One of the most common questions we hear from beginner traders is "How Much Money Do You Need to Trade Forex?" and our answer is: well, it depends. The amount of money you need depends on your goals as a trader. Is your goal to make a lot of money or are you going to try to learn first before you deposit more money? Hint: we recommend the second option, Here's why:
It is likely you were introduced to forex though a social media guru who is trying to sell you on this get rich quick idea of trading. Believe us when we say we've been there (Watch our video here). However, this mentality is a dangerous mentality for new traders. New traders who believe that making money in the foreign exchange market is easy will often over leverage and blow their accounts very quickly.
The reality is that trading forex is one of the most competitive ways to try to make money. Statistically speaking, the majority of new forex traders lose money in their first year and most new traders give up within their first 90 days. So, if you want to get into forex trading to quickly make a lot of money, you're probably better off somewhere else.
It is possible to make money trading forex, but it's not easy and it takes time. To get to the point in your trading career where you're making money you must be motivated by something other than money, because it won't always be there. Is trading something you are passionate about? Or are you just trying to find a way to make money? Trading will get tough, what is going to help you push through the tough times?
As a beginner forex trader, we recommend starting with at least $500 on a .01 lot size. With this account size and recommended lot size you aren't going to be making huge returns. However, we would rather you get comfortable making a slow amount of money overtime consistently then taking your $500 and losing it all very quickly because you want to use big positions. If you attempt to trade with a larger lot size you could risk blowing you account very quickly. Remember, it is much easier to lose money in forex than it is to make money.
Although you will not be making huge returns with this account and lot size, you are going to learn a lot and avoid losing your capital. As your account size grows your overall gains will also grow.
Before putting real money into forex trading you have to understand the risks. Knowing that statistically most new traders lose money, it is likely that you will also lose money at the beginning. We do not recommend putting money into forex that you cannot afford to lose. If you do not have money to put into forex that you are comfortable with losing, we recommend trading demo. Trade on a demo account until you are able to put aside this money and feel confident in your strategy.
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