Can You Start Trading Forex With Just $100?
Can I trade Forex with $100? Well, forex brokers offer various options to people who’d like to trade in Forex with limited funds.
Before answering the question of whether you can and should start trading Forex with $100. We’ll first discuss the various forex account types and we’ll also share some tips to attain a profitable change on your forex account.
These ‘micro’ and ‘nano’ accounts are designed for people who wish to trade in Forex with funds of $100 or less.
Their flexible position sizes and the minimal deposits might seem like an ideal option to you. But do you really want to jump in headlong? Don’t you think you should be a bit cautious before you decide to start forex trading?
Ideally, if you are dealing in Forex or any other kind of financial transaction for that matter, you must be careful. First of all, you should lay down the ground rule that you’ll never trade with money you can’t afford to lose.
Forex Account Types
Before we answer the question of whether you can start trading Forex with just $100, be clear that just because you can, you shouldn’t. You’ll need to know few things before you jump on that bandwagon. One of the basic things is to know the types of Forex account.
- Standard – this will allow you to buy or sell 100,000 units
- Mini – this account lets you trade in 10,000 units
- Micro – a micro account allows you to trade in 1,000 units
- Nano – you can buy or sell 100 units if you have a nano account
As you can see, a nano account is very small compared to the standard account. If a single pip move on EURUSD is equal to $100 with a standard lot, it’d mean just $0.1 with a nano lot. And, while a standard account allows you to trade in the other lots, the same can’t be said about other account types. In short, the other accounts offer highly limited options than the standard account.
So, while you can start a forex trading account with just $100, the odds of turning your $100 account into a $100,000 one is almost nil. Experienced traders would tell you that it is hard to turn even a $10,000 account to a $100,000 is slim.
So, what do you think are the probabilities of your $100 account hitting the six-figure sum? Almost zero, you’d agree.
Your target as a forex trader is to get the odds to work in your favour. For that you’ll need to do a basic evaluation of your forex trading performance.
The Margin Calculation
That brings us to another question – how can you evaluate your performance? You can do this through margin calculation. It is the calculation between the two financial units – USD or Euro, for example (By the way, investing in USD makes better sense in most cases). Once you decide on that, you can proceed along with the following steps:
Prevailing margin value calculation – this is done for getting the best value with your margin calculation
Find the equity – analyse your current position and move on accordingly. The total of the two values will be your equity.
Exploring the free margin – reduce the existing marginal value with the amount of free marginal value to arrive at the calculated equity
Obtaining the margin level – the percentage of margin level decides the future trading outcomes
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Tips To Attain A Profitable Change On Your Forex Account
If you are looking for a profitable forex trading performance, give attention to the following:
Procrastination is the greatest enemy of anyone in forex trading. So, you must guard against it and seize each opportunity to achieve your trading targets. Never postpone what can be done today to tomorrow. Use demo accounts to help you beat procrastination if any.
You would’ve heard the popular quote – practice makes us perfect. It is true in forex trading too. Use the demo accounts to get hands-on experience and a better understanding of how forex trading platforms work.
Recognise risks and opportunities
You should be aware of the degree of risk involved and the safety zones to achieve maximum profit from your forex trading account. Base your analysis on objective goals and make informed decisions.
A new trader should ideally dive into Forex trading with minimal capital. You can gradually increase it by reinvesting the profits and not through further deposits. So, even if you can afford to put in a large sum of money, start small and don’t put everything in one basket too soon.
Start with a single currency pair
Forex trading is overly complex and unpredictable. Starting with a familiar single currency pair – a global currency or your home currency is a better idea to start trading. Spreading your interests into too many currencies too early could spell doom for you.
A lot many traders lost the plot when they gave in to their emotions. You wouldn’t want to make that mistake. In forex trading, emotions can ruin the party for you. Always remain alert against emotional decisions by following the predetermined trading strategy all the time. There is no room for emotions in the forex trade because a feeling of accomplishment and satisfaction at one moment can lead to your financial ruin the next.
A great way to learn is from mistakes. Track all your success and failures, mistakes, and all other important aspects by keeping a record of each of them. Over time, these records will help you know what your strategy should be in each situation.
Possibility and probability
Theoretically, everything is possible to achieve with your forex trading account. However, you know that it is not always probable. Hence, it is important to understand the difference between the two by remaining vigilant and safe.
Use disposable funds only
The importance of this point can never be overemphasised. Never put anything other than disposable funds into the Forex trade. Don’t invest the money for your monthly grocery or other needs in forex trading with the hope that you’ll make a great return. Things are likely to go wrong and you’ll end up losing the money you can’t afford to lose.
If you follow all the above steps and exercise caution, you can start forex trading with $100 quite easily. Again, there is a lot of difference between what you ‘can’ and what you ‘should’. Like everything else in life, just because you have money at your disposal, it doesn’t always mean you should invest it in the forex market. Better be safe than sorry!
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