Maintenance margin is the exchange-mandated minimum amount that must be kept in a brokerage for each open contract. It is usually less than the initial margin. Because the margin amount is small compared to the contract price, the position is leveraged -- a small movement in the price of the underlying asset can cause a large percentage move in the contract value.

That is why it is unrealistic to consider trading futures without enough cash to safely cover the daily price movements of your futures contracts. On the same exchange, a foreign currency futures contract on Canadian versus U. Eric Bank is a senior business, finance and real estate writer, freelancing since He has written thousands of articles about business, finance, insurance, real estate, investing, annuities, taxes, credit repair, accounting and student loans.

Eric writes articles, blogs and SEO-friendly website content for dozens of clients worldwide, including get. His website is ericbank. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm.

Visit performance for information about the performance numbers displayed above. More Articles 1. The not-so-good news is that you are asking whether it's reasonable to learn enough to make a living during those few months. The first answer is that every student has a different ability to learn and some just have a better aptitude and can understand how options work more quickly than others.

So yes, it is possible to produce earnings within that time slot. But not everyone can move that quickly. To succeed, you must understand what you are trading, and that means taking time to learn options basics. You should have no trouble understanding that options are different from other trading vehicles. But I must warn you that some traders never get the special characteristics of options and mistakenly believe that they can be traded as if they were stocks.

Options are different; not difficult to understand, but they are different. If you are brand new to trading, that means there is even more to learn, including basic things such as how to enter an order, how to use your broker's trading platform, the different order types market, limit, stop, etc. Someone with stock trading experience is already familiar with those items.

How Much Money Do You Need to Start Day Trading?

In addition to how options work, the trader must possess or be able to develop certain personality traits. Jo, if you are willing to learn how options work, and if you believe you can demonstrate the traits listed below, then you may very well be able to succeed…but no guarantees. I do want to mention one important point.

If you expect to make money income by buying options and then selling them for profits, let me tell you that this is an almost impossible path. When earning an income stream, the method of choice is to adopt specific option selling strategies, all with limited risk.

Anyone can trade. But to have a chance of making money on a consistent basis, the trader must have:. High rewards come with high risk. That's a very good return. Most professional traders cannot earn that much. That sounds right to me. However, to give you a better answer, I must ask: How much cash do you have for trading? This is a key question that most beginners ignore.

They assume they can earn the same amount of money, no matter how much cash is in the account.

How to Trade Options in 4 Steps - NerdWallet

This is a huge fallacy. When you begin with a small sum, the risk of ruin, or the probability of going broke, is very large. When you have extra cash, you can withstand a string of small losses and still stay in the game. Also, when you have a small account, if you have outstanding success and double the account in one year, the total dollars earned is small. It does take money to make money.

Thus, I repeat: How much cash do you have? That will not take you very far. I assume you would want to earn a minimum of ten to 20 times that amount. To do that, you would have to take big gambles. There's a chance that you could have a nice win streak and quadruple your money in a year or so. But the most likely outcome of seeking such huge returns is the loss of all your capital. Yes Jo, you can do it. If you have the patience. If you take the time to learn and are not rushed into trading. And if you have sufficient capital to give you a realistic chance. If you lack the capital, you can still learn and trade part time.

If you grow the account, if you save more cash over the years, if you show the talent and discipline, you may eventually have enough to try trading full time.

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I wish I could offer better encouragement, but trading is not a business for everyone. Being a successful investor can be very rewarding over the years.

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Trading full time is different. On average, far more traders go broke than become experts. Very few become experts. This question depicts another trader mindset that I believe demonstrates no conception of reality. How long does it take to become an expert?

A lifetime. With that definition, few are experts. Trading is a game in which you are continually learning.

Want to add to the discussion?

And that's important because markets change over time and if you still do whatever it is that you are an expert at doing, eventually it will no longer work and you will cease being an expert. It is not necessary to become an expert. You do not have to earn more than the next guy. In my opinion, you can do well earn decent income if:.