Is it really possible to start trading forex with $100?
Remember: Trading involves significant risk and is not suitable for all investors. This article does not imply or guarantee success when trading. It is for reference only.
Many seasoned traders would probably urge against starting out with an account as small as $100. They understand the inevitable variance involved with any foray into the markets and the potential cost of being under-capitalized. One thing they seem to forget, however, is that it frankly doesn’t matter what size account you have, without a good strategy and a disciplined approach to risk management, you will inevitably blow your account up time and time again.
The issue is not the size of your account, it is how you manage your account. With a proven profitable strategy in place and the right approach to risk management, you can in fact start trading with as little as $100 and successfully grow your account to virtually any size. There can even be certain advantages to trading forex with such a small amount of capital at risk, particularly if you are new to trading.
Is it worth trading with only $100?
The first and most important rule of any trading plan is to only ever trade with money you can afford to lose. You should never be in a position where you are trading with money that should be for paying the bills. Most people get that and it is at least one of the reasons why there are a million articles online debating whether or not it is actually worth trading with only $100. A hundred dollars is an amount many people can put together fairly quickly and reasonably afford to lose, to some extent at least.
As pointed out above, it’s entirely possible to grow an account of any size with a good profitable strategy in place and a detailed risk management plan, even an account as small as $100. One of the key advantages, in fact, of trading with a $100 account is it limits your risk of losing financially. It is easy to talk about having profitable strategies in place and good risk management plans but, the fact is, most new traders will still make mistakes, whatever strategy they employ and however profitable that strategy may be for a more experienced trader perhaps. Human nature being what it is, new traders will also likely make mistakes with their approach to risk management, taking on more risk than they should or avoiding other risks that they should really embrace.
Trading with an account of just $100, even if you could afford more, can be a good way to get a cheap education. Better to make mistakes with a $100 account rather than a $1,000 account or a $10,000 account.
How to trade forex with 100 dollars
The foreign exchange market, commonly referred to simply as forex, is by far the largest trading market in the world. It is estimated that over $6 trillion is traded daily on the foreign exchange markets. The foreign exchange market is dominated by big institutional investors like banks, hedge funds and pension companies. However, in recent years, more and more retail traders, ordinary people like trading their own accounts, have established a growing presence. It is still the big institutional who move the market, of course, but more and more retail traders, many with accounts as small as $100, are learning how to identify and capitalize on those moves.
Such is the growing popularity of forex that many brokers now offer multiple account types in order to cater for traders with different amounts of capital available. There is the standard-sized account of course but a lot of brokers now also offer special nano, micro and mini-sized accounts. Having enough money to open a trading account, though, is the relatively easy part.
Before you consider putting any of your capital at risk you need to start investing in your trading education. That means spending time to learn how the market works, practising your trading strategies on a demo account perhaps, and learning how to control your emotions during your trading sessions. These are all equally important elements to successful trading. You may have seen experienced traders streaming their sessions live, netting hundreds of dollars on a given trade and making the whole process look easy. In practice, trading is actually very difficult and though some people may make it look easier, it rarely is.
If you’re looking to develop your trading skills we recommend checking out our 30 Day Trading Bootcamp. It covers all parts of trading including mindset, trading strategies (including forex) and software/tools.
Can you really live the laptop lifestyle and trade forex with only $100?
We have all seen the YouTube videos of young traders making thousands of dollars on the forex markets and perhaps wondered whether it was really possible. Not everyone who claims to be a successful trader really is, of course, but nevertheless it absolutely really is possible to start trading with an account of $100, grow that account rapidly and start living the laptop lifestyle. Many people have already achieved this. It is not an impossible feat and if others can do it then why can’t you?
The size of the account you start with is largely irrelevant. It may seem like if you started with a bigger account, you would be able to achieve your goals a lot quicker but that rarely proves true. In reality, if you are new to trading, the inevitable mistakes you will make along the way will ultimately determine the speed of your progress, not the size of your account.
One way that forex traders are able to grow small accounts fast is with the use of leverage. You will want to learn more about leverage as part of your trading education but, suffice it to say here, that leverage is like money your broker lends you in order for you to maximize the amount of money you can take from the market. Many experts say that leverage is a double-edged sword. It can certainly increase your wins but it can also magnify any losses you make so it has to be used with caution. Leverage has helped many people make a lot of money out of the foreign exchange market but it has to be properly understood and respected.
Five Important Tips When Trading With $100
For the moment, as a new trader with a small account you shouldn’t really be concerning yourself with making a full-time income from forex or living the laptop lifestyle. Instead, you should be focusing on your education and growing your account. Here are the top five tips you need to follow if you are going to start trading forex with just $100:
1. Familiarize yourself with your broker’s trading platform
Never mind about the size of your account, profitable strategies, risk management plans, trading indicators and so on. If you don’t know how to actually use the platform you are trading on, you risk making unnecessary and possibly expensive mistakes. One great way of familiarising yourself with a trading platform is to use your broker’s demo account first before ever placing any real trades. Make sure you know how to enter and exit a trade, set stop losses, limits, alerts and so on before ever risking any real money. Discover the best platforms for trading forex in our 30 Day Trading Bootcamp.
2. Learn more about how the forex market actually works
Markets are moved principally by the fundamental force of supply and demand but there are many other factors that have a huge impact on the markets like interest rates, politics and global money supply. Whilst you don’t need to be an economist to trade forex, it is important to have a grasp of these fundamental forces at play so that you don’t make unnecessary and costly mistakes. It is easy to be lulled into thinking that profitable forex trading is as simple as seeking out a few specific chart patterns with the help of a couple of indicators perhaps. In reality, of course, if it was really that simple, we would all be forex millionaires, right?
That is why you need to learn more about how the foreign exchange market actually works. You need to be continuously improving your edge or at least aiming to.
3. Understand leverage and how to use it safely
One of the main reasons many new traders blow up their accounts is because they don’t properly understand how to use leverage. They may have a vague understanding of what it is but they don’t know how to employ it in a safe and effective manner. It is the main reason so many people fail to make money with forex.
The amount of leverage a broker offers you will vary from broker to broker and country to country. Typically, most brokers will offer you leverage of 50:1 upwards. That means if you trade forex with $100 in your account, you will effectively be able to take positions that would otherwise require a $5,000 account!
Again, it is worth repeating that leverage is a double-edged sword and a very sharp sword at that. It magnifies both wins and losses. Learn more about leverage with our 30 Day Trading Bootcamp.
4. Forget about the money at stake
This may sound counter-intuitive but you need to forget about the money at stake. If you have stuck with the golden rule of only risking what you can afford to lose, you should perhaps consider this money already lost. Consider it payment for your education. Your return is knowledge, if there is an added financial return at the end of it all, great but if there isn’t, you have still gained valuable knowledge.
Trading forex is not a get-rich-quick scheme. It takes time to learn how to trade effectively and accumulate significant capital. If you trade forex with $100, you don’t want to quit your day job just yet because it is unlikely, not impossible but unlikely, that you will make enough income to live on.
Instead, you want to be practicing your trading strategies, strengthening your self-discipline and compounding any returns that you are making.
5. Don’t think of your account as a $100 account, think of it a $1,000,000 account
If you really could turn $100 into $1,000,000 through trading, investing and general compounding perhaps then your $100 is, in reality, already worth $1,000,000.
That is why you should think of your $100 account as a $1,000,000 account. With the right education, strategies and risk management plans in place and given enough time to compound, it will eventually one day be a $1,000,000 account.
You have to understand this and adopt this mentality in order for you to treat your $100 account with the respect that it deserves, if you ever hope to grow that small account into something more substantial.
Trading a $100 account is no different to trading a $1,000,000 account. The overall strategy is the same: familiarize yourself with the market, employ profitable strategies, follow a sensible risk management plan, always remain disciplined and compound your returns.
Forget about earning an income with such a small account, your focus should be solely on growing the account. As your account grows new possibilities will then naturally emerge and perhaps you really could start living the laptop lifestyle and become a full-time forex trader.
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