Starting to trade in the Forex market is not easy. Most of the time, few people have the capital to get into trading as a full-time thing. That is not all. When you are a beginner, there is so much about how to trade Forex that gets confusing, leaving you unsure what to do.
An Ultimate Guide on How to Trade Forex with $100
Can I trade Forex with only $100? Well, the short answer to that is yes, you absolutely can. The only thing you have to pay attention to now is how are you going to do this? How long will it take before you make some returns from this initial investment of $100?
Full disclosure, just because it is possible, does not mean you should blindly walk into it and start trading.
Keep in mind one thing; with $100, you can start trading in the Forex market. That is not in doubt. The real questions you should be asking are; how do I do this? What should I know? What are the pitfalls, and how do I avoid them?
These are the essential questions you should get answers when learning how to trade Forex. Trade-in.Forex will help you figure it out
Will Brokers Help Me Know How to Trade Forex?
Brokers, for the most part, do not care about you. Yes, you can open an account with $100. Heck! You can even open a Nano or micro account, as they are called, for $5 or something equally ridiculous.
The thing they want you to do is deposit funds into the account. That is why they create accounts with such a low threshold, knowing that once you start trading, it will dawn on you very quickly that $5 will not get you anywhere.
These weirdly low-priced accounts were created to benefit the broker, not you.
What’s the point of all this information?
Two words: DUE DILIGENCE
Before you open an account, do not look for a broker who wants you to clear the lowest bar or has ridiculously simple minimum requirements. Look for a broker, basing your choices on what they can offer you when you start trading.
If you do not do that, you will be opening yourself up to a lot of liability.
Just because they offer you a way to start trading with only $100 in your account does not mean you pick them.
Another essential thing is; never trade with an amount of money that you CANNOT AFFORD to lose. The basics of how to trade Forex dictate that the $100 should be disposable income that will not inconvenience you. We say this because the Forex market is fickle and extremely volatile, depending on the currency pairs you choose to trade.
If you make one error in judgment, lose focus for a moment or even forget to put a stop loss level, you could lose all of it. Stay keen and don’t walk into anything without knowing the specifics.
Practice valuable lessons like money management in Forex before starting. That will help a lot!
Invest time and even money in Forex education. Never skip this step. If you do not know what the market is like, even in theory, you have no business being in the market. Yes, social trading platforms offer you information that lets you start trading with no training, but there is no guarantee, and there can be no replacement for real Forex expertise.
Now that we have got that out of the way let’s get into the specifics of exactly how to trade Forex with $100.
To get started, register on the platform and open a demo account.
How Much Do I Need to Start Forex Trading in South Africa: Is $100 Enough?
You know what an easy question to answer is? Can you trade Forex with $100?
The more challenging question is, “should you?”.
If you were one of the people thinking that you have to be wealthy to get started in the Forex market, banish the thought. You do not need to have considerable wealth. You just need to be financially stable.
You need to be the kind of person who can lose the $100 and say “oh well, better luck next time for me” and not “I guess I’m not having any breakfast this week.”
In simpler terms, the financial losses should not bring your daily life to a halt or inconvenience you.
If you can afford to lose the money, have an excellent background in Forex education, understand the pitfalls, and know that the Forex market is not a magical money-making scheme, you should try trading Forex with $100.
When you initially join the market, you will be met with a lot of offers and claims that you can start trading Forex with just $100 and grow it into $10,000 and then $1,000,000 in a short time.
The number of factors that play into something like that happening is so high, and the elements are unlikely to line up and make your wishful thinking happen. You would be asking for a miracle.
You know what? A miracle would be a lot easier to get done than turning $100 into $1,000,000. So, forget the flights of fantasy that you are sold and look at this objectively. How much do I need to start Forex trading in South Africa? Well, you don’t need too much. $100 would be a good place to start.
How to Trade Forex Depending on Account Size
When looking for a way to trade, you will need a broker or app for trading. They will offer you account types that fall into, more or less, these four categories:
- A Standard account (100,000 units)
- A mini account (10, 000 units)
- A micro account (1,000)
- A Nano account (100) or (10)
The smaller size accounts are where you want to be when you have just $100. They allow you to trade mini lots.
The Nano lot is a fraction of the normal standard lot (1,000th the size). In financial returns terms, it means that if a currency pair moves up one pip, the Standard account trader will get $10. The Nano account holder will get $0.01.
If you apply for a Standard Account, you can be allowed to trade smaller size lots. However, with a Nano account, it would be impossible to get the leeway to trade lot sizes higher than your level. It sometimes happens, but it is rare.
What Is the Best Leverage for $100?
Here’s where the broker looks to trap you. Remember, they are not your friend. Let’s say the broker offers a leverage of up to 1:1,000 (a lot of them do) and a minimum deposit requirement of $1. The time bomb has now been created.
So, what is the best leverage for $100? Well, you can never go wrong with an estimate that will not wipe you out completely if you lose. That is what we call risk management.
You see, with the leverage, your $1 can control $1,000. If you lose, you are losing way more than you had. You are losing 1000 times more than you put in. If you win (which many new traders do not), you are up 1,000 bucks.
At first, it sounds like a pretty sweet deal, if you think you’re that lucky. Don’t fall for the absurdly high leverages. Nothing about how to trade Forex advocates for such recklessness.
Here’s the How
With all the odds stacked against you like this, you can start trading with $100 before you start thinking about staking more. Remember, it should always be money you can afford to lose-money you are not afraid to lose.
1. Learn About How to Trade Forex
The education part is essential. Any expert will tell you that the process you should follow must include these necessary steps:
- The theoretical learning stage
- The demo account stage
Theory can only get you so far. It is crucial, but exposure to the real thing is even more so. Any self-respecting broker offers the demo accounts. They allow you to use virtual currency and real market data to trade and gauge your skills.
2. Understand How the Leverage Works
Many of the brokers do not offer absurdly high leverages. For example, Europe caps it at 1:30, and in most other places, it is at 1:50. But, some offer 1:500 or 1:1000. It sounds like a quick and easy way to make money but the higher the leverage, the higher the loss.
Yes, the higher the win too, but you are new to this, remember? You will lose a bunch before you know how to trade Forex. So, learn the basic tenets of risk management to avoid silly mistakes.
Master simple things like stop-loss, find brokers with negative balance protection, and ensure your greed never pushes you to make a bet you cannot win or back if something goes wrong.
3. Trust the Process, Ignore the Money
You are staking money you are willing to lose, right?
Then don’t think about the money. Think about the process that leads to your success-the analysis, the trends, the risk management, and the informed choices. The money will come to you if you focus on how to trade Forex, instead of focusing on money.
Your motivation should not be how much you make, but how accurate you become. Consistency in terms of strategy and trading style is how you get there. You will not get there by obsessing about your money. If you obsess about money, your emotions come into play, and things start going wrong.
4. Control Expectations and Balance the Life-Work Dynamic
Forex may play out well for you, or it may so-so. Few ever get to achieve the kind of success that makes them millionaires before they are 40 or something like that. When you focus all you have on monetizing this and making it your entire life, you should already have a working plan.
Know how good you are, estimate your capabilities correctly, create proper risk management techniques, have an effective life-work balance.
5. Treat Your Account As If It Were Warren Buffet’s
Focus on being a profitable trader before you can start thinking about being a mover/shaker type. Learning to trade successfully is the first step. Treat your account as if you are on the standard lot with the big bucks at stake. That’s how you become profitable.
6. Focus on Consistency
The only chance you have of becoming profitable as a trader is cultivating your prowess to an extent where consistency becomes the name of the game. If you can be consistent, you will be able to make profits more than losses. The point is to gain more than you lose. That is why the Forex leverage for beginners is low at first before increasing with an increase in confidence and great results.
Humans Are Designed to Be Emotional
Welcome to Forex Psychology 101. Today, our topic is you.
If you lose a considerable chunk of money while trading, the markets might seem cruel to you, and you might never return. But, let’s look at the flipside.
Let’s say you go ahead and trade with the $100 you had. The deposit is made, and you are ready to go. The day you start, the EUR/USD pair looks pretty bullish, and everything is lining up for a great setup.
So, what do you do? You do the smart thing and stake $2, which is 2%, like a pro. So far, so good. The pair is not very volatile, and after four days, you hit your target with a profit of $4 (which is 4% of your total account balance).
That’s a win. It feels very nice. But that feeling does not last long. It will dawn on you, very quickly, that you have been trading for like 100 hours just to get $4. The kid you pay to cut your lawn is making more than you are in four days, in a single day.
That’s when you decide to use that leverage thing we talked about, remember?
You end up overleveraging and overtrading, to pump your rookie numbers up. Then, your cookie crumbles. The Forex leverage for beginners should be very low.
Let’s Get Real As We Finish
Depending on whom you ask, the answers to the question “should you trade Forex with $100” can range from a hard “NO” to “Absolutely, where is the $100?”
Just because you know how to trade Forex with $100 does not mean you should. So, why are we telling you that you should try it anyway?
Well, it all comes down to one simple thing; overnight success in the Forex market is overrated. We want you to trade with $100 to train yourself, gain the emotional discipline, risk management skills, and consistency needed to be profitable.
When you are confident in your skills, then you can start thinking about increasing your stake of disposable income for your trading purposes.
The reality is, you will not make that much money at $100. However, you will gain invaluable lessons in the art of remaining consistent, mastering analysis, and money management in Forex. If you cannot learn these lessons at $100 on the line, you should probably not trade with more!