The low barrier of entry to forex is a huge draw for investors all over the world. Not only is it very easy to set up a forex trading account and start trading currency pairs, but it’s also (relatively) affordable – especially when compared to more traditional investment options.
Most legitimate forex brokers don’t even have minimum deposit or trade requirements! So let’s take a look. at how expensive forex trading really is.
Forex trading is not expensive and works out much cheaper than other types of investing, like the stock market. Forex commissions are around $8 per lot, trading platforms are free and many brokers don’t even have a minimum balance requirement – making the barrier of entry very low!
Is Forex Trading Expensive?
As mentioned a moment ago, pretty much anyone can get into forex investing without having to have a bundle of money in their nest egg.
You can just as easily set up a fully legitimate forex account with five dollars or $5 million – or anything in between, even.
A lot of people even start off their forex journey with no money whatsoever. It’s very much possible to start forex trading with just $10
!
These investors begin with what are called paper trading accounts or demo accounts.
Basically you sign up for a broker, jump into a paper trading environment, and they set you up with $100,000 (or more) of funny money to make virtual trades with.
You’ll be able to test different strategies, learn the ins and outs of forex investing, and see how risky bets payoff (or flop) without having to risk any of your own money this way.
Sure, you won’t be able to take any of the money you get from successful paper trading home with you or move it into your real account. But the information you’ll get is invaluable.
Is Forex trading expensive? It doesn’t have to be and compared to other markets like the stock market, it’s much cheaper!
The Costs of Trading Forex
Is forex trading expensive when you break down the actual costs of executing trades, though?
Well, that sort of depends on a couple of different factors.
Commissions
Forex brokers (as we highlighted above) want to make it as easy and as inexpensive as possible to set up an account with them so that you’ll do your trading through them exclusively.
A big reason behind this “free stuff” upfront is because most forex brokers are going to charge some sort of commission for both entering and exiting every individual trade.
Forex commissions are generally pretty low, though, but a lot of it depends on the specific broker you decide to move forward with. You’re going to want to research the kinds of commissions you might get hit with on every transaction and compare them to the kinds of commissions you’d pay in the stock market.
Just don’t be surprised if the forex ones are much more affordable. I’d recommend using an ECN forex broker as they’re extremely cheap in terms of commissions.
Spread
In the forex environment there are really two separate prices in every market at the exact same time – the bid price (the price someone is willing to purchase a position for across every currency pair) and the ask price (the price someone is willing to sell a position for).
The difference between these two prices is called the spread in forex. Brokers live and die in this spread part of the price, essentially acting as the middleman between individual buyers and individual sellers while providing access to the kind of liquidity that makes these trades happen almost instantly.
Different brokers have different spread prices, though. You’ll want to make sure that you research these costs before choosing your broker for sure. Again, ECN Brokers are going to have the lowest spreads and be much cheaper than standard brokers.
Education and Training
If you are serious about making forex work (and building the kind of financial future most people only dream about with this investment opportunity) you’re probably going to want some training.
Don’t get us wrong, there are plenty of 100% legitimate – and really worthwhile – programs and trainings out there that you can scoop up totally free of charge.
YouTube is filled top to bottom with tons and tons of forex education, for example.
Some of those YouTube trainings and channels are more geared towards newbies and beginners, but there’s a lot of sophisticated and experienced forex investors that share their “secret sauce” as well.
At the end of the day, though, the chances are pretty good you’ll want to spend at least a little bit of money on forex education. You’ll want to know the basics, the more advanced steps of forex investing, and how to make the most of your broker tools and platforms.
Some brokers offer this kind of training as part of your membership. But you might have to seek out education elsewhere.
Expect to pony up at least a little bit of money for the real cream of the crop programs.
How to Trade Forex for Cheap
Let’s say, for example, that you want to hit the ground running in forex on the cheap – maybe with just $100.
Granted, $100 won’t get you much these days (and it’s probably going to get you even less in the future) but you can make a splash in the foreign exchange markets with this kind of money.
The first thing you’ll want to do is research the market top to bottom.
This assumes that you don’t want to simply gamble this money on currency pairs, but want to give yourself the best shot at growing that money.
Fundamental analysis and technical analysis are huge pieces of the puzzle. Learn to do both effectively (and quickly) and you’ll be in a great position to succeed.
Next, get that new brokerage account signed up for with the $100 – but be sure that it offers a paper trading or demo account.
Test drive your market research and forex strategies for a couple of weeks, see how well you did, and if you feel ready to jump right into the pit and risk your own money – that $100 – you can jump in with full fee.
Of course, if you want to sort of “trade with training wheels” you could do a little bit of copy trading or social trading.
There are a lot of platforms out there where people share their actual trades – live and in real time – with everyone that is a member of the platform, giving you a chance to mimic their moves without having to put in the heavy lifting on your own.
Copy trading like this isn’t without risk, though. But if you’re looking to start trading forex cheaply it might be the way to go!
Obtaining Forex Funding Without Spending Too Much Money
Although forex trading isn’t expensive, it can become expensive when traders start depositing their life savings into their accounts to try and increase their profits. This is extremely risky and there are much better ways to increase your assets under management without ever having to touch your savings!
Online forex prop firms are a great way to get funding. They offer funding between $50,000 and $400,000 for forex traders for a relatively small fee. You’ll need to pass a small trading challenge to get the funded trading account but if you’re a profitable forex trader – this shouldn’t be a problem!
I’d recommend having a look at all of the top forex prop firms to see what their offerings are! I have personally used FTMO and MyForexFunds the most religiously over the last few years.
In Summary – Is Forex Trading Expensive To Get Into?
In conclusion, forex trading is not expensive to get into. However, it will be expensive to run a successful operation as you have other costs associated with forex trading that are required to live up to the potential. Nevertheless, it is possible for an individual to forego any of these costs if they are willing to work on their own by using free resources online or through other means.
Compared with other forms of investing, forex trading is very affordable and makes a great first market for beginners!
