Trading Education

How Much Money You Need To Start Trading on Forex

One of the most common complaints about Forex is the high barrier of entry. With a worth of a typical lot being 100 000 USD, tons of traders like better to skip the market entirely. However, there’s no legal minimum for day-trading Forex — unlike with stocks and most other commodities. In fact, you can start trading Forex completely for free of charge.

Practice Demo Account

It’s obvious that nobody likes loosing money. But what about those who are willing to try Forex trading as a side job, or an additional way to make money part-time. In addition to lack of experience, there also are lack knowledge of trading platform, as an example, like MetaTrader 4.

The solution is invented already. Forex brokers have Demo accounts for beginners, where it’s become real to trade with no investment. It’s a kind of a simulation with real conditions, existed markets, currencies, and real-time changes in the currency rates only with virtual money on it. Anyone can easily open practice Demo account.

Of course, it’s better to start with a demo account, expecially if you’re a complete novice, but we highly recommend you move to the real account as soon as you’re familiar with the basics. Choosing a cent account is the perfect way to start trading as it allows to face all the emotions that a typical trader copes with and not to risk much money.

Live: Cent Account

Cent accounts are made specifically for the traders with the low starting capitals. They “multiply” all investments by 100 and divide all the payouts by the same amount. At first glance, it seems like a gimmick, but that gimmick allows you to trade more freely and better calculate your strategy.

The Cent accounts are the most cost effective among all the real-money accounts. They are also the sole ones that allow you to trade without leverage from 100 USD — which becomes 10 000 USD.

Of course, the profits will be rather small too. And not only thanks to the dimensions of your trading capital but also due to the larger spreads on the Cent accounts. So, while it’s technically possible to enter the Cent accounts with 10-20 USD, the simplest entry point would be around 100 USD.

Spread is the difference between the buying and therefore the selling prices: the tighter the spreads, the more profit the Forex trader can make.

Live: Standard Account

Standard accounts are what they sound like. They provide the quality conditions for the traders and offer some advantages compared to the Cent accounts. The largest one is the tighter spreads — while the lowest spread on the Cent account is 0.3, the Standard accounts go down to 0.1 spreads on the major currency pairs.

While this might not seem much, consider that the most profitable trading strategy — scalping — requires you to close orders with only 0.5 pips of profit. Switching from the Cent account to the Standard account reduces the losses from 60% to 10% and allows scalpers to make twice as much profit.

On the downside, Standard accounts require larger investments. There is no multiplication, so you will need larger orders. The minimum deposit is 100 USD, but profitable trading with such low amounts are going to be rather hard. If that’s all you can afford to invest — you’d feel much better on a Cent account. For Standard, we recommend to have a minimum of 250 USD.

ECN Zero Account

ECN Zero is a special case — these accounts are created specifically for the scalpers and have 0 pips spreads. On the other hand, they carry a significant fee for each transaction and have a 500 USD minimum deposit.

ECN Zero accounts are meant for professional traders and aren’t recommended for the newcomers — even though they are more suitable for scalping, the risks and expenses are way too high. However, if your average order is 1000 USD or more, ECN Zero will provide you with better profit margins than the other account type.

Conclusion

It doesn’t actually matter what initial deposit you have, what truly matters is that you want to start trading Forex and therefore, change you life for the better. Fortunately, there are demo accounts that you can practice on for absolutely free.

P.S. Still have questions? Please send an email at olivermurphy@altraforex.com
We would love to help!

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Oliver Murphy

Hi! My name is Oliver Murphy. I am the Head of ALTRA Group, the team of the most qualified and experienced forex traders and programmers. Our Mission Statement: "Trading Forex Made Easy and Profitable for Everyone"! Join our team today!

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