“I was wondering what do you recommend I do with a minimum capital of about 1600 dollars? What should I trade?”

Lots of people have this kind of question, so perhaps my reply will be of use to others:

A budget of $1,600 is quite low, but certainly not uncommon. Given that amount, I suspect most people would suggest forex, because it’s easy to open an account with a deposit of that size.

Forex is also easy to trade on massive margin, giving you lots of leverage. If you’re a beginner, that’s a very dangerous thing indeed. Leverage makes it very easy to lose a lot of money very quickly. As traders, our first priority is to preserve capital.

As you probably know, personally I prefer trading US stocks, because I believe they are one of the easiest markets to make consistent profits in.

The sheer number of stocks available, and their predictable nature, means that you can find good high-probability simple trades every single day of the week.

So my recommendation would be to find a way to trade stocks with your budget. A regular account will let you day trade a couple of times a week. If you hold overnight, you can trade as often as you want.

If you can get a CFD account (which depends on where you live), then you can day trade as often as you like. If not, there are other options such as umbrella accounts, which can overcome the 2 day trades per week limit for accounts under $25k.

Having said all that though, your priority should be to learn to trade without risking any real money at all. Make sure you’ve learned the basics, and have a solid strategy ready to trade. Practice that strategy inside out on a simulator, or on paper, and *only* risk real money once you’re consistently profitable.

A lot of traders dismiss paper trading saying it doesn’t accurately represent the emotional and psychological challenges of live trading. That’s true, but that also means if you aren’t profitable paper trading, you have very little chance of being profitable in live trading.

In summary then: Learn the basics, then pick a strategy and practice it on paper until consistently profitable. Then open an account and start trading with that real budget. If you follow those steps in that order, the choice of market will already have been made by the time you get to the opening an account bit.

Hope that helps.

In this context a tick is a trade execution. So instead of dividing your chart based on time periods, you’re dividing on number of trades.

A possible advantage of this method is that you will see a more regular representation of activity during slow and fast periods.

To take an extreme example, in a slow moving market with very few trades occurring, you could potentially have five minute bar representing just a couple of trades. Using a tick chart, the bar would not complete until the required number of trades had passed.

In other words, in a tick chart, all bars are equal. Tick charts smooth out fast and slow periods of trading to give a kind of ‘quantized’ view.

Whether that’s *actually* an advantage or not depends entirely on your trading method though…

Trying to figure out if a tick chart is “better” is a bit like trying to figure out if a 10 minute chart is “better” than a 5 minute chart. They both show the same data, just formatted differently (although you could argue a 5 minute chart shows more data points than a 10 minute chart, but for the sake of illustration, they essentially show the same thing). It’s not the chart itself that matters, it’s how you interpret it and act on that interpretation that counts.