A lot of people who have heard of the entire forex concept and all the great results one can obtain, still have one big question: how big should the initial investment be?
Sure, there are a lot of brokers who will let you start with just a few bucks, but let’s make a few things clear, from the very beginning, shall we?
The minimum amount of money you need, as a beginner, totally depends on your broker’s minimum deposit requirement and trade position size, as well as the maximum leverage. Plus, always consider the risk management strategy, the trading style, and the overall financial regulation.
What do I need to begin trading?
Keeping it short, in order to start on this road, you need a Forex broker. A lot of people believe that they can do it using a regular bank or a money changer, but this is a mistake since the process will become too costly and slow.
Most brokers won’t let you trade using real money until you deposit a required minimum amount. In most cases, it’s around $100.
It’s also worth mentioning that you can find brokers that don’t require a minimum deposit, which means that you can begin trading even with a $1 investment. But the bad news is that if you start trading with such a small amount you can encounter several issues.
Why can’t I start with just one dollar?
There is one specific dollar why a broker won’t let you trade such a low amount. Let’s get a bit into details in order to understand why.
The majority of brokers don’t agree with making a trade sized smaller than 1 micro lot or 0.01 lots, as this is worth 1,000 units of the base currency.
For example, let’s take the USD/JPY currency pair.1 micro lot is worth $1,000, meaning that you will need leverage in order to trade using this pair, with a deposit of less than $1,000.
If your broker offers top leverage of 30 to 1 on this pair – and this usually happens in the European Union, you need to deposit a minimum amount of $33.34 to make a trade-in USD/JPY.
However, it’s not wise to use leverage, even though it’s being offered to you.
To wrap it up, our recommendation would be to start with $100 if you want to try the world of forex. And always remember that you should never trade using the money you cannot afford to lose, not to mention that a balance that works for your trading style, as well as financial situation, is mandatory for the best results.