Do You Have Enough Money To Trade Forex?
Many people hear that Forex trading is a potentially lucrative way to make a few extra dollars in the financial markets. However, once they start investigating financial trading, they soon find that $1,000 to $10,000 is the minimum amount required to actually have a functioning trading account for the long term.
This is simply not the case for Forex trading. Thankfully, the Forex market is one of the few markets tradable throughout the world which requires only about $100 to $250 to initially open an account.
Why is this? Well, it’s probably because of the fact that when Forex trading was first launched for the retail market, the brokers decided that leverage would be one of the key selling tools to be used to entice new customers to use their services. Since then, leverage has simply become a standard factor of Forex trading, and only now is it being adopted by other financial firms for use in trading instruments such as Options and Equities.
Is $250 Realistic?
A number of brokers offer minimum account sizes of $250 or even less (down to $100 in some cases). But is this really suitable for such a volatile market as Forex?
To be honest, we don’t really think so. However, if you only have $250 to deposit, you could swing the field in your favour and potentially work with this if you really wanted to. One way of doing this is to adjust the size of your trading position to reflect the smaller account size.
Many brokers offer you the ability to customize the amount of currency which is traded per lot. For example – there are two mainstream lot sizes which are commonly used by most traders these days:
- Standard Lot = 100,000 units of currency
- Mini Lot = 10,000 units of currency
Most brokers offer the trader an opportunity to trade Forex with both of these lot sizes. Because of the conflict between small account capital and large lot sizes, a more recent lot size referred to as the “Micro Lot” has been formulated and is offered by an ever growing selection of brokers. This lot only contains 1,000 units of currency, and therefore has a much smaller impact on account profit and loss.