How much do you need to start Forex trading? It is probably the first question beginners ask before entering the financial market. The majority of newbies think they need to start with big money. Well, no. That's a common delusion. Besides, some brokers allow opening new trading accounts with a minimum deposit of $50 or even less.
Forex trading does not take as much money as you may think. On the other hand, there is an optimal amount of capital that beginners need to consider. Also, there is a chance to get extra funds as special rewards, bonuses, and other loyalty opportunities for the newcomers as well as returning investors. So, either you start Forex trading with $50 or $5,000, you need to know how to manage risks. Oh, and never forget the golden rule of investing.
The Golden Rule of Investing
Let's say you buy the stock at $60. You did the research and analyzed the market. The generated data convinces you that the stock will cost $100 in the nearest future. All you need is to lay back, wait, and sell it right on time to pocket the profit. Sounds like a piece of a cake, right?
There is only one problem. The financial market does not give a damn about your research or predictions. It does not care about what you think and feel. When you see a stock dropping down to $25, the Forex market says "Sorry, pal. You missed it". This is where the golden rule of investing comes into force: always try to cut your losses short. This is what actually the most successful Forex traders do.
Never wait until the stock rises by 20%-50% from the purchase price. Try to go shorter and sell it at a 7%-10% price increase. Despite the rule simplicity, a few investors stick to it. Moreover, some beginners are unable to set their ego aside and inevitably suffer from devastating falls they are unable to recover.
So, to cut your losses short, you need to:
- Put your ego aside.
- Get prepared both mentally and financially.
- Use tools to manage risks.
When we say "get prepared financially", we mean the balance. On the one hand, getting started with $50 looks safe enough even if you lose. On the other hand, having a financial handicap is good for a fast recovery and new order to be completed. Before answering the question "how much do you need to start Forex", you need to be well-aware of fundamental risk management tools.
Once you are busy with learning the basics of Forex trading, it's always a good idea to sign up with a trusted broker and get instant access to most powerful tools for trading. Open live or demo account now to be able to start whenever you are ready.