Hello, In my mentoring program I come across traders who start young and with a small portfolio, around 20K$, On one-hand its very good to start small since you have to learn the basics, On the other hand, a small portfolio can generate low returns thus discouraging the trader, Any ideas on how to make money with a small portfolio?
consolidate into 1 or 2 plays until you make some gains to branch out. im not a fan of buffet but its one of the few things i agree with him on.
What kind of mentoring program is this? Are you trying to display responsible risk management into the kid?
Each return comes with a risk. There is no free lunch. Which is why I asked about the level of risk you are willing to take. Your first step will be to define how much risk you are willing to take: which percentage of your investments are you willing to risk losing (per day/week/month). Only then can you determine what kind of investments are within scope, an which ones are out of reach.
Here's an idea on how NOT to lose money. Open an account at Interactive Brokers, choose the zero commission option (IB Lite) and use the IB paper trade account with 20K until the mentee can double it to 40K.
Thing is, 99% newbs have neither skilk or patience to take this aproach. But the 1% who does, yup, that's it. I still would suggest 5 to 10 positions.
Exactly, it's hard to explain this concept to a newbie, a new trader enters the market with expectations to double every few months, like he saw on the news, they don't see the patience element of the trade.