How Much Do You Need To Start Forex Trading?
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Yesterday I emailed our subscribers asking what they wanted answers to and any issues they were having. One of the primary themes we saw was people hadn’t started yet, and worse they didn’t know how to get started.
All I can say is don’t overthink it.
I’ll get onto how much you need to get started in a second but first we need to talk about over-analysis-paraylysis. I can’t remember who came up with that phrase but its one of my favourites in the business & investing world. This is simply where an individual takes no action because they are paralysed by the amount of information out there. This is very common and I am personally guilty of this too. A phrase instead to live by is below.
So now that we have that covered, let’s get back to the primary question at hand. How much do I need to start trading? That’s an extremely broad question that depends on 3 things:
How much knowledge of trading do you have?
What is your long term aim? Full time trader? Part time? Just for fun?
How much time can you dedicate to it?
If you cannot dedicate at least 10 hours a week to it then you won’t make money. Between 10-30 hours = Part time trader, which I believe can make about 20-50% per year on their money and 40+ hours = full time = 50%+ yearly ROI.
But that still doesn’t answer our question.
So this is a general rule: You want to start with the MAXIMUM amount you can afford to lose. I also don’t recommend anything under $10,000. The reason? Well let’s do the maths. Assuming you make 50% a year and DON’T withdraw any along the way. This $10k becomes $400k in 10 years and 15 years? Well that’s $3 million, this is assuming you don’t withdraw and you earn 50% per year. This is of course not easy and you will have to have the knowledge and systems in place BEFORE getting started. But back to our original point it is a lot better to take some action than to take none at all. Even if that’s demo accounts, which I hate, that is still better than nothing.
There are other types of action
Making trades is not the only type of “action”. Instead you can begin researching new potentially profitable theories, brush up on support and resistance training, earn money to increase your starting capital or back-testing systems or strategies you think may have been profitable in the past. Although past results DO NOT equal future results, there is a lot of proof that strategies tend to perform the same if set-up correctly.
Hope this clears this up. Remember to subscribe and comment below.