As of writing this blog post in 2024, having been trading for 8 years, I can confidently say that there has never been a better time to become a day trader. Since the introduction of home computers and now cellphones the accessibility to be able invest in the stock market has never been easier. In the last 6 years alone the introduction of Robinhood, Micro Futures Contracts and Prop firms has only exploded the barrier to entry to day trade or invest. Today we will cover how these three outliers have benefited everyday traders and how you can learn to trade with as little as $50.00.
Low Commission Structure :
Before Robinhood (brokerage platform) the average commission rate to open a trade whether options contracts or shares was as high as $10 to open and close per share / contract exchanged. Not only was that a steep barrier to entry for most individuals but the hefty account minimum requirements just to open and account in order to invest where starting at $600 - $2,000 depending on the brokerage firm. Ever since Robinhood entered the market place in later 2014 it completely flipped the investing industry on its head and eliminated the hefty costs of being able to invest and day trade for everyday investors. You now have the ability to open and close a trade with near $0.00 costs of commissions (options contracts require a $0.03 regulatory fee as late) and no account opening minimums. Which means we get to keep more of our profits and start investing with as little as you can, there is now even the ability to purchase fractional shares, as low as $1.00 which only has provided more opportunity to own higher share cost blue chip stocks such as Google, Apple, Amazon and Chipotle (currently trading at $2,869 per share at the time of this article).
High Leverage Low Margin Requirements:
Futures trading is very high risk high reward game given the exuberant amount of leverage the asset has. Just to put into perspective 1 Mini contract of the S&P futures per 1 point it moves up or down is value at $50.00. On average the S&P moves about 20-50 pts on any given day that is a total move of $1,000.00 - $2,500.00 per day on 1 contract. The notional leverage of this kind of trading is similar leverage of someone trading with $250,150.00
Contract Size 1x ($50) x Index Price ($5,003) as of 4/21/24 = $250,150.00 Notional Value
This amount of leverage does not come without certain margin requirements and barriers to entry of course.
In 2019 the CME exchanged introduced Micro contracts which provided the ability to have access to the futures market with only 1/10th of the costs and leverage to be able to participate in those large moves within the indexes. Now everyday day traders can have access to the same movements in the futures market with $100.00 or more per account, and 1/10 the amount of downside risk. Check out one of my preferred futures brokers Amp Futures. There has been a recent change in the market that allows you to trade with as little as $50.00 so stay tuned.
Prop Firm Trade Funding:
Prop firm's have been around since the 1980s it wasn't until the last 6 years that the online trading industry took a huge leap and began offering the ability for experienced traders to have access to higher forms of trading leverage. Prop firms give traders the ability to have access to $50k - $300k sized account leverage by paying and passing an evaluation for these accounts from starting from $50 - $250.
One thing we must keep in mind is that although the barrier the entry for these challenges / funded trading programs are low compared to the overall leverage you have exposure to, they inherently are meant to entice inexperienced traders lose money.
These funding challenges are meant for responsible traders who have experience and can objectively manage risk that have a profitable trading system that they can use to further leverage their trading skills to further the amount of money they can extract from the markets.
If you are an experienced trader and have a profitable trading system check out these prop firms I have reviewed that I personally use to day trade!
Conclusion:
No matter what background you have there has never been a better time to learn, execute and invest. The industry has become more readily accessible to all consumers regardless if you are looking to invest for the long term and slowly build out a portfolio or you wish to learn to create another source of income by day trading the various different products the financial markets have to offer whether, selling / buying options , futures or swinging shares of a trending stock!