In the world of trading, $100 won’t get you very far, but for some, it’s the only amount of capital that they have to get started with. Trading should be accessible to people of all socioeconomic classes because there are financial gains that one could have from it. Still, many experts state that trading with anything under $1,000 simply won’t produce any major gains. We want to make it clear that trading Forex with $100 is possible; however, it’s not sustainable, at least initially. To make significant monetary gains, traders will need to up their capital investment to a minimum of $1,000. Many brokers that advertise initial minimum deposits of $1 – $100 do so in hopes of luring in uneducated, novice traders in hopes of taking their capital in fees. We don’t want that to happen to you, and we advise against deposits under $100 but prefer $1,000 deposits. In this article, we will provide you with information to enhance your chances of success when trading Forex with $100.
Can I Trade Forex with $100?
Before diving into the “how,” let’s first examine why trading Forex with $100 is less than ideal. Forex is a different type of trading because one must account for the differences in currency value; therefore, traders cannot take the deposit amount at face value. We do not recommend starting to trade Forex with just $100 because the gains (if they occur) will be small. Many brokers allow for small deposits such as $10, which is enticing, but the problem lies with the amount of available earnings. If you start with $100, then one of two things may occur: (1) you lose the $100, or (2) you make some earnings, but they won’t be substantial. In a perfect world with an ideal setup, if you invest 2% or 2%, you may profit from $4 over the course of four days. Any profit is exciting, but many people will see this as a sign of success, overtrade, and over-leveraging their accounts. This will likely result in substantial losses. It is recommended that you have $1,000 of disposable income to start trading Forex because that’s where the potential significant gains lie. Note that I said disposable. If you invest $1,000 that you would otherwise use to pay bills or provide basic needs, this is not disposable. It would be best if you were willing to lose $1,000 because it is a possibility in the trading realm.
How do I start Trading Forex with $100?
Before you start trading Forex with $100, it’s essential to research the market. Understanding the different currencies, their current value and the market’s behavior will help set the stage for you to make predictions and execute the best trades. Most online brokers provide novice traders with tutorials and how-to guides, but we suggest that you conduct research beyond the scope that the brokers entail within their platform. For example, some currency values can shift based on what’s happening in the economic or political sphere, so it would be wise to look into how events can influence the values of the currency you’re interested in. Also, not all currency is created equal; look at different currency pairs and the data surrounding them to determine how their values fluctuate. Most brokers’ platforms will include technical analyses with charts and graphs to help pinpoint currency value movement, but again, it’s essential that you understand how to read and interpret that data; otherwise, it’s useless.
Once you’ve done some research into the realm of Forex trading, you’ll want to look at brokers whose platforms require smaller minimum deposits. Several reputable brokers such as eToro and Avatrade have minimum deposit requirements under $100. Look at the fee structure for your platform options to choose a platform that doesn’t have outrageous extraneous fees. Once you’ve found a platform, you can open an account and practice using the demo account. Utilizing the demo account will help you gain familiarity with the system so that you use your $100 efficiently and effectively. Once you’ve mastered the demo account, you’re ready to start executing Forex trades.
When setting up your platform for Forex trading, there are a few things you should keep in mind regarding your settings. Consider the ratios and percentages rather than the dollar amounts. You are starting with $100, so trading will not be a “get rich quick” scenario, but with enough patience, you do have the opportunity to make some monetary gains. Execute trades that involve small percentages of your capital. Initially, you may choose to execute a trade that is 2% of your $100 or $2. Once that trade hits your target value, let’s say $4, then you will now have $102 total. Now you may execute another trade that’s 2%, or $2.04, and continue on with the same pattern. Of course, there will likely be some losses, but if you keep the percentage of capital used in trade executions, then your $100 will stretch farther. Again, and we can’t emphasize this enough, trading with $100 is not going to make massive monetary gains anytime soon. It may take years to make any substantial gains. The goal with starting at $100 will be to allow your account to grow for at least two years before withdrawing any money. Doing this and risking no more than 1% each day will increase the likelihood of increased daily earnings. The average daily earnings of a $500 account are $10, and while this isn’t a lot, it is a starting point if you want to live off of Forex trading gains one day. Statistically, most unsuccessful traders risk more than 2% of their account on a single trade, as risking substantial percentages multiple times in a row will quickly deplete the account. As the cliche goes, slow and steady wins the race, and this is especially true for trading.
How many lots can I trade with $100?
Forex is traded in specific amounts that are called “Lots.” Lots are standardized numbers used to define the numbers of units that are traded on an exchange. There are a variety of lot sizes that you may encounter as you begin Forex trading. The types of lots are as follows: (1) Standard, (2) Mini, (3) Micro, and (4) Nano. Each has its own number or units or 100,000, 10,000, 1,000, and 100, respectively. Changes in currency value relative to another currency are measured in “pips,” which is another standardized measurement. The pip value in lot terms is as follows in EUR/USD pairs:
A standard lot is equivalent to $10 a pip.
A mini lot is equivalent to $1 a pip.
A micro lot is equivalent to $0.10 a pip.
A nano lot is equivalent to $0.01 a pip.
Now that a basic description of lots has been laid out, how many lots can you trade with $100? This will depend on the currency pair, as the pip value or lot value based on pips will vary based on which currency pair you are attempting to trade. For simplicity’s sake, we will stick with our EUR/USD example. Using the data from above, it is possible to trade either 10 standard lots, 100 mini lots, 1,000 micro lots, or 10,000 nano lots. The lot size you choose will depend on your risk tolerance; we recommend starting with nano lots as they have the least amount of risk. Of course, it is possible to trade EUR/USD with standard lots and $100, but this will likely result in overtrading, and you will have a higher risk of losing the $100 quickly. We initially recommend nano lots until you can build up some capital to take more of a risk.
How much money do you need to trade Forex for a living?
To make a steady income stream from Forex, you will need much more than $100 if we haven’t made that clear enough already. The experts recommend a minimum of $1,000 to truly make monetary gains in Forex trading, but they recommend even more to make a steady income off of it. The recommended capital needed to live off Forex trading is $2,000 – $5,000, with $5,000 being more preferred for a stable income stream. With $5,000, you could afford to risk about $50 a day, which will result in an average profit of around $100 or more per day. Over time if you allow this account to grow and reach $10,000, then you have the opportunity to make about $250 per day. When considering how much capital you should invest, remember that the most successful traders executive trades equal to or less than 2% of their capital and earn back, on average, double their investment. There is a lot of strategies needed for trading, so keep in mind that trading is a skillset and is not guaranteed. There will likely be days where no money is made.
In sum, yes, you can trade Forex with just $100, but no, we do not recommend it. If you are a very, very patient person and are okay with making very little off of that $100 for numerous years, then you’ll be okay with this method. However, many people overtrade or overleverage because they want to see substantial gains quickly, and this just won’t happen with $100 invested into Forex. Also, remember that whatever capital you deposit into a Forex platform is at risk of being lost, so never trade with money that is needed to pay bills. Only use disposable income that you can afford to lose. And finally, as always, happy trading, friends!