How Much Money Do I Need to Trade Forex_1

Post on: 17 Май, 2015 No Comment

How Much Money Do I Need to Trade Forex?

admin on October 22nd, 2011

One reason that Forex holds such an allure to many beginning traders is that the entry barriers are much lower with this market than most others. This is a huge advantage to those who don’t have a lifetime of savings stockpiled for trading stocks or other commodities. So how little can you get away with entering the market with? Can you really trade responsibly on so little? You may have heard many experienced traders state that it’s foolhardy to enter Forex with less than $10,000. Is this true?

There’s a good reason for the assertion that $10,000 is the minimum Forex bankroll—but that doesn’t mean it really is the minimum. A lot of it comes down to your trading style, your money management skills, and most of all your self-discipline. The fact is that you shouldn’t be trading more than $2.55% of your account on any given trade. Yep—that means not using all that leverage! Most successful professional traders risk very little of their accounts on any trade. For Forex beginners this is especially critical. You are very likely to blow your account if you don’t.

What this means is if you open an account with say $1,000, you will be risking about $25-$50 per trade. If you trade the dailies and take only a couple of trades each month, don’t trail stops. and get out at 1:1, this limits your profit each month to perhaps $100 at best. It’s very hard to be patient and keep trading so little when you are making almost nothing from your trading. Most Forex traders lose their discipline and end up risking 1020% per trade or even more—actually, for a lot of traders, 10% would be a modest investment. Many novices invest much more than they even have in their accounts to begin with by using leverage. These traders can blow their $1,000 accounts with just a single bad trade.

If, however, you do have the patience to go the long haul with investing 2.55%, then by all means, you should go for it. You can open a Forex account with just a couple of hundred dollars, and certain brokers will allow you to trade as little as you want—even a penny. Whether you wait and build up capital and then invest (after lots of demo testing ) with a larger bankroll or you start small and invest with patience, you’ll get plenty of practice. So how much do you need to really get the ball rolling? That depends completely on your trading method and how many trades you’ll be able to take each day or month. You’ll definitely want to be using another source of revenue to pay your bills though while you’re starting out with Forex. Using the example above, it’ll take you a few years of consistent profitable trading to work up to $10,000 from the $1,000 you start with, but the same trader who starts out making $100 a month will theoretically be making $1,000 a month once that bankroll increases to $10,000. Exponential gains start out slow and small but end up big—so whatever you decide to do, approach the FX market with discipline, patience, and faith in your method and yourself.

If you have any questions or comments regarding the minimum amount of money to start trading with, please reply using the commentary form below.

3 Responses to How Much Money Do I Need to Trade Forex?

Hi,I think Im being double charged on commissions,so far my attempts to resolve this with the broker have been unfruitful.Im new to FX and MT4 so maybe Im wrong. There is a $7 round on 1 lot,I opened a buy for 2 lots of EUR/USD at a price of 1.39130 and closed it at 1.39123 for a loss (dont laugh its just a practice account)In MT4 in the terminal window with the trade tab selected it displays two different profits, the top line showed -$14 and the bottom -$28 I assume the $14 difference is the $14 commission charged at the time of opening the trade,but on my daily statement it will show the -$28 and another -$14 deducted from that. There is always a $14 difference between the two lines in any trade yet they always deduct another $14 off the bottom line profit take, on the statement.Can you explain this?

3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D30&r=G /% admin Says:

Its very strange because if all positions are closed, there should be only one line in Trade tab of the terminal. Can you take screenshots of your Trade tab and the daily statement and post here a link to them?

3A%2F%2F1.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D30&r=G /% Gary Says:

admin: When a trade is closed you are correct.When a trade is open there are two profits displayed,top line is before commissions and the bottom line with commissions deducted.On my statements it shows the closed profit/loss amount and then the cost of the commissions for that trade deducted from the top line of profits in MT4. What I thought was happening was instead of them showing top line profit (before commissions)on the statement they were showing bottom line profit (commissions deducted)and than deducting commissions again! I dont think they were doing that now,but for now on I will be paying closer attention to the top profit line in MT4 when I close a trade.