div>

A lot of people ask how much trading capital you need to start trading Forex. The answer is dependant how much you can really afford. Trading forex is a risky business. I can guarantee that you’re not going to be a successful trader overnight. Sure, you might start off lucky but unless you have nerves of steel, you’re going to have losing spans and it’s really going to hurt you if you aren’t careful.

What sort of return are you expecting from you trading account? Do you think you can get 1% per month? 2%? 5%? 10%? You need to start trading and get realistic expectations. And well you probably don’t want to face the truth, but you will have losing months. There’s nothing you can do about that. It’s just going to happen whether you like it or not. That’s how forex works.

If you think you can make 2% per month consistently per year, then that pretty much answers your question. The next question you need to ask is, how much do you need to live off of every month. List out all the bare minimums that you have to have, food, shelter, and all the other expenses on a monthly basis. It’s actually a smart thing to figure out what your monthly expenses are anyway, you never know what you might come up with and might find things that you’re spending money on that you never thought you were before.

Let’s pull out a number and say that you need $2,500 a month to live off of. That means you need $125,000 ($2,500/0.02) of trading capital. Does that sound like a lot? But if you think about, you’re saying that having a 24% return annually is realistic. And on top of that you’re taking all of your winnings out of your Forex account just to support yourself, which means your Forex account won’t grow. What if you have 2-3 months of losses? What do you do from there?

It’s a dream for every forex trading to make a living off of your trading account. Unfortunately, too many traders fail to do the simple math and see if it’s really possible. They think it is, but overextend themselves hoping that it’ll somehow work out. They take too much risk on some trades and pray that they work and promise not to place such a dumb trade again. Well one of those “last time I’ll be trading like this” trades will come to haunt a trader and bite them in the foot. Then when that happens, it’s too late there’s just too much of a big drawdown for the trader to recover and sometimes hit a margin call.

Making money in forex isn’t easy. It takes a lot of time and dedication. Don’t think that just because you having trading capital that you’re going to be successful, that’s not how forex works. You need to be disciplined, focused, have a sound trading strategy and that just gives you a decent chance. Be realistic about your returns and what you’re trying to get out of the Forex market. Don’t dream too big, get the results and then focus on your dreams.

Post navigation

Leave a Reply Cancel reply