How Much Do I Need To Start Trading Forex? (TIP: IGNORE FX BROKER)

How much do I need to start trading forex? This is the question that every beginner forex traders asks before they open their first live forex trading account.

You see, these days, opening a live forex trading account is really easy because most of it is done online now.

As a matter of fact, you can do it in 5-10 minutes.

Forex Trading Minimum Deposit

In addition to the ease of opening online forex trading accounts, many forex brokers have very low minimum deposits (or funding) requirements to open a live trading account.

You see forex brokers websites with such statements like these:

  • start trading forex with $1
  • or start forex trading with $50
  • or start trading forex with $100
  • or start trading forex with $250.

Are these minimum amounts to start forex trading sufficient?

Yes and No…I will explain my answers…

Let’s get started.

YES, A $50, $100 or $250 Minimum Account Funding Is Adequate If…

You see, I didn’t put $1 minimum account here…I will explain why below.

If you are a beginner forex trader and have demo traded for a while and you want to start trading forex, starting small will give you a feel of what live forex trading feels like.

For that reason alone, I say yes…fund your forex trading account with a small deposit and get to know the forex market.

But there’s one BIG problem: you were most likely demo trading with a $5000 account (or more) and I’m pretty sure that you are not going to be a happy with the forex profits you’d be making on a $50 live  account.

Why?

Because when you were trading with a $5000 demo trading account, your profits where big and you were making $100 to $500 or even more in a single trade. And you were also losing in much bigger amounts too.

And guess what?

The tendency is that you’d be sort of expecting that your $50 account can produce such trading profits that you were making in your demo trading account but you can’t because there’s a really big difference between a $50 live trading account vs a $5000 demo trading account.

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It would be only a short matter of time before you are going to blow that $50 live trading account when you start thinking this way.

So one thing you’ve go to put up with is the fact that your trading profits are going to be really small.

If you are happy with such small profits then yes, trading small live accounts like $50, $100 or $250 would be the way to go for you.

 

No, The Minimum Amount to Start Forex Trading Is Too Small If…

If you think that you are not going to be happy trading with a $50 live account and getting profits like $1 or $2 profits then you need to fund your live trading account adequately.

What you want is to have an adequately funded live forex trading account so you can make profits like these:

what is the sufficient amount of money to open a live forex trading account

By the way, that screenshot above was taken on one of my live forex trading accounts which I took to $22,000 in 2 months starting with something like $8,000 and I blew up all of that profits I made within one week.

It took 2 months to reach 22 grand and I blew it up with one week. Guess what my problem was? I wanted to make $50,000 in a week!

So guess what I did? I took a lot of risk and it backfired. (Embarrassing)

And I have to remind you, that is not the first account I blew up!

Lets face it, with a  $50 or $250 live forex trading account the profits that you’d be making will be too small and this is not what you were seeing in your demo trading account.

The benefits of trading with an adequately funded forex trading account are many:

  • puts you in a better frame of mind (psychology) than a trader with a $50 trading account
  • your profits are bigger (and your loss too by the way!)
  • your trading account can suffer a big draw down and still survive (if you are strict in your forex money management)
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If you can afford it go ahead and do that.

 

Start Forex Trading With $1? SERIOUSLY?

Guys and girls,  there are lots of forex brokers that offer low minimum deposits like these:

Forex Brokers With Low Minimum Deposits

But if you are serious about making a living forex trading or at least making some money on the sideline while still employed at your day job (like me), then do you seriously think that a $1 forex trading account will bring you what you desire?

What can $1 make you in a live forex trading account?

Can you imagine the profits you’d make on or the size of the contracts that you’d trade? It won’t be even close to 1 cent!

Give that $1 to your child to go and buy a lollipop and share it with Scooby Doo.

$1 Forex Trading Account or buy a lollipop

What Is The Best Minimum Amount To Start Trading Forex With?

Firstly, its not going to $1. Just forget it.

Secondly, it’s not going to be $50. Forget it.

$100 will be a good start.

In my opinion, an adequate amount would be anything above $2,500…preferably $5,000.

$2,500 is a good number to start with. This is just my opinion, ok? So don’t believe me on this…

Why $2,500?

Because it is much easier to trade a $2,500 and increase it to $5,000 than it would be for a $100 forex trading account. On the other hand, without proper forex money management, you can decrease that amount. So it can really go both ways!

I gave examples of this concept in this post 5 Fastest Ways To Make $1 Million Dollars In Forex Trading (A Numbers Game).

Now, for some of you, $2,500 may be a huge amount of money…

I understand that we all come from different countries, different salaries, different currencies, some of you get paid in Pesos and Rupees, Rand etc…Some in US Dollars.  You know what I’m saying?

For some of you, this may take you 6 months to a year to save that amount of money to start trading forex. If you are in such a situation, you shouldn’t be even thinking about trading forex at all.

For some of you, $2,500 may be half of what you earn in month on your job. If you are in such a position, opening a $2,500 forex trading account shouldn’t really be an issue if you don’t have a lot of personal expenses every month.

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Summary

So there you have it, hopefully this answers you question on how much do I need to start trading forex and the main point to take from this article is this: ignore what the forex broker tells you what the minimum deposit is.

It is my opinion that the amount of money you need to start trading forex with should be sufficient and adequate enough to give your profits that you’d be happy with.

And I know, a $1 or $50 trading account can’t do that.

Even a $100 minimum forex trading account is too little.

You see, one big frustration for forex traders which often times gets them into trouble is the fact that they are underfunded.

Having an underfunded live forex trading account affects your trading psychology. For me, I cannot trade a $100 forex trading account and make money with it. I’d blow up that trading account in one or two days.

I’m used to trading live accounts of $3000 and upwards.  Therefore trading a $100 is way too hard for me.

If your trading account is not adequately funded, in your quest to increase it, you’d be taking a lot of bigger trading risks and all it would take would be a few big risky trades to go wrong and you’ll blow up your forex trading account.

So all your forex money management goes out the window. I’ve been there a lot more times than I’d hate to admit.

The best way would be to trade a demo account with an amount of money you plan to open a real live forex trading account with.

So if you are trading a $5,000 demo trading account, then open a $5000 live forex trading account when you feel that you are ready to trade the forex market live.

If you are demo trading with a $2500 account then open a live forex trading account with $2500.

“There are no secrets to success. It is the result of preparation, hard work, and learning from failure.”
Colin Powell

2 Responses

  1. thoko 2 months ago
    • RKay 2 months ago