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 make money day trading with $500? ›

With just $500, your choices dwindle quickly. If you're looking to make meaningful cash returns, you need one of two things: leverage or volatility. Micro futures are futures contracts that require much less capital than their traditional contract counterparts.

How do I start day trading as a beginner? ›

Here is a day trading guide for beginners
  1. Learn the basics of the stock market.
  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.

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.

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.

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.

What is a good day trader salary? ›

While ZipRecruiter is seeing annual salaries as high as $269,500 and as low as $39,500, the majority of Day Trader salaries currently range between $56,500 (25th percentile) to $105,500 (75th percentile) with top earners (90th percentile) making $185,000 annually across the United States.

Which 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.

Is it illegal to day trade with less than 25k? ›

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.

Is there a trick to day trading? ›

Set a Financial Loss Limit

It's smart to set a maximum loss per day that you can afford. Whenever you hit this point, exit your trade and take the rest of the day off. Stick to your plan. After all, tomorrow is another (trading) day.

What is the first rule of day trading? ›

The so-called first rule of day trading is never to hold onto a position when the market closes for the day. Win or lose, sell out. Most day traders make it a rule never to hold a losing position overnight in the hope that part or all of the losses can be recouped.

What equipment do I need to start day trading? ›

These are the basic tools you need for day trading. A reliable and quick computer or laptop is a must, along with a telephone and trading-charting software. You also need a quick and reliable internet connection. Also, consider getting a smartphone with a plan that you can use as a backup internet source.

How to make 100$ a day? ›

In conclusion, making an extra $100 a day is possible with some effort and creativity. You can start a blog, do freelance writing, complete online surveys, sell products online, drive for Uber or Lyft, rent out your home or space, sell photos online, or become a virtual assistant.

Can I live off 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 can you make day trading with $500? ›

Therefore, if you have $500, we recommend that you focus on growing these funds gradually over time. This means setting a goal of making just a few dollars every day. For example, if you make $10 per day, that will equate to $50 per week and $200 in a month, which is almost 50% return.

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.

Can you make money in the stock market with $500? ›

Even $500 is more than enough, and it can grow to thousands of dollars if you pick a good investment and give it time. For example, had you invested $500 into the Vanguard Growth ETF (NYSEMKT: VUG) when it was created in 2004, you would have nearly $4,000 today.

What leverage is good for $500? ›

Leverage of 1:100 means that with $500 in the account, the trader has $50,000 of credit funds provided by the broker to open trades. So 1:100 leverage is the best leverage to be used in forex trading.

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