are you capable of controlling?
So those will be few questions one will be answering before getting into the ring with the
professional swing traders. You may say George, I am not very sure. Alright.
The general rule is never risk more than five percent of your financial worth in the financial
markets. So a 100000 US Dollars worth person will only consider a $5000 swing trading account.
No more, that is the max. Those that are financially worthy of $20000 will hold $1000 swing trading
account. Note that your true worth is your total asset minus
household expenditures, debts, tax, depreciation and inflationary cost. That is the general rule.
The next thing one should remember is that a swing trader with $5000 trading account can not go
on a spending spree and take all kind of useless swing trades all over the place just to feel good as
a swing trader. With a $5000 trading account, one can only use at any one time 5% of that. Meaning
that if one opens ten swing trades, the total amount one is spending on all trades put together should not
exceed the 5% of the swing trading account. As always one will spare 95% of the total of the
swing trading account without a second thought. This is about the five percent money management rule
that will help a swing trader.
Without straying away from the real question, let's answer the question. The question is
How Much Money Do You Need To Be A Swing Trader
Taking into consideration the risk control as a swing trader and five percent money management rules
that I have just highlighted, it is always nice to have a bigger swing trading account. The bigger the better but
withing the limits already discussed above. Do not forget those limits or rules. 5% of your worth for the trading account
and 5% of the trading account for all open swing trading positions.
Personally, I would say that one should have a minimum of $5000 swing trading fund. With that one can open at any
one time total swing trades equal to $250. Understand that the $250 equal to the 5% of $5000 swing trading account.
So to answer the question How Much Money Do You Need To Be A Swing Trader, I will say
$5000 or above without breaking the rules that I have discussed earlier. $10000 account is better, why not $20000,
$50000 or $100000. Indeed, only a person that is worth $2000000 will open $100000 trading account. And he will
open swing trades worth $5000 at any one time.
So, one must first calculate how much worth one is then use 5% of it to open a trading account then adhere to the 5%
money management rule. Note that when I say swing trading account, I really mean financial markets trading account.
In this context, it makes sense that I talk about swing trading account.