Okay so this is another common question that I get; how much to start forex trading or how much money do you need to start trading forex? A lot of pe
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Okay so this is another common question that I get; how much to start forex trading or how much money do you need to start trading forex? A lot of people interested in starting forex trading want to know how much they should start trading with.
The answer is zero. Okay. So a lot of people just jump into trading. They get really excited and learn a trading system or strategy in a weekend and then rush to open a live trading account. They put in all their savings into that trading account and wait for the millions to start rolling in.
They soon find out that’s not how it works. So, I believe that you should start with zero. You should rather start by opening a demo account with your forex broker. This account comes with ‘fake money’ which allows you to learn trading and come up with a trading plan.
Your trading plan must include things like when to enter the market, when to close trades. Where to place stop loss, how to move the stop loss etc.
How much to start forex trading?
I also highly recommend back-testing whatever trading strategy you’re planning to use. If you don’t have a trading system, then you should probably get one or learn one. Whether you are creating your trading system or buying it, make sure that it is tested thoroughly.
You will then discover its strengths and weaknesses in terms of technical trading and fundamental trading.
Only after this exhaustive process will you be better equipped to start trading it in live market conditions. Even if you’ve back tested it and it looks good, remember that back testing can give you false results as it often does not capture things like spread widening during news announcements.
So you want to also test it in live conditions – OF COURSE in a demo account. I recommend the broker that I use because their demo accounts don’t expire. You can still open a real live trading account with just $5 if you want to test anything without putting too much money on the line.
So that’s what I would recommend. Don’t start with any money in your trading account. Instead, build your trading skills via a demo trading account. Figure out what’s a good trading strategy or trading system in backtesting and forward testing.
How much money do you need to start trading forex?
When you can prove that you are consistently profitable trading demo accounts, then you can go ahead and open a real live trading account. When you are consistently profitable, at that point that’s up to you how much you can use to start forex trading.
Let’s agree that if you are profitable and have a good trading plan and strategy in place, it won’t really matter whether you start trading with $10 or $100 000. I would still recommend that you start with small amounts as many new traders often lose their first accounts.
Starting small is also a way to test and see if your broker will honor your withdrawals. You don’t want to discover that your forex broker is terrible at withdrawals when you have now made $1 million profit.
So remember that the correct amount to start trading forex with is zero. Open a demo account, test forex systems and strategies and if your results are good, take it live!
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