How much money do I need for Forex and CFD trading?
Many people still wonder how much money they actually need for trading, so let’s break it down in detail. And let’s talk about something from real practice.
You can hear many opinions and facts with sufficient argumentation to make it credible and logical, but the truth is that the real simple answer to this question is very difficult to obtain, and we will explain why.
If I wrote somewhere that 500 EUR is all you need to start, I wasn’t kidding, its reality, but many people may look at this reality completely differently. It depends on whether you are looking for financing accounts through prop firms, trading through PAMM accounts, trading purely with your own capital, and many other things. There are also many perspectives on how you trade and how much you need to earn. It is obvious that if I have a capital of 500 EUR, I cannot expect to make a payout of 1,000 EUR every month, and so on because at the beginning, there is no profit at all. At the beginning, you start studying at a university, and it doesn’t graduate in a month. It is also clear that if I have such a small capital, my subconscious will push me towards greater risk (relative to capital) because, of course, I will still want to earn those 1,000 EUR a month, but this is again a different topic. 500 EUR at the beginning and especially for beginners is definitely enough, and they don’t even have to be on the broker’s account. And now, we can break it down.
We need to start from the roots and break it down point by point.
If we look at Forex, that is available to most people, we find that today, CFD brokers offer micro-accounts and cent accounts in addition to trading 0.01L (1,000 EUR, USD GBP…). It is possible to open a volume of up to 100 or even 10 (USD, EUR, GBP) on these accounts. This means that if I have 100 USD in my account, I am able to open a position for 100 USD, 90 GBP, 95 EUR… = completely without leverage. Not to mention cryptocurrencies, where it is possible to open positions without leverage even for euro! On the other hand, we are able to open a position of 50,000 USD, but that is a different matter.
This implies that 500 EUR is enough for any strategy, whether leveraged or unleveraged. But it must be clear to everyone that it will not be enough for life. For that, we have our or other prop firms, where it is possible to get to funded accounts in hundreds of thousands of euros for 500 euros.
On the other hand, we have a different type of brokers, bank brokers, brokers where various funds trade, but also retail, we can get into Forex here with a minimum volume of 0.01 Lot (1,000 EUR, USD, GBP…). However, as small players, we will mostly be punished by a minimum fee that can be equal to a trade for 0.5 or 1 Lot. In this case, trading a volume less than 0.5 Lot is completely impractical and destructive, not to mention the fact that the amount of capital that a small player has on the market is not enough to affect anything in the market. In this case, we cannot talk about starting with 500 EUR because it is not enough, and it never will be.
However, of course, there are other decisive factors.
If I am a complete beginner, then having a small capital is the best decision, even if I have the ability to invest much more, it will almost certainly be a very bad decision. The financial market and Forex can take millions from you and never thank you for it.
Therefore, if my trading is not preceded by months of theoretical learning from reliable sources and preparation, then it will always be less = more.
As a beginner, I need 500 EUR, and if I can afford more, then only enough so that I don’t look at it as just a demo, but rather something I have to approach more responsibly, but not unnecessarily much, because it is almost certain that a crash will come if I don’t yet know what I am doing. This can last until the point where we already know what we are doing, and there the capital can start to increase, a person can get to investors and gradually build up a huge capital. However, this ideally requires years of practice or the supervision of someone else, 4 eyes, and it cannot simply happen overnight. If it happens too quickly, it almost always ends badly. Our company provides an ideal solution in this regard with the RF Cooper 4-phase training program, which is ideal for beginners. On one hand, you learn to responsibly manage risks, on the other hand, you fight for a large, funded account, and therefore it is much better than trying it with your own capital of 500 EUR directly with brokers.
So, if someone tells you that you need at least 10 or 100 thousand, it’s only partly true. Because to learn how it works, what your options are, whether it’s for you and to build some strategies, you don’t need a large amount of capital and certainly not on broker accounts. But if you want to earn decently, then a large amount of capital can be a big advantage, but not at the beginning, and again it is important to emphasize that it may not be necessary to have it on broker accounts if you do not trade or invest in stocks completely unleveraged.
It is true therefore, that the larger the capital at the beginning, the worse it can be! And the larger the capital in the future, the better. But you really have to know what you’re doing, and that’s another point where in practice betrayal happens often, because many factors decide. A person must gain experience to understand that a large amount of capital (and especially a large amount of ones own capital on the broker account) can mean a big problem, on the contrary, a small amount of capital provides huge flexibility and learning opportunities at an acceptable price.