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How much do you need to start trading?

Mon Sep 14 2020 14:50
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New traders are always confused with the minimum amount required for forex trading. They ask experts what minimum amount for trading is compulsory to start trading. But most of the traders are unable to find any particular answer to this question. Some experts will do a guess that $5000 is the recommended amount to start forex trading. While some forex brokers will claim that they will help you trade forex with just $5. So what is the actual answer to this question? If after reading a lot of forex news, blogs and Q&A posts in forex trading strategy forums, you are still confused. Now you are in the right place. Here we will tell you the minimum amount for trading, that you need to start online forex trading. 

Start Trading Forex With $1, But See The Reality 

You as a forex trader may have seen a lot of trading platform advertisements and claims by some retail forex brokers on the web. These forex trade advertisements are claiming that you can start trading currency pairs with $1. Yes, there are advertisements with $100 claims also. Then what is the reality behind all these foreign exchange trading claims? Don't know? Don't worry. The real thing is— opening an online trading account is free and you need capital in that forex account for trading. You can start a currency trading account with $0 also. But what will you do with that currency-market account? You will need sufficient liquidity to start trading currencies in the exchange market. Yes, there are some brokers with $5 also. But there is no benefit with $5 trading as you can’t bet on too many commodities in the trading market.  

Trading With $100 Is Beneficial? 

We all know that trading currencies with $1 or $5 doesn't make any sense in a serious manner. You cannot earn with such trades due to the low spreads they will have as a currency trader. $100 seems a reasonable amount for a good trading strategy, right? $100 is the general tradable amount that people have always ready for trading. So $100 is the minimum amount for trading? No one has coined a minimum commodity futures trading for a live account. Because we know that you can trade with $5 also, but it is not a good idea. Trading with 100 USD or Euro is also not that good to earn a good amount. But if you are curious about how to trade with a couple of trading indicators, then you can try.  

Then How to Calculate The Least Capital Required For Forex Trading? 

Maybe you are still confused with the question that what minimum amount for trading is compulsory? If $1 is not good, $5 is not helpful, $100 doesn't give a good return on investment, then what is the actual amount that you require to enter foreign exchange market? Well, this question can be answered with the help of various Fx-market factors. You must know about some factors if you want to find out what amount is good for you to learn forex. 

Capital:  

You must note down how much you can afford in forex trading and what your risk appetite is? We are not talking about profitable trades. But we are talking about the losses in financial-market. How much amount you can afford to lose. Choose a particular amount for capital. This capital can help you define what amount you can put in your first live trading. 

Earning Desire:  

What is your earning desire? Your minimum amount depends upon various factors, and earning desire is very important. Note down how much you want to earn in a day through forex trading, and how much you want in a month from the global market. 

Goal:  

No, we are not talking about financial goals. If your goal is to get into forex trading as a full-time worker or you just want to start it to learn how to trade in the forex market. 

Perspective:  

If you see forex trading and commodity futures as a learning opportunity then you can start with a very less amount such as $50. But if you want to generate an income stream, then you must start trading with at least $3000 to $5000. 

Risk Management Is Important 

Some people ask, can they trade with whatever amount they have? Then the answer is yes. Yes, you can start trading with any amount in CFD trading. Whether it is a low amount or a very higher amount. If the money that you want to use for trading is $100 or less, then this trading experience will be for learning only. On the other hand, if you want to trade with an amount equals to or more than $3000 then you will start earning with high risk. You can trade with any amount but you must use risk management tricks and trading signals. 

Trade with 1% Risk:

You must trade with a 1% risk if you are trading as a beginner. Also, you can trade less amount of money at such a risk rate. %1 means, if you are trading $100 then you will have a risk to lose $1 in your trade. Experts say that you can trade up to $1500 with a 1% trade. 

Trade With 2% Risk:

You can trade with a 2% risk also. This is another strategy that traders use to trade in foreign exchange. However, a 2% risk rate is not recommended for the beginner level trader. But you can use it if you are confident about your trading skills. The recommendation is to have at least $2000 or more if you want to trade at 2%.  

What Expert Traders Say About It? 

Top forex traders of the world have always shared trading tips for the newcomers. Experts answered differently to the question: what minimum amount for trading is compulsory? Some said that it is important to start trading at $500 and some said it is necessary to start trading at $1500 at least. So it will vary as per your trading goals for the future. No expert traders suggested starting trading with $1 or $5. They have said that if you want to grow your account then you must start at $500. If you are confident using a $500 account then you can start creating a stream for you with $1500.  

Expert Advice: Demo Accounts Are Free, Use Virtual Money 

This advice is about demo accounts that forex brokers offer. These accounts are free to use. Nothing is required to start using a demo account, other than an email. You can use a demo account with virtual money provided by the forex broker. If learning is your goal then the demo account is a good option for you. It will help you to understand the various trading platforms provided by different forex brokers. You will learn various tactics and tools required to trade in a demo account. You don't need to spend even a single dollar on trading if you can start a demo account with just your email. So many brokers have web-based demo accounts always ready for new traders. 

Conclusion 

Different recommendations are there about the topic “minimum amount for trading”. That is why there are always confusing answers to this question. The practical answer is that the amount varies according to the risk appetite and future goals. Because some traders trade with $500 and some trade with thousands of dollars. There is no particular amount common for all. But you can find a particular amount for you individually. You can find out what amount is suitable for you. To find out the suitable, affordable, and so-called minimum amount required for trading, you can follow the above-mentioned steps. You can analyze your requirements and goals to figure out. 
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