Questions

Is $100 Enough for Trading Forex?

By Stefano Treviso , Updated on: May 24 2023.

$100 is definitely enough to start trading Forex assuming that the trader has clear expectations on his potential returns and doesn't chooses to double down on riskier leveraged trades in order to gain higher profits.

The main problem that every new trader has is the desire to generate large profits regardless of their available capital and this can result in a very expensive mistake.

A new trader with a $100 account, may think that generating a $50 profit is a small number, but what he fails to see is that in order to create that $50 profit in a short timeframe, the trader most likely will have to engage in oversized and high risk trades (for his account). Here's an example:

• Lets assume our trader opens a long position on EUR/USD at 1.07893 using his standard account leverage of 1:30 and a trade size of 0.01 lots ($1,000 worth of currency or also known as one micro lot)
• If EUR/USD moves to 1.08714 (a total movement of 82 Pips) the pip value per micro lot size would be of $0.1 resulting in a total profit of $8.2 or if the position moved in the opposite direction the same amount as a loss

Here's where it gets interesting, since our trader needs leverage in order to potentially see some decent profits, he's missing out on the fact that he basically just risked 1/3rd of his buying power on a single trade and even worse, the most likely thing that could happen to our trader is that he uses full buying power to open a $3,000 position in order to be able to gain more profits and just like that, he can erase his account in a very short timeframe.

Trading Forex with $100 is completely possible as long as a trader understands that he must trade proportionally to his account size with an effective risk management plan. This will prevent him from risking far more than what he should risk.

Now that we explained the situation better, we can conclude the following:

• Trading Forex with $100 is definitely enough to start but it's not enough to generate considerable profits that are worthwile the time investment and most likely will result in overcompensating from the trader's side by innefective risk management.

What could be considered a better course of action?

• Always trading with money you can afford to lose and don't need
• Trading with a capital size that reflects the expected amount of profits you want to generate (eg: a $10,000 capital in order to be able to risk 2% per trade and improve your odds)