It takes money to make money. You need Trading Capital. Everyone knows that, but how much does one need to get started in Forex trading? The answer mainly depends on how you are going to approach your new start-up business.
FIRST: Consider how you are going to be trained. There are many different approaches to learning how to trade: classes, mentors, on your own, or any combination of the three.
While there are many mentors and classes out there willing to teach Forex trading, most will charge a fee. The advantage of this route is that a well-taught class or great mentor can significantly shorten your learning curve and get you on your way to profitability in a much shorter time in comparison to doing it all by yourself.
The downside is the upfront cost for these programs, which can range from a few hundred to a few thousand dollars depending on which program you go with. Some of those new to trading, the resources (money) required to purchase these programs are not available.
For those of you unable to pay the cash for education, the good news is that most of the information you need to get started can be found FREE on the Internet through the brokers, articles, forums and from various websites.
As long as you are disciplined and laser focused on learning the markets, your chances of success increase exponentially. You have to be a gung-ho student, if not you will end up n the poor house.
SECOND: is your approach to the markets going to require special tools such as news feeds or charting software? As a technical Forex trader, most of the charting packages that come with your broker’s trading platform are sufficient (and some are quite good).
For those who need special indicators or better functionality, higher end charting software can start at around $100 a month. Maybe you are a Fundamental trader, and you need the news the millisecond it is released.
Well, instantaneous and accurate news feeds can run to a few thousand dollars per month. Again, you can get complimentary news feed from your Forex broker, but for some, that extra second or two can be the difference between a profitable or unprofitable trade.
FINALLY: you need money/capital/funds to trade. Retail Forex brokers offer minimum account deposits as low as $25, but that doesn’t mean you should enter immediately. This is a capitalization mistake, which often leads to failure. Loses are part of trading, and you need to have enough capital to weather losses.
So how much trading capital do you need?
Ideally, more than $50,000, it depends on what type of trader you are and how often you will be looking at the computer plus how much can you afford to lose?
Below are the gross income data and other supporting data generated by the PREMIUM SERVICE in 2016.
PREMIUM SERVICE 2016
2016 completed TOTAL TRADES = 512
MICRO LOT TRADING
Single-Lot trades cost $0.10 cents each
512 trades cost to trade $51.20 income generated $1,120.90.
MINI LOT TRADING
Single-Lot trades cost $1.00 each
512 trades cost to trade $512.00 income generated $11,209.00
STANDARD LOT TRADING
Single-Lot trades cost $10.00 each
512 trades cost to trade $5,120.00 income generated $112,100.00
From my perspective in 2015 the monies required to operate a:
MICRO LOT ACCOUNT you need up to $5,000.00
MINI LOT ACCOUNT from a minimum of $5,000.00 to $20,000.00
STANDARD LOT ACCOUNT above $20,000.00
(Please note all cases RISK & MONEY MANAGEMENT skills need to be adopted and a TRADING PLAN should be used)
It is common knowledge that most businesses fail due to undercapitalization, which is especially true in the Forex trading business.
I know that many people will say a minimum of $50,000.00 is required, but in the real world, this is simply NOT always feasible as not everybody has access to that amount of money. I have proven that with single-lot trading you can make money from Forex Trading with smaller balances using trade disciplines.