What Is the Minimum Amount That You Need to Start Forex Trading?

Free $100 Forex No-Deposit Bonus

You are no doubt reading this article because you are becoming increasingly interested in the idea of trading forex, whether to escape the rat race and trade the markets full-time or just as a profitable side hustle perhaps. The idea is alluring, the lifestyle is attractive and the money can be amazing but what is the minimum amount that you need to start forex trading?

Asking what is the minimum amount that you need to start forex trading may seem like a perfectly rational question. However, as I hope you will understand by the end of this article, there is no simple or straightforward answer, no arbitrary dollar amount. The answer depends on a number of factors that we will now explore.

The foreign exchange market is the largest and most accessible financial market bar none. It is estimated that over six trillion dollars is traded on the foreign exchange market daily. Not million or billion. Trillion. Six trillion dollars. Daily. The scale is barely even comprehensible.

Most of that money is traded by big financial institutions like banks, insurance companies and pension funds but in recent years a growing number of retail traders have got involved in this exciting market. Retail traders are ordinary people who invest their own money and make their own decisions about which currencies to buy and sell. As a result there are now dozens of brokers who specifically cater for small retail traders. Most of these brokers have a selection of different account sizes available with many offering small micro accounts that can be opened with as little as $10.

Forex Brokers with Low Minimum Deposits $10

BrokerInfoBonusOpen Account
OCTAFX forex broker Min Deposit: $5
Spread: From 0.2 Pips
Leverage: 500:1
Regulation: FSA (Saint Vincent and the Grenadines), CySEC
50% Deposit Bonus, Real contest 1st prize Luxury car BMW X5 M, Copy trading, Trade&Win.Visit Broker
new logo FBS Markets inc Min Deposit: $1
Spread: From 0 Pips
Leverage: 3000:1
Regulation: CySEC, IFSC
$100 No-Deposit Bonus, 100% Deposit BonusVisit Broker
xm best forex broker Min Deposit: $5
Spread: From 0 Pips
Leverage: 500:1
Regulation: ASIC, CySEC, FCA (UK), IFSC Belize
“50% +20% deposit bonus up to $5,000, Loyalty Program BonusVisit Broker
exness forex broker review Min Deposit: $1
Spread: From 0 Pips
Leverage: 2000:1
Regulation: FCA UK, CySEC, FSP, BaFin, CRFIN
35% of the account DepositVisit Broker
Forex.com Gain Capital review USA Min Deposit: $50
Spread: Starting 0 Pips
Leverage: up to 400:1
Regulation: FCA UK, NFA, CFTC, ASIC, IIROC, FSA, CIMA
Visit Broker
No Deposit Bonus Instaforex Broker Min Deposit: $1
Spread: Fixed Spread From 3 Pips
Leverage: Up to 1:1000
Regulation: CBR, CySEC and FFMS
30% Forex Deposit bonusVisit Broker
Pepperstone review best forex broker in Australia Min Deposit: $200
Spread: Starting 0 Pips
Leverage: 500:1
Regulation: ASIC Australia, FCA UK
Visit Broker
iq option best binary options brokers Min Deposit: $10
Spread:
Leverage:
Regulation: CySEC
-Visit Broker
etoro best forex broker USA Min Deposit: $200
Spread: From 3 Pips
Leverage: 400:1
Regulation: NFA, FCA, CySec
Visit Broker
City Index forex broker Min Deposit: $100
Spread: Starting 0 Pips
Leverage: up to 500:1
Regulation: FCA UK, ASIC Australia, MAS Singapore
Visit Broker

Three Questions You Should Ask Yourself

However, just because it is possible to open an account and start trading with as little as $10, it doesn’t necessarily mean that you should. In order to determine the minimum amount you need to start forex trading consider the following questions.

1. Why do I want to trade forex?

Ask yourself why you want to start trading forex in the first place. Is it because you have always been interested in the financial markets perhaps? Or, because you have seen some YouTube videos and are attracted to the purported lifestyle of forex traders? Is it because you hope to eventually make forex trading a full time career? Or, because you simply like a challenge?

The reasons why you want to trade forex are important because if you are doing it for the wrong reasons it can prove to be a very expensive mistake. If, for example, you simply like a punt, forex trading is probably not the right game for you. The amount you can lose is effectively unlimited. Sure, you bet on the direction of a price movement but a professional forex trader is not really gambling as such, they are simply looking for high probability setups that have a positive risk to reward ratio in line with their strategies, risk management plan and overall trading plan.

Likewise, if you are only interested in forex trading for the money, be warned: it’s not as easy as many would have you believe. Sure, there will be times when you will make more in a day than most people make in a week but there will also perhaps be entire months where you don’t make any profit at all. Such is the nature of the beast. Forex trading is a hard way to make easy money.

2. How much capital have I got to invest?

The first and most important rule any trader can have is to never trade with more than you can afford to lose, particularly in the case of those starting with small accounts.

If you are thinking of trading forex with a small amount, it is probably because you do not have much capital to spare. Ask yourself whether you can actually afford to do this. As a general rule of thumb, if you are starting with a small account, you should probably start with an amount that you can afford to lose and forget all about making withdrawals or, equally importantly, further deposits to the account. The reason is simple: you don’t want to get into the habit of continuously reloading your small account, therein lies a potential gambling problem or, at the very least, a catalogue of doomed trading strategies.

Instead, you want to seed your account with an amount that you are comfortable with saying goodbye to then leave it there, make profitable trades and compound any returns, which is a lot easier said than done of course.

3. How much time can I invest?

If you are starting with a small account, you probably won’t be able to generate the sort of returns you would need in order to produce a full-time income. You are not going to make a full-time income using a few hundred or even a few thousand dollars of capital, that is just not realistic. So, the second most important rule is don’t quit your day job right away!

The forex market is open and active twenty-four hours a day, six days a week, so there will always be ample opportunity to trade in your spare time. That said, you do need to set aside time not just for trading but also for learning about trading and staying up to date with the latest market news. Technical and fundamental traders alike need to ensure that they stay in the loop with regard to significant events that may be affecting the market or about to affect the market.

Also Read: Forex Trading Market Hours

A Word On Risk Management

It is worth bearing in mind that it doesn’t matter what size account you start with, if you don’t have a profitable strategy in place and a disciplined approach to risk management, you will almost certainly blow your account.

As a general rule of thumb, you don’t want to be risking more than 1 or 2% of your account on any single trade. If you have a $100 account, it means the absolute most that you will want to risk per trade will be $2. With a $1,000 account it would be $20 per trade and with a $5,000 account it would be $100 per trade.

The reason for this is simple: even the best traders encounter strings of losses. If you are risking more than 2% of your account on each trade and you encounter a string of five or six losses you will deplete a significant amount of your account. By keeping your maximum risk to 2% or less per trade, even with a string of losses you will have only depleted a relatively minor amount of your account and should be able to recover.

Conclusion

As was made clear at the beginning of this article, there is no arbitrary dollar amount that you need to start forex trading. Forex Brokers offering micro accounts have made it possible for practically anyone to access the forex market. The minimum you need to start forex trading depends on the sort of returns you are hoping to produce, which should in turn depend on the assumption that you will never be risking more than a small percentage of your account on any given trade. Be realistic and patient and you will likely also be profitable.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.