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.

  • 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)


Can you day trade with only $500? ›

Many people believe that you need at least $1,000 to start doing day trading, but that's not necessarily the case, in fact, you can start with little money. With careful planning and execution, it is possible to start day trading with just $500.

How do I start day trading as a complete beginner? ›

Here is a day trading guide for beginners
  1. Learn the basics of the stock market. Before you start day trading, it is important to have a good understanding of how the stock market works. ...
  2. Choose a broker. ...
  3. Set up a demo account. ...
  4. Develop a trading strategy. ...
  5. Start small. ...
  6. Be patient. ...
  7. Manage your risk. ...
  8. Take breaks.
Aug 10, 2023

Is it hard 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.

How to day trade with $500? ›

Steps to start day trading with $500
  1. Educate yourself about trading. The first important step to follow when you want to start day trading is education. ...
  2. Set realistic expectations. ...
  3. Use a demo account well. ...
  4. Keep track of every step. ...
  5. Master risk management strategies. ...
  6. Start with small trades. ...
  7. Adopt easy-win strategies.
Mar 23, 2023

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.

What type of day trading is best for beginners? ›

Start Small

As a beginner, focus on a maximum of one to two stocks during a session. Tracking and finding prospects is easier with just a few stocks. It's now common to trade fractional shares.

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

What are the golden rules of trading? ›

Let profits run and cut losses short Stop losses should never be moved away from the market. Be disciplined with yourself, when your stop loss level is touched, get out. If a trade is proving profitable, don't be afraid to track the market.

How to learn trading from scratch? ›

8 steps to start trading
  1. Understand how trading works.
  2. See examples of trades.
  3. Research the available markets.
  4. Know the risks of trading and how to manage them.
  5. Learn more about trading styles and strategies.
  6. Create a trading plan.
  7. Begin trading on a practice account.
  8. Get into trading by opening your live account.
Sep 5, 2022

How to start trading with no experience? ›

The following tips will help you begin your journey in stock trading.
  1. Open a demat account. ...
  2. Understand stock quotes. ...
  3. Bids and asks. ...
  4. Fundamental and technical knowledge of stock. ...
  5. Learn to stop the loss. ...
  6. Ask an expert. ...
  7. Start with safer stocks.

Is $1000 enough to day trade? ›

Believe it or not, you can start forex day trading with $1,000 or even less. It requires mastering position sizing and managing risks, but if you navigate your way to success, the rewards can be significant. In this article, we will discuss in detail how you can day trade with $1000.

Can I make 1000 per day from trading? ›

Earning Rs. 1000 per day in the share market requires knowledge, discipline, and a well-defined strategy. Whether you choose day trading, swing trading, fundamental analysis, or any other approach, remember that success takes time and effort. The share market can be highly rewarding but carries inherent risks.

Why is day trading so hard? ›

Moreover, emotional control is crucial; day traders must avoid common pitfalls like overtrading or letting emotions drive their decisions. The steep learning curve, combined with the need for discipline, consistent strategy, and the ability to handle losses, makes day trading a hard thing to succeed at.

Is there a minimum amount to day trade? ›

First, pattern day traders must maintain minimum equity of $25,000 in their margin account on any day that the customer day trades. This required minimum equity, which can be a combination of cash and eligible securities, must be in your account prior to engaging in any day-trading activities.

How many lots can I trade with $500? ›

It's possible to change the position size if the size of your account significantly changes. The point value will be the same for you all the time. You have $500 on your account. With 1:100 leverage, this amount will be enough to make 50 trades of 0.01 lot each.

How much money is enough to day trade? ›

The Financial Industry Regulatory Authority (FINRA) requires at least $25,000 in your brokerage account to allow day trading. Otherwise, the broker will restrict your trading ability. You may need more capital depending on how many trades you plan on making.

Can you day trade with less than $1000? ›

Believe it or not, you can start forex day trading with $1,000 or even less. It requires mastering position sizing and managing risks, but if you navigate your way to success, the rewards can be significant.

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