A Trade A Day

Investing for a living is a dream for many people. The freedom from the rat ace. The opportunity to make your own hours, to control your own destiny. The ability to pull money from the market like it’s your own personal ATM. Well, maybe not the ATM part.

However, in order to get started you need capital. How much capital depends on who you ask. Throughout market history there are stories of traders who started with a a minuscule bank roll and turned it into a fortune. Traders like Richard Dennis and Jesse Livermore started with a grubstake and a dream.

The point is you need capital. Whether it’s $250 for to open a forex account or a couple of million to start a hedge fund. There are ways to get capital. Here are my top 5.

5. Bum it off a relative.
There’s a couple of ways to do this, but I would recommend pitching it like a business proposal. I actually acquired my first trading stake through this method. In my case, I created a business and trading plan and presented it to my relative. He thought it was a great idea and I got funded. Then I lost it. So I asked him if I could have more. Which I then preceded to trade into oblivion. If you’re going to try it this way, make it as formal as possible. Create a business plan including milestones to pay back the loan. Chances are you will lose your entire stake, so consider it before asking Aunt Betty for the cash. How will your relationship suffer after you’ve blown cousin Gertie’s hard earned money on your stock market dream.

4. Credit Cards and Bank Loans.
As an American, I’m very much into immediate gratification. Credit Cards and Personal Loans through your bank are a great way to get cash now. And for the astute trader there’s a second added bonus. Credit cards require that you achieve. Consider that to keep up with the 30% interest rate they will charge you, you’re going to have to trade better than a Turtle to keep afloat.

3. A second mortgage.
If trading wasn’t such a losing proposition for most would be traders, I would actually be serious by suggesting this. Interest rates are typically lower, and the equity you have built up could be enough to actually make a legitimate start. But like I said trading is a losers game. Most will fail, and do you really want to face the Mrs and explain that you blew the nest egg on cocoa options?

2. 401K or IRA.
I trade my IRA right now. Of course I can’t “make a living” off it. I do think that everyone should learn to be proactive with their retirement account. Whether it’s active trading or buying an index fund, if you can’t trade for a living try focusing on making good investment decisions with your retirement.

1. Work for it.
Sorry, but if you really want to trade, you should start saving money from your current income. It is the best way.
Why? Because you will not value anyone else’s money more than your own. All the other methods of acquiring trading capital add stress. True, you do not want to lose the money you’ve made, but the fact that you made it should give you confidence that you can make more if you need it. You have no one to answer to except yourself, and you will do a better job of research, and execution because it is your money that you are trading. Not making enough money? Get a second job whose earnings are specifically for your trading account. Consult, start a blog, write a book. There’s lots of ways to earn some extra cash. Learn to spend less and save more. Consider it training for those streaks when you aren’t making much. Macaroni and hot dogs never tasted so good.

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