Is £500 Sufficient to Start Forex Trading?
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The answer to your question is Yes if you want to start trading forex with £500 in your account you can do exactly that.
But let’s move on to the questions that you will more than likely lead on to after “Is £500 sufficient to start forex trading?”
One of the most common questions tends to be “how much money could I make from forex trading with £500? “
Which is another good question…
So let’s delve a bit deeper into this and try to understand what you can expect from a £500 trading account.
Question: Is a £500 trading account going to give you the ability to put what you have learnt in your free forex trading Course (if you haven’t enrolled yet make sure you sign up here now) to the test?
Answer: Absolutely, you can test out everything you have learnt and start turning your knowledge into a more hands-on practical experience.
Having a £500 trading account is going to give you the ability to test out your money management skills in terms of risk management, sticking to your trading plan and generally your self-control.
You can also test your understanding of trading strategies with your £500 trading account.
You’ll probably notice we haven’t mentioned anything about making money yet and you were probably hoping for us to say - Yes, you can turn a £500 trading account into a Million Pounds overnight…
Well, unfortunately we can’t say that because it simply wouldn’t be true. Although having £500 in a trading account will give you the ability to put your skills and education to the test it’s not going to turn you into a millionaire overnight and anyone who tells you any different is a liar.
Having a £500 trading account should be about getting your confidence up, practising good risk management and trying to make a good return on your capital in terms of a percentage of your starting amount. If you made 10% in a month that would be a good return, although that would only be £50 so you wouldn’t be buying a red Ferrari just yet.
But we’ve got some good news, good things take time and should you manage to master forex trading with a small amount of money you could be destined to make much more money in the future.
What should you do with your £500 trading account?
- Practise proper risk management
- Learn how to open and close trades
- Master stop loses and Take profits
- Practise your trading strategies
- Try to make a good percentage gain on your initial capital
What shouldn’t do with your £500 trading account?
- Take high risks in hope to make more money
- Leave trades open without the safety net of a stop loss
- Chase losing trades
- Be effected by losing trades, it will happen and does happen to even the best forex traders.
Although an initial capital of £500 is considered a pretty small account. There is nothing wrong in small accounts and this does not mean that you are doomed to failure, it simply means that you have to have realistic expectations about the abilities of your account. In fact, forex trading newbies are always recommended to start with smaller accounts.
The good thing about small accounts is the flexibility they allow. Your risk should always remain below 1%. This is a good start for someone not good at risk management considering the fact that risk management is a skill you will be able to develop with a lot of experience and education.
Set your goals the right way and you will understand that your initial experience of forex trading is dedicated to learning how to trade and not so much making a profit.
The desire to learn and ability to understand the mechanism of the market is what increases your chances to make money from forex in a long-run.
A good educational background and training is the key to becoming a good forex trader. If everything you expect from trading is making money, you have the wrong attitude.
If gaining knowledge is what you expect – this is the right place and time for you to open an account. In this case, even £500 is enough to help you start learning, developing your skills, experimenting, outlining your trading style.
We at Trading Education respect and admire your willingness and desire to learn, understand, develop, improve. This is why we provide you with something that’s going to put you a step ahead of the rest – a comprehensive, up-to-date, and reliable source of fundamental forex trading information and knowledge. Make sure to read more about our Ultimate Guide to Forex Trading course here and enroll into the course today to start changing your perspective and explore many new opportunities in forex.
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The £500 forex account scenario
According to DailyFX more than 20% of the forex trading beginners nowadays start with micro accounts of below $999. While the fact that not everyone has a lot of money at their disposal to invest in trading or not everyone has the serious intentions to continue trading forex in future, there are also other reasons why opening a smaller account is highly recommended by professionals in the field.
Opening an account for £500 you can risk up to £5 per trade and this provides you with more flexibility. In this case, you can manage the risk and not get swept away by the temptation of exploiting high leverage (with an increased risk of failure) by setting a stop loss 10 pips away from your entry price and take 5 micro lots.
You can always play around with the pips and micro lots but your aim is to never go above the recommended risk of just 1%. The realistic amount of daily income you can expect from starting with £500 is £5 to £15 on average. Of course, this may seem like an insignificant in monetary terms compared to your initial expectations.
However, a £500 account will allow you enough flexibility to play around and gain experience while keeping the risk of major loss low.
It is recommended to build up your account with patience, slowly but surely, instead of trying to take advantage of high leverage and not be able to manage the risk properly.
In general, forex trading is often a nerve-wracking experience filled with pressure. You may also feel pressured by the emotional impact of feelings such as greed and impatience but you will need to fight the urge of these feelings if you want to become successful.
One simple way to ease the pressure is to trade conservatively. In this case, an account of £500 is just about enough to allow you some freedom in coping and handling adverse conditions while even if the worst happens, your life won’t be affected to drastically.
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Is £500 sufficient to start forex trading?
It is enough if you feel free and flexible enough to learn and gain experience;
And it’s enough if losing this money won’t affect your life.
The basic idea of forex trading is often the context of trading conservatively and managing your money sensibly. While failure and loses happen all the time on the forex market, your goal should be learning from the mistakes (of others and your own too) and try everything to avoid turbulence.
Look at price catastrophes that have occurred in the past in the currency pair of your choice, think about how such scenarios can be interpreted by your trading size and in your life.
Make sure that your capital is large enough to withstand a similar price shock in one way or another. Make sure you are ready to withstand a shock if you destroy your account.
In a nutshell, in the common case you will be ok to start with a small account of £500 and use the money not only with the hope of making a small profit but also with the idea you are investing them in your development as a trader, in gaining experience and discovering a trading approach that works for you.
People who succeed at forex trader are the ones who work very hard for it. The more effort you put in, the more of your time and energy you dedicate, the more likely you are to succeed.
So when you are facing this exciting world of opportunities and risks forex is, the best option is to spend time learning more about what you are getting into. It is not that hard and we at Trading Education can help you a lot! Why don’t you start with checking out our forex trading articles which cover a plethora of interesting and useful topics?
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