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Chapter 10. Trading Systems > Frequently Asked Questions

Frequently Asked Questions

FAQ #1: How Much Money Do I Need?

Ed Seykota was once asked how much money someone should have before starting to trade. He responded: “Good money management is equity invariant. I’d ask a trader who thinks he needs a certain amount before he can trade exactly what amount he would need to stop trading.” His point is that there is no dollar amount too little or too big that allows you to sit back and assume that your starting capital alone is some secret key to success.

There are numerous factors related to the correct amount of starting capital, not least of which is a trader’s own personal discipline and ability to stick with it. Anyone who promises a magic number of how much is needed to win is not truthful. No one can guarantee you profits. But what if you have unlimited resources? That should be to your advantage, right? However, unlimited starting capital can be a benefit or a strike against you. Jaromir Jagr, the famous hockey player, and William Eckahrdt, Richard Dennis’ longtime partner, obviously have contradicting views on how much is enough starting capital. Jagr sounds like a riverboat gambler:


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