Compared to other financial markets, not much capital is needed to trade on the Forex.

How much capital is needed to trade?

 

Depending on your trader, the bare minimum you need to deposit in order to open an account can be as low as $100. Even with such a small amount of capital as that, it is already possible to make large trades because of leverage. In the Forex, leverage is usually higher than in other markets and can go as much as 100:1 or even 200:1.

This does not mean, however, you will automatically be successful. While using a high ratio of leverage will increase the trading power of your account, it can also put you under increased risk. This is because leverage amplifies profits as well as losses, meaning that it is much easier and takes less time to both make and lose money.

In order to avoid your account from being wiped out, it is advisable to control the size of each trade you make. Instead of putting everything you have into a single currency pair, consider using only a maximum amount at a time to ensure that you will always have an opportunity to win back whatever losses you incur.

This technique is easier to do once you have enough confidence to deposit more money into your account. With higher capital, you can safely put limitations to how much you can spend each trade while still being able to buy or sell a large amount of currency pairs.

In the end, the right amount of leverage and trade size will be completely up to your own preference. After gaining experience, you will find the level where you are most comfortable with regarding the balance between risks and potential benefits.