In today forex faq, we have a question from one of our fellow reader from India.
Below is the question:
I am Ashwath from India,I would like to know what is the minimum capital required to start fx trading and which is the best broker. Thanks in advance for your advice as i am very new in this field
Glad to hear from you.
There is no say minimum capital to start trading forex as they are broker that allow you to start an account for $250USD. The amount you need to have in your account depends on how much you want to make every month.
If you aim to make $1,000 every month, a $250 account will not be able to make it. If you wish to make $1,000 every month and you have a strategy that grows your account for 25% per month, you will need to have $4,000 in your account.
Do not be mislead by those advertisement in the market telling you that they make $10,000 in a week. Those people had to have an account at least $100,000 in their account. There are too many gimmicks in this market nowadays and as a new trader, you have to be careful who to trust and what to believe.
Having a good broker is extremely important. I have a student who told me that he had $70,000 cheated by their broker.
Therefore if you ask me for recommend, I will only trust FXCM or Oanda as they are reputable big companies. Do not go for those small and weird broker that promises 100% or 200% bonus just to try to lure you in and you will later have a hard time withdrawing your money.
Lastly, please do not trade live without a proper proven strategy. Do remember to always trade a demo for at least 3 months and you will only move to live trading when you manage to produce 2 consecutive months of profitable trading with a strategy.
I understand that most of you new traders are very eager to get into action as I am once like you guys. I lost $20,000 within the first few months of trading thinking that I have a good strategy after watching some youtube videos.
Trust me, those strategies that you see on youtube are general strategies that are not fine tune and not back tested before.
If you have read my blog, you should have seen me writing a notice at the bottom of each strategy telling my readers that these are general strategies and you need to fine tune them before you use them in trading.
You can read about how to fine tune a strategy from my blog below
The problem with most websites and youtube videos is that they do not tell you that those strategies are general and not fine tune yet. In fact, most but not all of the websites and videos in youtube are created by marketers and as a experienced trader, I can tell that what they shared are useless stuff.
However I can’t say that all of them are done by marketers as I believe that they are some that are created by real traders but again it is just a general strategy and not a fine tune one.
I hope that I have answered your question and do feel free to email me whenever you have any problem.