Minimum Capital Required to Start Trading Forex For a Living

Minimum Capital Required to Start Trading Forex For a Living

One of the most commonly asked questions Forex Traders are being asked is “how much can you earn trading forex?”. After all, everybody has heard of forex traders making millions, but is this so, and if it is, is it as easy as many people claim it to be?

Today, becoming a Forex Trader is easy, especially in our day and age. We all live in an information age where educational materials and Trading Platforms with Demo Accounts for training are easily accessible to anyone with internet access. Moreover, Forex market is the most accessible financial market: Many forex brokers require only $100 as a minimum initial deposit, some go as low as $50 and others offer Micro and Cent accounts. But simply because you can start with only couple of dollars doesn’t mean that’s the amount that will allow you to trade for a living.

$100 Starting Capital

Let us consider a scenario, when you open an account with $100. You will obviously want to limit your risk on each trade, to avoid your account being wiped out if the markets do not behave in your expected way, lets say, we will limit the risk to $1per trade (1% of $100).

You are trading EUR/USD, buying or selling one micro lot, because that is all you can afford with 100$. Your stop-loss has to be set within 10 pips of your entry price, to ensure that your risk is exactly 1% (10 x $0.01). At the same time as a reasonable trader, your have to bear in mind, that you have to consider the spread during entry — this means that, you have to deduct the spread value from the distance of your Stop Loss, which barely leaves any space for the market to move, without triggering your Stop Loss.

Simply from the above example about risk limitation, you can already see how hard it will be to grow a $100 account. If you are risking a very small amount on each trade, which is how it is supposed to be when you want to make money long-term, as a result your gains will be equally small.

Even if you are able to make 5% every single month without a single loss, just to grow your account to $500, will take you 33 months of trading without withdrawing a single dime.

In order to make more money, and derive a reasonable amount of income from your trading activity — you will need more capital.

$500 Starting Capital

Since you now realised, that you need more capital to earn more, lets assume you open an account with $500. You are now able to risk up to $5 on each trade and open trades with more than 0.01 lot. You can now set a stop loss 10 pips away from your entry price and buy five micro lots and still be within your risk limit. At the same time you can now afford to have wider Stop Loss with 0.01 Lot trades.

Starting with $500 gives you more trading flexibility and will obviously produce higher monthly income than starting with $100. But even in this scenario making 5% per month will earn you $25, which is hardly something that will improve your lifestyle.

Of course, there is always a possibility to compound the earnings, but even with 5x the precious capital, it will take you 15 months to reach $1000 balance, which is also hardly rewarding for 15 months without having a single losing month.

$5000 Starting Capital

By now, you have saved up a lot of money and you realised that $5,000 is the capital you want to start trading with. Your trading is now more flexible than ever, you can even trade Mini lots now!

Your maximum risk now is $50 (1% of $5,000), and you because you can trade Mini lots now, each pip of Mini lot is worth $1, so you have higher earning potential, but at the same time the risks will be higher. A good option would be to keep trading with Micro Lots, so you have more flexibility, but yet again — your income potential will be limited.

For what it’s worth, lets assume that your trading system is the Holy Grail and it does make that 5% per month, even with very tight Stop Losses. In this case, you can make your first $1000 in profit after 4 months of trading, if you keep compounding of course. Yet again, $5000 is not the capital every person can afford to risk.

Recommended Capital

• $100 Is too little to start with, if you intend to make a living from Forex Trading. Of course if you are dedicated enough, you can start with $100. You can even turn it into $5000 — as long as you will make a stable 5% each month with no losing months for 6 and a half years straight. But even then, 5% from $5000 is $250 which you can earn every month. Hardly a worthy investment for 6+ year period.
• $500 will give you the flexibility to trade which you will not have with $100, but it is still not the amount to make a sustainable living. Even with proper dedication and no losing months, it will still l take you very long time to become financially independent and earn full-time from Forex Trading.
• $5,000 sounds like a suitable amount, but in reality — this is not the amount everyone can afford to start with and especially risk. Moreover, nobody is perfect, and in the real world it is very unlikely that you will be consistently profitable, some months might be negative other months might be less profitable, and sometimes you might not be able to to trade, thus the balance will remain unchanged. And let’s not forget, by the end of the day 5% from $5000 is only $250 monthly.

So what amount is required to earn as much as you need to live the way you want?

Whichever amount you need, can and will be provided to you, as long as you can display consistent profitability and proper risk management. Simply choose the capital which is most suited for you and join the challenge.

At Fidelcrest Investments, we provide capital for successful traders, based on your risk appetite and skills, traders can get up to 200,000 USD.

Visit Us at Fidelcrest Challenge and see if You can get the amount of money you need!