How Much Money Do You Need To Start Forex Trading?

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 ListOpens in a new tab.

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 hereOpens in a new tab.

90% Of Forex Traders Will Lose Their Deposit

This graphic from Compare Brokers ArticleOpens in a new tab.

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 FxOpens in a new tab.

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 BabypipsOpens in a new tab.

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 SignalsOpens in a new tab.

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 BrokersOpens in a new tab.

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 MyFxBookOpens in a new tab.

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 ListOpens in a new tab.

There are many other firms offering different funding options like The5ersOpens in a new tab.

  1. Start learning forex trading for free from BabypipsOpens in a new tab.
  2. Sign up to a regulated broker like IC Markets for a free demo accountOpens in a new tab.
  3. Practice for a few months, learning strategies and perfecting your own risk management/charting ability.
  4. Track results on MyFxBookOpens in a new tab.
  5. 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 Summary

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.

Kyle Townsend

Kyle Townsend is the founder of Forex Broker Report, an experienced forex trader and an advocate for funding options for retail forex traders.

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