How to start forex trading. Initial deposit
In 2021, almost anyone can afford to trade Forex, even if they don't have any start-up capital. Brokers offer a huge number of special offers and bonuses that allow a trader to enter the market and start earning almost from scratch.
How to start Forex trading? First you need to remember that Forex is not traded in money, but in lots. 1 lot is equal to 100,000 units of the base currency. If we consider, for example, the standard EUR / USD pair, 1 lot = 100,000 EUR. Most private traders don't have that kind of money, so you can trade with incomplete lots. The minimum transaction volume is 0.01 lot, or in our case 1000 EUR, but even this amount is very significant for a beginner trader. What to do in this case? Leverage will come to the rescue.
Brokers provide their clients with a margin lending service that allows them to trade without having large amounts on the account. Leverage is a financial instrument that gives a trader the ability to make transactions with amounts in excess of his own deposit. If you are a beginner and do not have 1000 USD at your disposal, but want to enter the market, the broker lends you the missing funds, which, in the event of a winning deal, then gets back. What happens in the event of a loss? Of course, the broker does not want to lose his money, so he automatically sets a loss threshold equal to the amount of your collateral when making a deal. When the loss approaches this value, the trade will close and you will incur losses, and the broker will receive his funds back. This situation is called a margin call.
Leverage is different, and their size depends on the specific financial instrument and its liquidity, as well as on the broker's dealing policy. Leverage is the ratio of the trader's own funds to the loan amount. For example, a ratio of 1: 100 means that the broker is providing a loan for an amount 100 times the trader's deposit.
So how much should you start trading with?
You don't even need to fund your account to start trading! You just need to register on the broker's website and create a demo account. Of course, in this case, we are not talking about earnings, but you can add up an idea of the market mechanism and the process of making deals. To be able to make a real profit, you need to make a decent initial deposit.
The size of this deposit directly affects the speed and size of earnings in Forex. No matter how talented and knowledgeable a trader may have, he will hardly be able to make a million by investing 10 dollars.
Theoretically, you can trade Forex starting from $ 1. Some brokers offer such a minimum deposit, but as such it makes no sense. With such an amount, the leverage should be huge, and the larger it is, the easier it is to drain the deposit due to the slightest market fluctuations. The smaller the deposit amount, the higher the commission is charged to the trader. Scalping and pipsing strategies cannot be used with such a deposit. And it is impossible to learn how to manage capital for $ 1.
To get full access to all market opportunities, it is enough to have $ 10. This is exactly the minimum deposit on the Grand Capital cent account. In this case, there is still no need to talk about big earnings, but you can learn the basics of trading and test your trading strategies. A cent account, like a demo account, is indispensable for a novice trader, because it allows you to trade real money, but without serious losses.
The minimum initial deposit is not always and not optimal for everyone. When calculating the optimal starting deposit, you need to take into account a number of factors: trading method, account type, preferred strategies, broker's leverage, desired amount of profit and acceptable amount of losses. These factors are often interrelated.
On most Grand Capital accounts, the minimum deposit is $ 100. With this amount, you can already count on a certain income. But at the same time, the loss of these funds will be offensive, but not critical. With a $ 100 deposit, you can safely trade micro lots (0.01 lots) and test almost any trading strategies. It is better for a beginner trader not to put more than $ 100 into the account. Even if you are confident and have successfully traded on a demo account, the risks are very high.
When you learn to multiply your capital by $ 100, you can invest large amounts - $ 1000 or more. An amount of $ 1000 is sufficient for trading any instrument, it allows you to withstand drawdowns and hedge the risks of volatility in the foreign exchange market through transactions on commodity CFDs.
A good profit is about 10-30% per month. You can calculate the size of the deposit yourself based on the desired profit.
Conclusion: the optimal size of the initial deposit for a beginner is about $ 100. In order to really make good money on Forex, you need to invest from $ 1000 and more.