How Much Capital Do I Need to Successfully Trade Forex?

When you are just starting to trade Forex it is very easy to get confused about how much working capital you’ll need to trade Forex successfully. Forex  brokers advertise a number of different amounts required to open an account depending on the type of account you wish to open.  The 3 typical account types are Forex micro account, Forex mini account, and Forex standard account. Many beginning traders see this minimum opening account requirement and believe that that is what they need to comfortably trade Forex. 

The minimum capital requirement from your Forex broker actually has nothing to do with what it takes to trade Forex successfully. The amount of capital you need is determined by your trading plan. Your trading plan should outline your goals for your Forex trading as well as include your Forex trading system. Let’s dig into this a little further. 

If you wish to trade Forex for a living then you will quite logically need more money to work with than someone interested in trading Forex as a hobby. For instance let’s say you want to replace a $50,000 per year income by trading Forex. In our example we will assume that your Forex trading system will produce a 100% yearly return. In order to replace your $50,000 per year job you will need to start with $50,000 in working capital and get a 100% return on your money. Please take note that in this simplified example we are not taking other factors such as employer-funded plans such as insurance or retirement. 

So as you can see having the proper amount of working capital is crucial in Forex trading as it is in any business. Do not make the common mistake of underfunding your Forex trading account.