Nowadays, it is normal for retail Forex brokers to offer trading accounts from as little as $1. Of course, when you start trading with such a low amount, you cannot earn anything significant without resorting to pure gambling. But where does that limit, which separates ‘just trying the taste of Forex’ from ‘serious trading to earn your payroll’, lie?
Obviously, the answer largely depends on the scale of earnings you need to sustain yourself. Someone who can live on $100/month needs a much a lower starting FX capital than someone who is living on $10,000/month. Yet, there are independent parameters that make some account sizes more viable than others.
How flexible can you be in your trades with your account balance? For example, if you have a $1,000 account with a broker that offers just 1:10 leverage, even with
How much of a drawdown or a losing streak can you tolerate? Of course, putting only a small part of your account (like 1–2%) to risk at each trade is a good way to avoid deep drawdowns. At the same time, such prudent money management can rarely be practiced if your account size is quite small. Risking big results in fast depletion of trading funds when a particularly long streak of losing trades hits your bottom line.
How diversified can your trading be? With tighter balance restrictions, you can open just several trades simultaneously. What if a valid trading signal appears on some new currency pair? You would have to skip it if you had not enough capital capital. More money lets you participate in more markets. This is especially important if you add CFDs to your range of trading instruments.
How seriously will your broker treat your account? Of course, it is unethical for a broker to offer
How will your deposit/withdrawal fees compare to the size of your account? No sane trader would spend $30 on a bank wire transfer to deposit $1 into a trading account. However, even if you are depositing or withdrawing $1,000 from your trading account, paying $30 results in a 3% loss. When the same amount is charged from a $30,000 transfer it becomes a mere 0.1%.
In my opinion, trading with anything less than $10,000 can be only for educational purpose. Up from that amount, we are beginning to talk serious business and realistic possibilities for trading profits that could be used as an additional or even main source of income. And what is your opinion on the matter?
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