Minimum Reasonable Sumfor to Start Forex Trading

With which minimum sum is it reasonable for me to start Forex trading?…
Is 1000 USD enough or much more?
I don’t want to lose money when bought asset moves just a little against me.
I am starting trader.

The correct answer for FX or any other highly liquid security is zero. When you start trading any new asset class, you should start paper trading to refine your strategies and risk parameters.

Trading Without Having Money at Risk

Newbie trader forexThere are some who would argue that it is difficult to take paper trading seriously without having money at risk. I will make the opposite argument. If you trade differently based on how much money you have in the market, then you will always have difficulty increasing the capital in your strategy. Increasing from 0 to $1,000 should be the same transition as increasing from $10,000 to $100,000 once you have decided that the strategy can handle that capacity.

Successful traders that I know do not focus on the amount of capital they have deployed, the only focus on whether they are winning, whether or not they paper trade or trade millions of capital. So being able to validate your strategy paper trading is the cheapest way to refine your strategies.

Note: there are some cases when you are unable to get accurate feedback from paper trading, such as strategies where market impact is an important factor, but if you are trading currencies this is not an issue.

Once you have finished “starting” to forex trade and have a strategy that you have proven through paper trading, the next consideration for determining minimum capital level is whether the strategy works with the commission you will face at lower transaction sizes and whether your strategy will produce large drawdowns that will wipe out your initial capital.

How to Start Trading Forex

If you’re interested in forex trading, you can do it alone, but try to attend a forex class first, or practice as an apprentice. The forex market is volatile, and new traders may find it hard because of the risks that it involves.

The last two options are much better especially if you are new in the FX market. This way, you can benefit a lot from having well-experienced instructors. You are to have a real time experience which you can use later on when you do your trade.

You have to understand the process of forex trading first. Remember that the FX market has no boundaries or barriers. So before jumping into the market, you have to know the right entry points.

Charting and mapping are also important aspects in forex trading. Charting software are readily available, you can secure one so that you can learn about it; as well as learning how to properly map it. Through this, you can see how the market moves. And you can now make good decisions whether to buy or sell a currency, and earn profits in return.

Another important thing to learn is forex trading psychology. You should know how to properly deal with all your losses, of course you can’t expect to gain at all times. If for a short period you have made a lot of losses, perhaps its time to stop just for sometime. Don’t be carried away in doing the trade, otherwise you may incur a lot of losses.

New starters who instantly gain a lot of profits may think that they know too much. But it helps to know that it is not the same all throughout. Good profits oftentimes encourage more people to trading so much, without thinking of the risks. Discipline is one trait that you should practice and learn.

Leave a Reply

Your email address will not be published. Required fields are marked *