Can I Day Trade in the Stock Market using $100?
The stock market used to only be available to a handful of investors and traders — those who had money, influence, education, and interest in such things. However, this changed when the internet went mainstream, and stock trading became available online.
Suddenly, everyone was able to jump in at any point, and with almost any amount of money. Making smart investments, keeping track of new events, looking into historical data, and developing successful strategies became a very popular way for traders to spend their time.
For a lot of people, stock trading became their main source of income, especially today, when there are so many different options, various brokerages, trading bots, and alike. Many have even left the stock market to trade other assets, which they find more exciting, profitable, or easier to deal with.
However, the bottom line is that for those interested in stocks — there is little standing in their way if they really wish to trade or invest.
Can you start trading with $100?
When it comes to newcomers to the trading world, many are willing to try it out, but they do not like to have to risk a whole lot of money on something like trading. Most people seem to be comfortable with dedicating around $100 for trading, and that is fine, for some assets.
For stocks, however, entering the market with only $100 is technically possible — if you can find a broker that would let you enter with such a low amount. However, the real question is whether or not it is worth it.
You see, when it comes to stock trading, there are certain things you need to keep in mind. For example, you will likely manage to deposit your funds for free. However, trading comes with a number of fees, even if you day-trade.
Day trading revolves around the opening and closing a position within the same day. So, you invest your money by buying stocks in the morning, and you sell them by the end of the day, with the goal of profiting from your decision.
However, you have to make pay the fee for buying stocks, and you have to pay the fee for selling stocks. In other words, even if you enter with $100, you will have less than that for actual trading.
Meanwhile, it is also worth keeping in mind that most stocks are not that volatile unless there is great market unrest. That means that their prices could move only a tiny bit, and let you earn extremely small amounts.
And even all that only comes if you made the right call, and the stock's price actually grew, as opposed to dropping.
As you can see, there are a lot of problems with approaching the stock market with only $100 for day trading. You do not only have to find a broker who would let you in — most brokers demand that you start with $1000, $2000, or even $5000 — but you also need to make the right decision by investing in a volatile stock that is moving in the right direction.
So, provided that you satisfy all of those requirements let's talk about whether or not you can actually make some money.
Can you make a profit by day trading at $100?
We will be honest — the situation does not look that good.
Let's imagine a scenario where you found a broker that will let you trade with $100. Let's also assume that you had a successful first day, that allowed you to earn 3% on your investment.
So, you come in at $100, and your first move is to buy stocks, which could cost you about $7 in fees. Already, you only have $93 to actually buy actual stocks. And, since you will also need this amount to sell stocks at the end of the day, let's say that you only use $86 for purchasing stocks.
As mentioned, we will assume that you managed to make 3% on your first day. With that in mind, you would only make a profit of around $2.55, and at the end of the day, your balance would sit at $88.55.
So, you have entered the stock market with $100, and at the end of your first successful day, you have $11.45 less than you had in the morning. Repeating this on a daily basis will only continue to reduce your balance, as you cannot really hope to make enough in a single day to even match the fees, let alone see some actual profit.
Not to mention the fact that you are extremely unlikely to have every day be your successful trading day that will bring 3%. In other words, you can maybe use $100 to do a few experiments, but as far as becoming a successful trader goes, you won't get very far with this amount.
How much do you need to start day trading stocks?
Trading stocks can be very profitable, so if you have studied the market, trading strategies, new events, and you know what you are doing — you can make some great money even if you day trade.
However, if you are new, you should likely not take too many risks until you get better acquainted with the market, and learn how it acts and reacts. As for how much money you will need to start, it all depends on your broker.
As mentioned, brokers have a bottom line that you need to match. For some, that is only around $1,000. For others, it can be as high as $10,000, or more. Of course, there are also some that require you to have a lot more than that, but they are typically not too accepting of just anyone, and they only work with professionals.
But, finding a broker that will let you start with $1,000 is already much easier than looking for those who will let you in with only $100. Your profits will likely still be very low, even if you are successful. But, with $1,000-large balance, you actually stand a chance at ending the day with a bit more than what you originally started with, provided that the price moves in a beneficial way.
You should keep in mind that time is your most valuable asset, apart from the funds themselves. If you are looking for a quick profit, you might want to start with an even higher amount. There is a risk that you will lose a considerable amount if the prices go down instead of up, but if you make the right call, you can end up with a nice sum at the end of the day.
Also, be prepared for the fact that you won't make the right call every day. Sometimes, there are price movements that no one could have predicted, and you might actually see losses.
This is why you should try to look at your performance over a monthly period, rather than daily or weekly. If at the end of your first month, you had more than what you started with, you can officially say that you have been successful. If not, then it is time to work on modifying your strategy.
Can you really do nothing with only $100?
Of course, there are many who cannot afford to risk a huge amount like $10,000, or even $1,000, for that matter. However, if $100 is all you can afford to use right now, there are still things you can do with this money.
For example, you can buy stocks of a company that you have high hopes for, and simply keep them for a certain period. These are long-term investments, as opposed to day trading, and you can choose to keep the stocks anywhere from 1 month to entire years.
A great thing about stocks is that there is no expiration period, so you can wait for 10 years if you wanted to. In the meantime, you can earn a bit of money by being paid dividends, in addition to watching your profits grow alongside the firm's stock price.
And, if this is also not interesting to you — it does require patience, after all, and you won't benefit that much with only $100 to be worth it on a multi-year basis — you can consider other possibilities.
For example, many would say that trading options is better if you only have $100 to spare. There is significantly more risk involved, especially if you trade with leverage. However, $100 with high leverage can secure very nice earnings, provided that you get it right.
Be warned, though, that trading options with leverage, if you don't know what you are doing, is likely going to lead to a complete loss of your investment. If you are unsure about this, it is best to leave it alone for now, and study it further.
A great thing about online trading is that you can invest in anything, with nearly any amount. However, you need to keep in mind that there are plenty of fees to pay along the way, which is the cost of such benefits.
With that said, you should also consider the risks, potential gains, as well as the time needed to reach actual profit. When it comes to day trading stocks, an amount as low as $100 is not going to cut it. It is simply too low, and even in the best-case scenario, you will be at a loss, simply due to the fees.
Such low amounts can be better used for long-term investing, or trading other assets. If that is acceptable, then go for it. If you wish to stick to the stocks, we advise saving up a bit, until you can enter with a higher amount.
Author: Ali Raza - A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and writes extensively about the financial markets and fin-tech industries.