IF YOU WANT TO START TRADING
with a RELATIVELY LOW AMOUNT OF CAPITAL...
If you intend to start trading with a
limited amount of capital, we just want to make you
aware of the following realities before you actually start trading...
Some very unethical companies will try to make
you believe that the "secret" books and techniques which
they want to sell to you will allow you to literally
transform $2,000 into $100,000 within a few months. They
will of course make that statement for only one reason which is to just try
to "sell you something" (their courses, books, seminars etc.),
with total disregard to basic common sense and to your personal situation
and best interest.
At PM Traders, our
top priority is the satisfaction of our
Members and we always want to really make sure that we help you as much as
we can to make decisions which will be in YOUR best interest.
We would never dare to insult
your intelligence by making such misleading statements as
"Transform $2,000 into $100,000 within 6 months with our Secret
Techniques!". Such unethical marketing practice is just
not part of our World and of our values. Our priority is to
"tell it to you like it is..." and to make sure that our Members are really happy and
satisfied with their experience with us. Just "...making another sale..."
is definitely not our style.
It is very important for us that you realize
that the odds that you could reach such an incredible return or results are pretty
much close to zero. It just does not work that way...
Whenever you read something like that,
please never trust a word of it. If something sounds too impossible to be
true ... well, you know the rest!
At PM Traders, we want to tell you what the realities of
the trading World really are so that you can really make an informed
decision which will be in your best interest...
The goal of most of our Members is usually to
make returns of 0.5% to 2% per trade (of course some of them
become incredibly successful and start to occasionally make profits of 10%, 20%
and even more within a few minutes or a few hours but they certainly
do not represent the majority; the majority of our most successful Members
is more in the 0.5% to 2% range of returns (per profitable trades)).
Some of them also make several such trades during a same trading day,
ending up with a much higher total daily return. But overall, if you
can consistently make an average of 0.5% to 2% per trade (or even per day), you will of course
end up with outstanding YEARLY returns in the 100% to 500% range and more
The main downside of
starting to trade with a relatively limited capital is that the impact of
the commissions on your NET $ PROFITS will of course be greater than it
would be if you were trading $20,000 or $50,000. This is simply
because of very basic mathematical calculation.
Let's use two examples to illustrate that point...
1 Let's say for example that you BUY the stock MICROSOFT
at $100 and you SELL it, 20 minutes later, at $102 therefore making a 2%
RETURN (before commissions) on that trade.
Let's now assume that you were trading with a capital of $5,000.
This 2% RETURN will therefore translates into a
$100 profit (5,000 x 0.02) from which you will have to
deduct the trading commissions COSTS (usually $10 for each transaction
with a total of $20 to complete a trade ("buy / sell")).
This will give you a NET PROFIT (before taxes of course) of
$80 ($100-$20) which now
represents a NET RETURN of 1.6% (which is lower than your
original 2% NET RETURN).
Now if you had made that very same trade on a
$20,000 capital, your GROSS PROFIT would have been $400 (20,000 x 0.02) and
your NET PROFIT (after $20 of commissions) would now be $380 which is now
a NET RETURN of 1.9% which is much higher than the 1.6% of the
previous example and which is also much closer to your original return of
2%!... This is a substantial difference of course, especially when you
"add up" all
those 0.X% differences at the end of the year, on hundreds of trades !
We used this example just
to demonstrate to you how everything really works and the incidence of starting
to trade with a relatively
low amount of capital. It is of course very possible as long as you
know how it will impact your net $ profits.
Just remember that if you decide to start trading in those
conditions, your main goal will be to LEARN and to PRACTICE. It will be to give yourself a chance
at entering the trading World and an opportunity to find out if you could
actually become a great and very profitable trader or not.
If you do
become successful, you will hopefully have many options to start
trading a much higher capital and therefore you will end up making much
higher NET $ PROFITS.
Also, if you find out that you are indeed
becoming a good and consistently profitable trader, you will have the option to trade on "margin", allowing you to DOUBLE
your NET $ PROFITS using only the same amount of your own
Many beginners like to consider the
"paper trading" option which, to us, is like trying to learn how
to fly a plane by only reading books. Until you really get yourself
into a real plane and take off, you won't be learning much about the
realities of flying! And whether you start by flying a small plane
(limited trading capital) or a commercial airliner (larger trading
capital) will not matter that much as long as you get
started and you start to do some REAL flying ("REAL
It is the exact same thing in our trading
World... Whether you start trading with a few thousand dollars or
with $100,000, the only way for you to really start your trading journey
... will be to actually start to trade.
(as of September 2001): The NASD, which regulates many things and
rules for stock brokers and their customers (you and us), started
implementing several new rules in terms of minimum capital requirements to
be able to "day trade" etc. Please make sure that you
visit their website to read and learn about their latest updates on these
new rules (you can also contact them directly or contact your broker about
Their Website address is: http://www.nasd.com/default.asp
a very new type of account has been created by a European
Direct Access broker which might allow you to "day trade"
without limitations and with a much lower capital requirement.
This type of account is open to everyone but American and Canadian
citizens. If you would like more information about it, please click
here to visit the Website of this broker and contact them
for more detailed information.
We hope that those few lines will help you to
better understand how things really work and allow you to make the best decision for
PM Traders, Inc.