Thinking that it is impossible to start trading in the forex market without having thousand of dollars is wrong. Actually, forex is one of the most accessible markets in the whole world.
But how much money do you need to start this activity? The answer depends on a number of factors, including the type of account you open and the trading strategy you use. In this article, we are going to understand what is forex trading and talk about this so that you will have your own representation of how much you need to start.
What is Forex?
Forex is the largest marketplace in financial trading. The market can be accessed 24 hours a day, 5 days per week which means that people all over different time zones have an opportunity to trade forex and make deals with each other by buying or selling currencies from abroad. This makes it very popular among traders.
And forex trading is the process of buying and selling the currency pairs on the market and making profits from it.
Can you start trading with minimum funds?
Sure, you can. In fact, Ii you are only starting out in the world of trading, it is best to deposit a small amount of money that you are comfortable with and slowly increase your trading capital as you become more comfortable with the risks involved.
But there is a nuance you need to know – your options will be limited and your returns may not be very motivating. For example, if you will start with 100$, a 3% return on a single trade might sound like a great result, but it would only result in a 3$ gain.
How much do you need to start forex trading?
The minimum amount needed to trade forex depends on your trading style, available funds, average stop loss level, broker requirements, experience level, and more. You should never invest more than you’re comfortable losing and keep in mind that trading financial markets involve a high risk of losing your funds. Your trading style is also important when it comes to determining how much money you’ll need to start Forex trading.
One more factor you should consider is the broker you trade with. When choosing it, be aware that some may require a higher minimum account size in order to open an account. Although many brokers accept deposits as low as $10, some may ask for hundreds or even thousands of dollars. If you’re trading on a budget, make sure your preferred broker will accept your limit for starting capital.
The main thing you should know before starting trading is that although forex is a great way to have a passive income, you won’t become a millionaire in a few days.
Have realistic expectations and in this case even if you start out with a small account and use sound trading strategies, you can grow your funds over time and reach the level of success you desire.