With so many people looking to make money online and start side hustles, forex trading has blown up over the last few years with many people interested in joining this lucrative industry. Financial markets have always had a very high barrier to entry, keeping budding traders out of the markets for many years. However, due to how forex brokers operate, you can start trading this market with much less capital… but how much?
In order to start trading forex you would need roughly $1000 dedicated to your trading account. This is a rough estimation but in this article we are going to break down exactly why you need this much, how little you could start with and how you could even start trading a huge $100,000+ account without needing a large deposit… Let’s get into the article…
Brokers Average Minimum Deposits
The minimum amount you can start forex with, in theory, mostly depends on what a broker is allowing you to trade with. A broker account is what connects you, the trader, to the international financial markets. Different brokers have different minimum deposit requirements, depending on how they are structured.
The majority of brokers on our Top Forex Brokers List are going to accept $100 as the minimum deposit. Some brokers like IC Markets or Global Prime don’t have minimum deposits per account, just per payment method but these are extremely low. Offshore brokers like Hugosway typically have a minimum deposit of $10 – which is potentially great for beginners. Bare in mind that it’s extremely hard to sensibly trade with such a low amount of capital, so just because there is a minimum, doesn’t mean you should use it.
Depending on where you live in the world and the regulation of the broker you’re using, you’ll be able to have leverage on your trading account. I’ll link an Investopedia article here that breaks down exactly what leverage is in forex, but essentially it allows you to make more money/lose more money, with a smaller deposit. You’ll want to consider how much leverage you need and the regulation of your broker, as FCA regulated brokers are only able to offer 1:30 leverage, whereas CySec regulated brokers can offer 1:500 etc.
90% Of Forex Traders Will Lose Their Deposit
This graphic from Compare Brokers Article highlights just how many retail forex beginners are losing their money in the markets. The reality is very few traders are profitable and out of those profitable traders, most of them would have blown their first few accounts and lost their initial deposits.
You need to bare this in mind when learning to trade. Ideally you want to be risking 1-2% per trade, in order to ensure you can take a lot of potential losses in a row before losing your whole account. Sadly, a lot of budding traders don’t understand this, look to get rich quickly and will just blow through all of their money within a few trades.
In short, you need to start forex trading with an amount you are willing to lose, because you probably will. This will be person dependant but I would recommend starting with $1000 roughly and putting that into various different accounts of maybe $250 each. Trade these accounts with 1-2% risk, figure out what works and practice your craft.
Learning Forex Is Rarely Free
When coming into the forex industry a lot of traders don’t realise the fact that most profitable traders have paid for education from mentors. This can range from maybe $500 for Transparent Fx, all the way to $5000 for Trading Masterclass. Education is one of the largest costs you are going to deal with in your first few months of trading.
Education Speeds Up The Process
The reason a lot of people will pay for education in forex trading is just to learn faster and from a profitable trader, in theory. Although you may potentially save yourself a few months of studying and head scratching, the majority of traders that learn from mentors will still not amount to being profitable over the long term, so it’s no indication of success.
Don’t Want To Pay For Education?
If you are looking to put your money into a trading account, rather than spending it on education, there are a lot of options you have when looking at where to learn from. It may potentially take you longer to learn and find the right materials, but it’s certainly all out there – for free!
I’d recommend starting with YouTube and Babypips as there’s a huge amount of content on both of these platforms that can help you learn the basics and start finding your edge in the markets.
Wanting To Pay For Education?
If you’re someone looking to speed up the process potentially and pay for some education, factor this into your budget when working out how much money you need to start forex trading because you’ll still need to fund your account with real money too.
I would highly recommend doing a lot of due diligence around who you actually learn from, as there is a great number of mentors that are not even profitable themselves, just making their income from selling courses. I don’t actively endorse any trading courses but it’s worth doing research into some of the big names like Forex Signals (Full review here) and Trading Masterclass (Full review here), as they’re very well known in the retail industry.
Start Trading Forex With Less Capital
Baring in mind that the majority, literally 90%, of forex traders will lose their whole accounts in the first 90 days of trading – which is really worrying. The reality is that everyone comes into the market and gets extremely confident about their ability, which is backed usually by just a small winning streak of a few trades. This leads to over leveraging, a lack of risk management and ultimately a lot of losses. This is where demo accounts come in…
The majority of the Top Forex Brokers offer a free demo account, which you can get within a few minutes of signing up. I would recommend maybe IC Markets, or Global Prime as these are currently the two highest rated forex brokers that both offer free accounts. If you’re in a jurisdiction that doesn’t allow forex traders, an offshore broker like Hugosway will be your best bet.
The benefit of trading a demo account is that you cannot actually lose real money, it’s all simulated money. Now if you just trade recklessly and don’t focus on risk management, this is going to be a pointless experience and you’ll just lose money when you move onto live trading. However, if you focus on risk management, risking 1-2% per trade, using a fixed stop loss, journal your trades and use MyFxBook to track your returns for a few months, you’ll be in a great place to deposit real money and start actually making money, rather than losing it. My biggest regret in forex would be starting with live money, rather than reaching consistency on a demo account.
The downside to a demo account is that you won’t gain the psychological strength needed to trade forex, hold winning trades and cut losing trades as you don’t have any skin in the game. This is minor though, as it’ll come with time once you start trading live.
Trading $100,000 Without Needing Large Capital
Traders often assume that they will need to either start trading with a huge amount of capital to ever make good money, or that they need to risk 10% of their account in every trade to make money – both of which aren’t strictly true. Prop firms allow traders to pay a small fee to take a profitability challenge – if they pass, they get access to a huge trading account!
There are nearly 20 forex prop firms in the industry now, all of which are ranked in our Top Forex Prop Firms List. FTMO, for example, will allow you to pay $540 to do a $100,000 challenge. If you pass the trading criteria, you will get funded at receive a 70% profit share of the $100,000 account, alongside getting your initial fee refunded!
There are many other firms offering different funding options like The5ers, DT4X Trader and Lux Trading Firm. Using these companies can mean that you can start forex trading with much less capital. For example, you could plan to do this:
- Start learning forex trading for free from Babypips.
- Sign up to a regulated broker like IC Markets for a free demo account.
- Practice for a few months, learning strategies and perfecting your own risk management/charting ability.
- Track results on MyFxBook, making sure you’re actually consistently profitable after maybe 6-12 months of learning.
- Buy a $100,000 challenge from FTMO for $540 and get funded.
This is of course a best case scenario, as 90% of traders fail – however, it’s possible to start forex trading with absolutely no money, spend $500 on a challenge account and be straight to trading 6 figures after a year of practicing.
In conclusion, you will need around $1000 to start forex trading sensibly and learning the markets, risk management and respecting your account balance. This $1000 will be spent on education, funding your live account and potentially paying for funded account challenges.
Never start trading with money you can’t afford to lose! I hope you found this article useful, please comment below if you have any more questions that I haven’t answered in this article, or let me know how much capital you had when you first started trading forex.