How Much Money Do I Need to Trade Forex

How much money do I need to Trade Forex is the very first question that comes to mind of many traders. There is a misconception about the minimum budget that is required. To help you out, I have done a research to find out how much you really need. 

AtoZMarkets – Alongside this question, many novice traders also struggle with their choice of a reliable Forex broker, trading platform and Forex strategy. However, these questions are already dealt with by my colleagues. I rather focus on one of the very first questions that comes to mind of any beginning trader. How much money do I need to trade Forex?

Not all traders are similar, though, and not everyone trades the same way. The intraday trader may not need the same amount of money to start forex trading as a swing trader does. The amount of money you need to trade forex will also be resolute by your goals. Are you looking to simply raise your account, or do you seek regular revenue from your forex trading?

How Much Money Do I Need to Trade Forex? - It Matters!

Before going to into how much cash you’ll need to trade forex effectively, we need to look at why this matter is even vital. Does it really matter if you begin an account with $100 or $3000? Yes! One of the most significant issues beginner traders face is being under-capitalized. Forex brokers are remorseful of fostering such an environment by offering to open accounts for as little as $5 in some cases. Therefore, the minimum opening balance is usually about $100.

I am a strong believer in never risking more than 2 percent on a single trade. If your account is $100, that means you can only risk $2 per trade. In the Forex market, that means you can take a one micro lot position, where every pip movement is worth about 10 cents. Trading in this way, if you have a good strategy and personal trading plan, you can earn a reasonable profit every day.

Less Money, More Risk

Moreover, the other problem with forex trading with such an insignificant amount of money is that it offers almost no flexibility in the style of trading you undertake. If you deposit $100 and follow proper risk management conventions, you can only risk 10 pips if you take a 1 micro lot position. You have to be an active intraday trader. Hence, new Forex traders are better off saving up more money before opening a forex account, thus sufficiently funding their account so they can trade properly.

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