What is the least amount of money you need to start trading?

I started with $1300 in a trading account in 2004. Leverege was 400:1 and away I went. after 6 months of trading I had turned that $1300 into $276.00. Sound familiar to anyone? Most ego’s won’t allow them to admit that this is the basic scenario for most new traders. You MUST LEARN several things. First and foremost the realization that trading the forex market is volatile, unforgiving and is NOT A GET RICH QUICK PROCESS!!! You MUST develop/learn a trading style/strategy based on a proven set of criteria. You MUST also follow strict money management so not to overtrade your account. when initiating trades based on criteria you must exercise discipline and patience. one can become a successful trader using all of the aforementioned, but it is a learning process. Greed is another factor. once you have learned to experience some level of success in trading many traders want to “speed up” the process by trading too early or staying too long in a trade. you are going to miss movements…DON"T CHASE A TRADE. Be satisfied when a trade plan executes as you planned, and don’t worry if you missed some of the move. “patience equals profit” and remember you will never go broke by closing trades while in profit. sorry just a rant…Danny

In my humble opinion, the reason you lost so heavily was the high leverage. 400:1 is crazy! I advise using a maximum leverage of 30:1 … and for newbies, 10:1. Professional trader Cory Mitchell of[I] VantagePoint Trading[/I] says: “I recommend 10:1 to 50:1 [leverage]. We aren’t really going to use more than than about 20:1, but having 30 or 50:1 is fine as well. We have stops on all positions, never get re-quoted (we may get a bit of slippage though) and our stops are usually a ways away from the current price so taking a massive hit isn’t likely. During volatile times our stop will be bigger, and if the stop is going to be so big it causes us to risk more than 1%, we don’t take the trade.”

Also you don’t mention whether you were following a trading system, or just trading “by the seat of your pants”. The latter “method” is likely to lose you money, unless you have instincts as good as George Soros, who gets - literally - a tingle in his spine just before the market is going to make a move in his favour (or so I once read in an article about him), at which point he bets heavily (as he did with regard to the British Pound in 1992, when he brought the Bank of England to its knees, metaphorically), and nearly always wins big. Most people, however, including myself, don’t have such good instincts, and are better off using a trading system, and sticking to it consistently. What were [I]you[/I] doing?

In this respect, Cory Mitchell says, with regard to swing trading:

[QUOTE]

[B]Forex Swing Trading with $1000 -It’s Just Math[/B]

Let’s get down to mechanics. I have a specific strategy I follow, which I won’t fully outline here (will make a video [later]) but I will give you the math and how I set my orders so my account grows.

If I am taking a long trade I place a stop 5 pips below a major swing low in price. The stop on a short position is placed 5 pips above a major high, plus the typical spread.

If trading a $1000 account that means your stop can’t be more than 100 pips away from your entry price. Therefore, you are looking for entry points with less than 100 pips of risk. If trading a $600 account, you need to find trades with less than 60 pips of risk. This is because we are only risking 1% of our account on a trade.

(Note: pips values will vary when the USD isn’t the second currency listed in the pair. If you are unsure of pip values, you can always check the amount you have at risk on a trade in MetaTrader4. Go to Tools>Options>and select “Show trade levels.” Put out an order away from the current price where you want to enter, place your stop and target. Hover your mouse over the stop level on the screen to show the dollar amount at risk. If it is more than 1% of your account, cancel the trade or reduce the position size.)

So with a $1000 account let’s say you find a trade where the risk is 30 pips. This means you can trade 3 micro lots (your risk will be $9, and you are allowed to risk $10, GOOD!). Take three separate positions at the same price, each for 1 micro lot (the level II plugin makes this easy). Place the same 30 pip stop for all of them, but each position will have different target.

Take profit on the first position at 1.6x the risk. You are risking 30 pips, so put a target of 48 pips for one of the micro lots. For another micro lot put the target at 2.0 x risk, or 60 pips. For the third lot put a target at 2.6 or 3.6 x risk, so 78 or 108 pips.

If the stop is a bit bigger, say 70 pips, then you can only take 1 lot. When this happens I recommend taking profit at the 1.6 x risk, which is 112 pips in this case. The reason is that you get your profit and you can always look for another entry. There are loads of forex pairs and other opportunities. If you have a trade were you took 2 lots, get one out at 1.6 x risk and the second lot at 2.6 x risk.

By risking about 1% per trade, and getting filled on 3 to 5 trades a night (which is about how many I am filled on each night) even if you lose 60% of the trades you will be profitable. Your gains are bigger than your losses, by a margin of 60% of more, and when you can take multiple micro lots with different targets your wins will be more than double of your losses. It’s is just math. Making 1% to 5% per day isn’t uncommon with this approach, and those sorts of returns add up quickly. There is no reason to risk more than 1% per trade. On losing days you may lose 1% to 3%, but average it out and you are making money.

There is no emotion here (or shouldn’t be). You set your orders and that is it. You do need a decent system to win 50%+ of your trades (ideally), but beyond that it is just math. You will have losing days, but the winning days will be bigger and more frequent.

[END QUOTE]

[QUOTE=Absolutely;762366]In my humble opinion, the reason you lost so heavily was the high leverage. 400:1 is crazy! I advise using a maximum leverage of 30:1 … and for newbies, 10:1. Professional trader Cory Mitchell of[I] VantagePoint Trading[/I] says: “I recommend 10:1 to 50:1 [leverage]. We aren’t really going to use more than than about 20:1, but having 30 or 50:1 is fine as well. We have stops on all positions, never get re-quoted (we may get a bit of slippage though) and our stops are usually a ways away from the current price so taking a massive hit isn’t likely. During volatile times our stop will be bigger, and if the stop is going to be so big it causes us to risk more than 1%, we don’t take the trade.”

Also you don’t mention whether you were following a trading system, or just trading “by the seat of your pants”. The latter “method” is likely to lose you money, unless you have instincts as good as George Soros, who gets - literally - a tingle in his spine just before the market is going to make a move in his favour (or so I once read in an article about him), at which point he bets heavily (as he did with regard to the British Pound in 1992, when he brought the Bank of England to its knees, metaphorically), and nearly always wins big. Most people, however, including myself, don’t have such good instincts, and are better off using a trading system, and sticking to it consistently. What were [I]you[/I] doing?

In this respect, Cory Mitchell says, with regard to swing trading:

[B]Forex Swing Trading with $1000 -It’s Just Math[/B]

Let’s get down to mechanics. I have a specific strategy I follow, which I won’t fully outline here (will make a video [later]) but I will give you the math and how I set my orders so my account grows.

If I am taking a long trade I place a stop 5 pips below a major swing low in price. The stop on a short position is placed 5 pips above a major high, plus the typical spread.

If trading a $1000 account that means your stop can’t be more than 100 pips away from your entry price. Therefore, you are looking for entry points with less than 100 pips of risk. If trading a $600 account, you need to find trades with less than 60 pips of risk. This is because we are only risking 1% of our account on a trade.

(Note: pips values will vary when the USD isn’t the second currency listed in the pair. If you are unsure of pip values, you can always check the amount you have at risk on a trade in MetaTrader4. Go to Tools>Options>and select “Show trade levels.” Put out an order away from the current price where you want to enter, place your stop and target. Hover your mouse over the stop level on the screen to show the dollar amount at risk. If it is more than 1% of your account, cancel the trade or reduce the position size.)

So with a $1000 account let’s say you find a trade where the risk is 30 pips. This means you can trade 3 micro lots (your risk will be $9, and you are allowed to risk $10, GOOD!). Take three separate positions at the same price, each for 1 micro lot (the level II plugin makes this easy). Place the same 30 pip stop for all of them, but each position will have different target.

Take profit on the first position at 1.6x the risk. You are risking 30 pips, so put a target of 48 pips for one of the micro lots. For another micro lot put the target at 2.0 x risk, or 60 pips. For the third lot put a target at 2.6 or 3.6 x risk, so 78 or 108 pips.

If the stop is a bit bigger, say 70 pips, then you can only take 1 lot. When this happens I recommend taking profit at the 1.6 x risk, which is 112 pips in this case. The reason is that you get your profit and you can always look for another entry. There are loads of forex pairs and other opportunities. If you have a trade were you took 2 lots, get one out at 1.6 x risk and the second lot at 2.6 x risk.

By risking about 1% per trade, and getting filled on 3 to 5 trades a night (which is about how many I am filled on each night) even if you lose 60% of the trades you will be profitable. Your gains are bigger than your losses, by a margin of 60% of more, and when you can take multiple micro lots with different targets your wins will be more than double of your losses. It’s is just math. Making 1% to 5% per day isn’t uncommon with this approach, and those sorts of returns add up quickly. There is no reason to risk more than 1% per trade. On losing days you may lose 1% to 3%, but average it out and you are making money.

There is no emotion here (or shouldn’t be). You set your orders and that is it. You do need a decent system to win 50%+ of your trades (ideally), but beyond that it is just math. You will have losing days, but the winning days will be bigger and more frequent.

[END QUOTE]

In 2004 forex was just offered to be traded by the public, so the “systems” available were very scarce…the 400:1 leverage is what everyone was using, but obviously 50:1 is smarter and what is available now. The main reason for my losses wasn’t as much the strategy as much as chasing trades and not closing winning trades before they became losing trades(greed). I started with wizetrade(scam) so their strategy was sketchy at best. I soon befriended a technical trader guru that taught me what trading really was…the premise of my post was to re confirm to the new traders how important it is to stick to the proper money mgmt, strategy criteria and discipline. I was not really asking why what I did wrong. Twelve years later I am just trying to remind the new traders to stick to a good plan and don’t let greed, or impatience ruin your trade. Danny

MoneyNVRSleeps,

Instead of thinking in margin maybe it will be better for you to think in actual terms of units won/lost.
I use a trade position size calculator so it doesn’t matter the “size” of the stop because I just adjust the position size so that i loose the same monetary amount each trade. And the wins are then just X units of the initial risk.

I guess we agree to disagree then.

danster2,

Yea ! I started out the same way !

Regardless of the amount you need to start trading forex with, what you need the most is an education on how to trade. Otherwise you are going to lose every dime you invest - I speak from experience and I can imagine a lot of traders can relate.
My opinion, you need at least $250-$500 to start. It might be wise to start with $100, once you triple that amount then you can bump yourself up. Trading your own money and fake money will generally have two different outcomes.
That’s just my 2 pips.

Yeah, I hear you, I just said that for others to understand what Im saying I guess, lol…

I use 50% of units available on my real account and 20% on my demo

Real account at 48% this week, Im done with that account today. 24 wins, 1 loss.

Strictly working my scalping demo now. Its up 30% for the week, 135 wins, 8 losses due to slippage on Trailstop,

its best that you learn a proven strategy and paper trade for as long as it takes until consistently you have winning trades. When you paper trade you are better off if you ignore the $50,000 balance and
1:trade with near the amount you will be starting with in a funded account.
2:use the exact strategy determined in your trading plan
3: practice proper money management
3: use patience and discipline
this all sounds easy, but trust someone who knows it isn’t!
I hope to encourage the new traders NOT to make the same mistakes that we as seasoned traders have made in the past.
ALWAYS USE A STOP LOSS
There are those on this forum that want to teach, but have not proven their capabilities…BEWARE!
There are many trade strategies/plans that are successful, you must choose one that fits YOUR personality.
My strategy works for me, and may not work for all, this is why I don’t get involved with explaining what I do… its based on Fibonacci levels of support/resistance levels sma/ema levels to execute trades and there are a lot of good traders who use technical based trade strategies that are similar and work well. Remember that indicators are LAGGING and show you what happened after it happened which can help you with probabilities of future movement only. Nothing is set in stone. Good Luck Danny

About capital I think is become second matter, first matter in trading is about skill trading, if skill is good already with high accurate analysis to determine best timing entry with highest possibility to gain profit hence use not too big capital also might can increasing these capital

If a trader is able to increase his trading funds then his trading will become more profitable and this is why i am saving my funds for making a big investments of 10,000$ in the ECN trading account :slight_smile:

I think the least amount of capital required is the amount of money which you can light on fire and laugh as it burns.
I tried it with a 100 dollar bill and put it out right after the edges got burnt, so I started with 50 and added to it every month.

why dont you focus on what your actually saying. For a TRADER to be consistently profitable he has to use a STRATEGY.

Unless you know of a different way to chose entry points and manage risk against reward. haha

it perfectly demonstrates that you are never consistently profitable as you never know whats around the corner. you only know you’ve stopped being profitable once that happens in real time.

No; for a trader to be profitable he (or she) has to use some [I]STRATEGIES[/I], plural. If the trader is judicious in his or her selection of strategies, it doesn’t matter if one of them fails; the other strategies, which haven’t failed, will take care of the losses of the failing strategy.

I agree. It’s always important to have a back up plan when you’re trading, you can never rely on the idea that the current plan would work infallibly.

Did someone say strategies was plural, perhaps not to the individual!


280 trades, 19 loses, all loses are slippage on trail stops, all less then half a pip, 52% gain, 8 days

Practice your A$$ off

We must have a good back up not use all amount in trading and not invest all amount at once in account . I ever trade with low risk to make my side safe . I invested just $100 as a newbie , It was reasonable amount to see my skill of trading . After some time I decide to invest more amount when I was able to make profits.

I chose to start with a $2,000 dollar account. As some have said on this thread I think the minimum amount is based on what you are trying to get our of trading forex. Duh MONEY :)… but what I mean is are you trying to make a living or are you trying to learn? Me I’m trying to learn and to develope a skill that I can take with me into retirement. I would like to retire in 10 years, so I am starting early and hopefully have my skills polished to retire without fear of relying on 401K balanced to get me through the so called golden years. Now before I opened this account I also studied Forex and Demo traded on and off for the past 2 years. I think if you are looking to make a million off of a 2K account your kidding yourself. Manage your risk and set realistic goals then match your capitol with those goals.

What strategy did you use?