Hi, I’ve been playing around with the MetaTrader5 demo and been making (fake) money with it.
I made an account on forex.com but it seems the minimum unit to trade $10,000!!??? I don’t have that kind of money!
What’s the difference forex.com and going thru a broker?
Is there anyway I can start out trading $100?
10,000 units of currency is the “notional value” of the trade, not the amount you must have in your account.
Retail forex is heavily leveraged, so that (in the U.S.) a broker may offer you UP TO 50:1 leverage. If this is the leverage offered by Forex.com, then the $10,000 position that you referred to will require $200 of your money in MARGIN. (This is 2% of the $10,000 notional value of your position, and corresponds to 50:1 leverage.)
In addition to the $200 margin required TO OPEN this position, you need to have enough money in your account to cover the risk you have decided to take in this trade. Let’s say your plan is to risk 30 pips (at $1 per pip). If your position is stopped out, you will lose $30. So, at least $230 must be in your account before you open this position, in order to cover the MARGIN plus your potential maximum loss.
When your position is closed (either for a profit or a loss), your $200 margin will be released back to you.
If trades requiring $200 margin are too rich for your blood, then you need to find a MICRO ACCOUNT, where the minimum trade size is 1,000 units of currency (instead of the 10,000 units specified by Forex.com).
The four common types of accounts available to retail customers are:
[ul]
[li]Nano accounts: minimum trade size 100 units of currency, margin (assuming 50:1 leverage) $2 per nano lot.
[/li]
[li]Micro accounts: minimum trade size 1,000 units of currency, margin (50:1 leverage) $20 per micro lot.
[/li]
[li]Mini accounts: minimum trade size 10,000 units of currency, margin (50:1 leverage) $200 per mini lot.
[/li]
[li]Standard accounts: minimum trade size 100,000 units of currency, margin (50:1 leverage) $2,000 per standard lot.
[/li][/ul]
There are some brokers (Oanda, and others) who allow you to trade ANY size position, including positions smaller than nano-size. That might be a good option for you.
Thank you Clint, that really helped. A few questions:
So forex.com is effectively just another broker?
I think I meant the most I want to put in right now is $100. That means I can trade up to $5000 lots?
Not really. You broker requires margin for a trade but you also must have money in your account to risk beyond your margin. For example, if you have a trade with a 30 pip stop loss, you would need 30 pips worth of money to cover the trade. Since, with a $5000 trade 1 pip is equal to $.50, that means you need 15 bucks to cover each trade. Furthemore, you would only be able to make 1 trade at a time.
Oanda is the best broker I’ve found for small lost size. That being said, $100 is not enough to reasonably start an account. You couldn’t realistically trade more than $1000 lots, or $.10 a pip. even with a very low risk system. If it were me, and I was so excited about getting into forex that I was willing to start with only $100, I would pull some extra shifts or do some freelance work to get a couple grand. A friend of mine just made 500 bucks on a garage sale. Just a sugestion.
GL and, whether now or soon, welcome to the world of live forex. (its addicting :D;))
So the money you would need is trading money + stop loss money?
Can I use MetaTrader with Oanda?
You need the margin required for the number of trades you will have going at one time + enough to cover your stop loss many times over.
As far as metatrader goes, you can not use it directly with Oanda, as far as I’m aware. I chart on metatrader and then execute my trades on Oanda’s platform.
P.S. If you are trading microlots, ($1000) Its still advisable to have at least $1000 in your account.