You don’t actually need any cash to start trading forex. If you’re starting off your forex trading career and want to find out if forex is an ideal career path for you, maybe start with a practice (demo) account where you’ll trade with virtual money.
Practice accounts are a good testing ground, but if you’re serious about pursuing forex trading as a career at some point, you’ll need to calm your fears and start trading with actual money. However, you can start off with a minimal initial sum.
Forex trading has no minimum deposit. The amount you need will mainly depend on the brokerage firm you choose. Some brokerage firms allow you to open an account with $500, others accept a starting deposit of $100, and some will accept lower sums.
However, while it’s still possible to trade with a minimal amount of money, you will struggle to use your account to the max if the deposit is too low. So let’s look at what you should do when you want to trade on a budget.
So What Should You Do?
Get The Right Broker
Start by choosing the right broker. You want to choose a broker who has accounts at the price point that you can afford. You should also choose a broker who’s under a regulatory body.
In the US, that would be the NFA (National Futures Association), and in the UK, that’s the FCA (Financial Conduct Authority). Also, check the broker’s other offerings and policies, such as commissions, cash withdrawals, and leverage amounts.
Take Time to Understand the Forex Market
Prior to investing in the forex market, whether with a huge deposit or a small one, you need to understand what you’re doing. Whether you’re starting off or previously were trading other instruments, you need to get acquainted with the forex market basics.
Get acquainted with basic forex concepts such as risk management before you fund your trading account. If you already have an account, maybe withdraw some of the money and spend it on forex learning resources.
An excellent resource to use is the CMT (Chartered Market Technician) exam. The first level of the CMT program is the ultimate text for technical analysis. It’s a great place to begin for any serious and aspiring forex trader.
The CMT program will give you advanced analysis techniques, in-depth money management advice, and best of all how to how to engage experts who work with financial institutions on matters trading. Even if you don’t buy the actual books, find a way to get exposed to the trading world, maybe from seasoned traders with a good track record.
Starting small means actually starting small. You can’t be successful in trading enormous amounts until you’ve mastered the art of trading small amounts. If you get the right broker, they will advise you on how to go about this process.
Even if you have a small trading budget, invest regularly to hone your trading skills. Try adding 5 or 10 dollars per week to your account. It’s not much, but after investing for a while, you’ll find that you have grown your account balance to a sizeable sum. The best part about this is that you won’t struggle to do it, and it’s not risky at all.
Starting small can be slow and frustrating, but the forex market is all about bidding your time. When you are patient, you acquire the required discipline to trade successfully.
Also, always view your account balances, profits, and losses as percentages. For instance, if you have a profit of three dollars with a 10-dollar account, that’s a 30% profit. On the other hand, if you lose 1 dollar, you’ve lost 10%, which isn’t a lot considering your profit.
It takes time to be a successful investor; no one is good at their first attempt. Trading on a budget can help you overcome some of the major hurdles with regard to trading forex.
To sum it all up, if you want to trade forex and have a limited amount of capital, start by opening a demo account and learn the basics of risk management. Then, once you’re confident that you’ve understood the market, you can proceed to fund your account and start trading.