How much to start trading?

I have been asked how much money/capital does one need to start trading credit spreads? And I will tell you that it is more of personal preference and also how much risk you are willing to accept and how much risk you can afford. But I will give you my rules…

First, trading options should only be a part of your entire investment portfolio. In my opinion it should only be a maximum of 10% of your total investments, to me this includes items such as real estate, gold, stocks, ETFs, Mutual Funds, etc, etc.

For an exact amount - ideally I would start with $10,000, however $5,000 is acceptable and $2500 is the absolute minimum.

Personally I use a $10,000 account and use the profits to put into my ETF accounts. If I have a loss or a couple…LOL…I will replenish the amount to maintain my $10,000 account or I will keep the profits in the account until $10,000 is reached again. It is a systematic approach with specific rules that I keep. This is the way to win at this game, make rules and stick to them.

I also only risk a  maximum of $25% per trade and preferably 10%. So with my rules I am risking 10% of 10% of my total account or a total of 1%, if you follow the math.

Now what I started with when I first opened my options account was $2500 which I promptly lost then I put another $2000 and was able to lose than in another 6 months, then another $2000 and I finally learned how to trade to make a consistent profit.

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