Trading account size calculator
How large your trading account should be depends on what you want it to earn and on what your setups need to be traded without taking big risks. Enter a monthly income goal, a believable monthly return, your tax rate, risk per trade and the risk on your smallest normal trade, and the calculator shows the capital each goal calls for. It also points out the $25,000 minimum for frequent day trading in US margin accounts.
Capital each goal needs
The money each requirement calls for, next to what you have now. The tallest bar decides the account size.
Account size at other returns
Capital needed to meet your after-tax income goal at a spread of average monthly returns. Most traders who survive long term sit in the upper half of this table.
| Monthly return | Yearly, compounded | Account needed | Monthly pre-tax profit |
|---|
How the account size is decided
Three separate tests are run, and whichever needs the most money sets the account size.
For the income goal
Add tax to the goal, then divide by your monthly return.
account = goal ÷ (1 − tax) ÷ monthly return
For safe trading
Your smallest normal trade has to fit inside your risk per trade.
account = smallest trade risk ÷ risk %
For day trading
US margin accounts that day trade often need at least $25,000.
account ≥ $25,000
What your money earns now
Today's capital at your return, after tax.
income = capital × return × (1 − tax)
Time to get there
Months of compounding, with nothing withdrawn, to reach the needed size.
years = ln(needed ÷ capital) ÷ ln(1 + return) ÷ 12
Trading capital FAQ
How much do I need to start trading?
Enough that a normal trade fits inside a small percentage of the account. If your smallest sensible trade risks $50 and you want to risk 1 percent, that is $5,000. With less, you either risk too much each time or cannot take your setups at all.
What account size makes $1,000 a month?
Divide the income by a realistic monthly return. At 2 percent a month after costs, $1,000 needs $50,000, before tax. Many consistently profitable traders average less than 2 percent a month, which is why living off a small account is so difficult.
What is a believable monthly return?
Much lower than social media suggests. A 20 to 30 percent year is excellent for most professionals, roughly 1.5 to 2.5 percent a month. Plan on a cautious figure and treat anything above it as a bonus.
Why does the $25,000 rule matter?
In the US, a margin account that makes four or more day trades in five business days is treated as a pattern day trader account and must keep at least $25,000 in equity, or frequent day trading is restricted. Our PDT rule calculator explains it in detail.
Should I take profits out or let them grow?
Withdrawing everything keeps the account the same size, so the income never grows. Leaving some profit in lets it compound. The calculator assumes you take out the income goal and shows the size needed to do that without shrinking the account.
What about trading a prop firm account?
Funded accounts let you trade a bigger balance for an evaluation fee, with strict drawdown rules and a profit split. Our prop firm calculators compare their costs and odds with funding an account yourself.