The most important question for a beginner trader is what minimum deposit is required for forex trading. These days many brokers offer minimum deposits as low as $100, which is kind of an industry standard among forex and CFDs brokers. But I don’t think that $100 can give you any substantial gains sooner, and you are probably looking at at least 5-7 years.
Well, if you are a newbie and are going to blow that account in a few hours, then jokes on me. Today I want to address some common questions regarding minimum deposits, so let’s get started.
The industry average minimum deposit for forex trading ranges from $100 to $250. However, many brokers will allow you to jump right into trading with as little as $10. But I don’t think that is something worth discussing.
Many factors determine a trader’s minimum deposit, ignoring the brokers’ minimum deposits, such as his expertise, goals, expectations, account types, and risk management.
Let’s go through these factors.
A trader’s experience in forex trading determines his minimum deposit. In my opinion, the brokers offer $10, $100 and even $250 minimum deposits for newbies who are more likely to blow their accounts. Traders like me who have spent 8-10 years in the forex market would never go in with $100 expecting $10,000 in a month unless they are testing their strategies or something.
Goals in trading also determine a trader’s minimum deposit. Let’s take the example of someone who deals forex trading as a side hustle, not a full-time job. Then he’s more likely to spend less than 50% of his money. Therefore I cannot describe it in a sure short number or amount.
On the other hand, someone who has spent years trading markets and now wants to go full-time is more likely to put 75% or even 100% in some cases of his money in trading.
If someone is a complete beginner and wants to take his pulse by testing his mindset and strategies for a few months, may start from $100 by using a minimum lot size.
Benefits of forex trading - Everything has an upside? — 2023This one is connected to the experience and goal of a trader. As we know, that mini account would allow for minimal deposits and to trade with micro lots, which explains why beginner traders open mini or micro accounts when they start.
On the other hand, a professional trader with substantial capital may open an ECN or direct account.
We all are guilty of blowing our accounts in our earlier careers with crap risk management. Aren’t we? But as we gain more experience, saving more and earning less become our top priority rather than doubling or tripling our capital in a month.
While trading for a prop firm, the first lesson I learnt was that it’s okay to gain 5% per quarter, while losing 5% in the same duration is terrible. Beginner traders open a live account with a minimum deposit of $100 and hope they will start paying their bills with this account in a month or two. They jump on the highest lot size allowed to their accounts and start gambling.
In my opinion, when you are getting started, start with the minimum deposit allowed by a broker. Now, why didn’t I suggest a demo account? Well, demo accounts are okay for learning the trading mechanics and platforms, but they don’t provide you with the true picture as there is no real money involved. Start with the least; go slow. It’s okay to blow a few accounts of $100 rather than one account with $10,000.
No, a $100 deposit is sufficient for full-fledged trading with excellent money management and for practically any trading technique.
