One of the most frequently asked questions from beginners: how much money is needed to start trading in the Forex market ? There is no one-sided answer, of course. All individually. Here’s what you can think about:
- Why do you want to start trading in the forex market, it will be your primary or secondary earnings?
- How much can you afford to invest?
- What is your personal attitude to risk, and how risky are you planning to play in the market?
First of all, it is necessary to determine the motivation and goals. Why do you want to start trading in the Forex market, and what are you aiming for in the long run. Clearly formulated goals will help you build a path from the place where you are now, to the place where you want to be. Without this, it is difficult to estimate how much money you need to start trading Forex.
How much would you like to earn on Forex? Imagine this number! Per month. In year. Presented? Good. And now forget it!
Usually, ambition is good. They push us forward both in the market and in life. The main thing is that ambitions do not turn into expectations from the realm of fantasy. Such expectations create pressure on the trader, distorting his perception of the market, leading to a pursuit of profit and loss of the deposit. For the sake of preservation of peace of mind, beginning traders are urged to measure their successes in the market at the initial stages in the form of acquired material, in the form of a decreasing number of obvious mistakes, in the form of a growing stock of patience and tranquility, but not earned or lost money.
If Forex is only interested in you as an online casino, you will not need big money for such forex trading. You can gradually replenish the account for a couple of thousand and will be to you.
But, if you have far-reaching plans for Forex and you are ready for everything, then, in principle, the message is the following: the larger the balance, the greater the potential yield while keeping risks at the same level. What is this level? 1%!
Take yourself for a rule, especially if you are a beginner, put a picture on the desktop, hang a poster over the workplace, hack on the nose – it does not matter, the main thing is not to break! In each transaction, risk no more than 1% of your deposit!
Suppose you have opened the most simple account with a 1: 100 lever and threw a minimum deposit of $ 100. Then 1% is equal to $ 1. With a lever, 1% is $ 100. Can you open a deal with a volume of $ 100, observing the 1% rule? No, because the minimum volume is 0.01 lots, and this is $ 1000.
Simply put, the minimum deposit for a seriously minded beginner is $ 1000 minimum.
Most novice traders find this amount too big to risk it. But this fear does not prevent them from putting $ 100 on the account and, at the risk of up to 90% of the deposit in one transaction, try to get rich in this way. Of course, they all lose. Again and again.
The truth is that if you follow the 1% rule, trade systematically, learn from your mistakes, your risks are reduced to an absolute minimum. About the loss of the whole deposit and no thoughts.
Having dealt with the lower limit, we translate to the upper limit – it also exists.
Not all money is suitable for trading. Money that you can not afford to lose is not suitable for speculative trading. Why? Not because you will certainly lose them, but because you will think about it. As the pursuit of earnings, and an attempt to avoid losses lead to a distortion of the picture of the market.
Any book on trader psychology unequivocally asserts that proper trade is a process that is dispassionate. Cold calculation, regular repetitions and summing up not after each transaction, but at the end, say, a month – that’s the way to success.
The lack of education, erroneous goals and insufficient capitalization are the main reasons for the failures of traders.
A financial leverage can help a trader break into the market with insignificant funds, but expecting to get a lot out of small quickly is stupid.
Technical Analysis of Forex
Summing up, let’s summarize the factors that are most important in determining how much money is needed to start trading on Forex.
- Determine why and why you want to trade in the currency market.
- Weigh the actual attitude to money and risks.
- Assess how much you are willing to invest, do not risk the money that you can not afford to lose.