How much money do I need to trade forex?
There are various amounts you need to invest depending on the broker you decide to trade with. Some brokers offer the ability to trade with a mere $25.00, however, most require a minimum deposit of $100. These types of smaller investments are ok to start you off, however, they will not result in any serious profits. Becoming a serious forex trader, your initial investment will play a colossal role when determining your success.
There are many brokers in the FX industry, and with that comes a number of different traders, that trade in many ways that do not always require a minimum deposit of over $5,000. Day traders, for instance, will not need to trade with the same capital as a swing trader does. One will need to define ones’ goals: are you looking for a more of a serious income or to simply grow your trading account?
Why the initial investment matters?
There is a trade difference if you start with $100 versus $2000, and yes it does matter. One of the more significant problems new traders face is being under-capitalized. When you start trading your goal is to have some sort of profit or income from your investment. This cannot be accomplished on a $20 account. Most new traders have no patience to allow their accounts to grow, and with small deposits, you risk far too much on each trade and thus risk to lose the entire initial investment.
While there are some brokers that offer you a trading bonus, which is an additional boost to your capital to get your trades going. This can amplify your trading capital allowing you to open more trades, however, keep in mind not to overextend yourself per trade, look at a market exposure ratio of 2-5% of your account to be safe.
Another recommendation when receiving a broker bonus is to read the terms and conditions to fully understand them. Most brokers do require you to trade a certain volume in order to withdraw funds from the account. All-in-all a welcome bonus is a great way to increase the available trading budget.