How To Start Day Trading With $500 | Beginner’s Guide (2024)

Day trading is increasing in popularity, and smaller investments are an ideal way for beginners to get started. Before you can do any type of trading, you need to create an account with a reputable broker and deposit your funds. Many trading platforms will not require a set minimum deposit for opening an account, so you can get started with small amounts.

In this post, we discuss important factors to consider before embarking on your day-trading journey and how to avoid rookie mistakes.

What to Do Before Day Trading With $500?

Over 70% of beginner day traders blow their accounts after a few months. To avoid these pitfalls, traders must evaluate themselves with the following factors:


Beginners should stick to the basics first. Strive to understand foundational technical indicators, market theories, and strategies.

Never rush to learn or buy ‘secret trading strategies’ as most of these are gimmicks. There’s a wealth of day trading material on the internet and you can take advantage of these free and cheap resources to build your fundamentals.

Markets are growing more complex daily, and new trading instruments occasionally pop up. You’ll also need to keep up with the economic and other financial news to understand their impact on market trend volatility.

Financial Goals

You won't earn hundreds of thousands of dollars or become a millionaire overnight. Aim to hit a winning rate of over 50% and start small. Profits per day may be less than 1%. Expect to grow your account by between $1000-$2500 annually.

Practice Trading with Demo Accounts

Before risking your capital, start experimenting with your trading strategies, market theory, and platform tools. Dummy accounts allow you to gain meaningful experience without losing money.

Most day trading platforms will allow customers to set up demo accounts. They provide virtual funds and mirror actual market conditions.

Trading Strategy

Develop a trading strategy that supports your investment plan. A good strategy should recognise the following parameters:

  • The Time to Trade: Day traders need to monitor markets and spot opportunities continuously. Day trading will be difficult if you have limited time to spare.

  • Funding: Don’t risk all your capital. Successful traders also set a risk limit of less than 2%.

  • When to Enter the Market: You can use tools such as intraday candle stick charts, real-time news, and ECN/level 2 quotes. Indicators to look out for include momentum, volatility, and volume.

  • When to Exit the Market: You can use market momentum and daily pivots to exit, depending on your trading instrument.

  • Risk Management: Use trailing stop-loss orders, profit targets, and guaranteed stop-loss.

  • Maintain Exemplary Records: Many expert traders are also great record-keepers. They want to know precisely why and how they won or lose a trade. Targets, entry and exit points for each trade, time, levels of support and resistance, daily opening range, market open and close, and notes on your rationale for the trade and any lessons you learned should all be noted down.

  • Backtesting: Expose your trading strategy to historical data (backtesting) to see whether it aligns with your game plan.

Select a Broker

The good thing is that many brokers have scraped high minimum deposits. However, opening an account with the right trading partner is paramount for success. Some platforms aim for traders in a specific niche, while others cater to different levels of trading prowess.

A good day trading broker will typically exhibit these traits:

  • Inexpensive fees and commissions

  • Low minimum deposit

  • Wide range of features and functionalities

  • Quick and cheap deposit options

  • Regulated and secure platform

  • Good execution speeds

  • Research capabilities

ECN (Electronic Communication Network) brokers improve day trading by helping traders capitalize on market opportunities with low fees and spreads. Ensure that your broker offers micro lot trading (0.01 lots).

Intraday traders should know that the US pattern day trader rule (PDT ) restricts investors with $500 capital to three-day trades in a consecutive five-day period.

What Financial Instruments to Invest in Day Trading?

The most popular intraday trading includes forex, trading stocks, futures trading, options, and index funds. Before settling on an instrument, you must understand its rules and qualities.

Forex Instruments

Forex trading is popular with traders who understand how market movements and global events influence forex volatility. Short-term traders invest in forex due to high liquidity, minimal capital requirements, low fees, and high volatility.

Consider trading the EUR/USD, USD/JPY, and GBP/USD pairs. Due to lower liquidity, avoid long-term pairs such as USD/CAD and exotic pairs.

Forex derivatives such as forex futures and forex options are popular among traders.

Commodity Futures

Commodity futures are derivative contracts that depend on a physical asset's future price. Physical commodities such as crude oil, gold, silver, and wheat are highly liquid. They provide intraday traders opportunities to speculate on price shifts. These futures come with an expiration timeline.

Index Futures

An index futures contracts are between two parties that allow investors to trade on a financial index and settle it at a predetermined time. Examples include the Nasdaq, S&P 500, and Dow Jones Industrial Average(DJIA) index futures. Traders speculate future price changes in the underlying equity index, e.g., stocks or a basket of stocks.


Exchange-Traded Funds also boast high liquidity and low costs. They are a financial asset made from a combination of several large companies within the exchange. EFTs, offer real-time stock trading and the diversification of a mutual fund. Examples include the VOO, which tracks the S&P 500 index, and the Vanguard Total Stock Market EFT.

Contract For Difference (CFDs)

Intraday CFDs focus on highly volatile markets and involve closing positions within the day. Short-term speculative traders can use CFDs to profit from small price fluctuations in the market. Traders can watch out for changes in the stock market, indices, or forex and try to take advantage of opportunities.

Hypothetical Scenario

Assuming you trade forex with the $500 on a broker who offers micro lots, here’s what an excellent session would look like.

  • Assume a winning rate of 50%

  • Four trades, with a target of 8 pips and an average stop loss of 5 pips

  • Day trading the $500 in the forex market for 20 days per month using a micro lot of 20.

  • The 20-micro lot will keep the risk below $5(1% of $500).

  • Working out the possible loss = 20 X $0.05 X 5pips = $5 being risk per trade.

Working out the possible profits

  • Four trades X 20 days = 80 total trades per month

  • 50% winning rate X 80 trades = 40 trades are winnable

  • A winning trade with eight pips translates to 8pips X 20 micro lots = 16$

  • Losing trade with 5 pips translates to 5pips X 20 micro lots = $10

  • Winning total trades 40 X $16 = $640

  • Losing trades 40 X $10 = $400

  • Monthly profits $640-$400 = $240

  • Total commissions 80 trades X 20 micro lots X $0.05(round trip)= $100

  • Monthly profit, including commissions $240-$100 = $140

  • The percentage return is 14% on a $500 account.

Conclusion: How to start day trading with $500

Even with limited capital of $500, getting into day trading is possible. However, before investing you should get the fundamentals right by learning, selecting a good broker, and devising a working trading strategies. This will increase your odds of success.

Day investors can trade many financial instruments, including forex, futures, options, and EFTs. Remember that more than 70% of retail investors lose their money. Pick your desired trading instrument and stick to your trading plan.


Can you start day trading in the US with $500?

What is the minimum amount to start day trading?

Can you trade options for only $500?

Can you day trade with little money?
How To Start Day Trading With $500 | Beginner’s Guide (2024)


How To Start Day Trading With $500 | Beginner’s Guide? ›

making $500 to $5,000 + A DAY is Not Unreasonable… I myself have made this and Much Much More. Many Times with less than $30K, or $40K in My Account… as anyone with $25,000+ qualifies as a Margin Trader…OK..

Can I make $500 a day day trading? ›

making $500 to $5,000 + A DAY is Not Unreasonable… I myself have made this and Much Much More. Many Times with less than $30K, or $40K in My Account… as anyone with $25,000+ qualifies as a Margin Trader…OK..

How much money should a beginner day trader start with? ›

It's common for day traders to start with anywhere from $30,000 to $50,000 or more. 3. Additional Costs: Beyond the minimum capital requirement, you'll also need to consider other costs such as trading commissions, platform fees, data feeds, and taxes.

How many lots can I trade with $500? ›

You have $500 and decide that the acceptable risk level is 2% of your account. With 1:100 leverage, your need to choose ($500 * 0.02) / 100,000 * 100 = 0.01 lots. With $1000 on your account, you will be able to trade ($1000 * 0.02) 100,000 * 100 = 0.02 lots.

How much do you need to make $100 a day trading? ›

You're really probably going to need closer to 4,000 or $5,000 in order to make that $100 a day consistently. And ultimately it's going to be a couple of trades a week where you total $500 a week, so it's going to take a little bit more work.

Can you make $200 a day day trading? ›

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

Can I make 1k a day trading? ›

Earning Rs 1000 per day in the share market might seem ambitious, but it is achievable with the right strategies, knowledge, and discipline. The share market offers numerous opportunities for traders and investors to generate consistent profits.

What type of day trading is best for beginners? ›

Overview: Swing trading is an excellent starting point for beginners. It strikes a balance between the fast-paced day trading and long-term investing.

How many hours do day traders work? ›

Most independent day traders have short days, working two to five hours per day. Often they will practice making simulated trades for several months before beginning to make live trades. They track their successes and failures versus the market, aiming to learn by experience.

What is a good day trader salary? ›

Day Trader Salary
Annual SalaryMonthly Pay
Top Earners$185,000$15,416
75th Percentile$105,500$8,791
25th Percentile$56,500$4,708

Which lot size is better for beginners? ›

Micro and nano lots are used by beginners who want to experiment in forex markets without risking much capital. The larger the lot, the higher the profit or loss could be.

Can I day trade with $100? ›

Can You Start Trading With $100? Yes, you can technically start trading with $100 but it depends on what you are trying to trade and the strategy you are employing. Depending on that, brokerages may ask for a minimum deposit in your account that could be higher than $100.

Why do I need $25 000 to day trade? ›

Why Do I Have to Maintain Minimum Equity of $25,000? Day trading can be extremely risky—both for the day trader and for the brokerage firm that clears the day trader's transactions. Even if you end the day with no open positions, the trades you made while day trading most likely have not yet settled.

How hard is day trading? ›

Day trading is tough. A University of Berkeley study found that 75% of day traders quit within two years. The same study found that the majority of trades, up to 80%, are unprofitable. While some day traders end up successful and make a lot of money, they are the exception rather than the norm.

Why do day traders lose money? ›

Another reason why day traders tend to lose money is that it's very different from long-term investing. While traders take advantage of price swings (which means they have to make specific predictions), investors tend to buy a diversified basket of assets for the long haul.

Can you make a living day trading? ›

In summary, if you want to make a living from day trading, your odds are probably around 4% with adequate capital and investing multiple hours every day honing your method over six months or more (once you have a method to even work on).

How much money can you realistically make day trading? ›

Some traders aim to earn 1%-2.5% of their account balance daily. It should be noted that higher risks usually accompany higher returns and that traders who risk more have a higher potential to blow out their trading accounts. Many profitable traders attest to the importance of proper risk management.

How much can an average day trader make? ›

Day Trader Salary
Annual SalaryMonthly Pay
Top Earners$185,000$15,416
75th Percentile$105,500$8,791
25th Percentile$56,500$4,708

How much money do I need to make $1000 a day trading? ›

In order to make $1,000 in a day on a stock that increases 10% in a day, you would have to invest $10,000 in that stock. If you wanted to trade on margin, you could invest a little more than $5,000 and still make $1,000 on that trade.

How much money do day traders with $10,000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

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