I quite often get e-mails from people wanting to get into futures trading. I can't blame them, given the high profit potential. But profit is usually the only thing new traders see, and they neglect one key success factor- specifically how much capital they need to start trading with.

Most of these e-mails have the same theme "I have X dollars, what should I trade?" The problem is X is almost always very small, typically under $5,000, sometimes as low as $500.

My response is the same: "Unless you have more than $10,000 to risk, you are better off not even trading futures. The risk of ruin, especially as you learn your way around the trading game, is just too high with a small starting capital base."

I won't bore you with the math, but this can be proven mathematically. Less capital equals greater risk of ruin. And once you are ruined, you are out of the game, at least until you can secure more capital.

Of course, my response usually evokes an upset reaction from the questioner. They understandably want to trade, and trade right now! They then accuse me of crushing dreams, being too negative, and being a downright sourpuss. So, they go elsewhere, find someone willing to take their tiny account, and of course inevitably it gets blown to pieces.

How do I know this? After the initial outrage to my response, I tell people: "Look, I am speaking from experience, and I know what I say is true. But if you are able to turn your very small account into a significant amount before you blow out the account, write me back. I will stop giving this advice, and you can rub my nose in it."

In five years of giving this advice, no one has ever written back with their success story.

So, don't start trading with a small account. Instead, learn all you can about trading, and at the same time, increase the amount of risk capital you will start with. It might take 6 months, or a few years, but don't worry - the markets will still be here. And then, you'll be much better prepared to succeed.