In today’s episode, you’ll discover how to start forex trading with $100 (it’s not what you think).
So tune in right now…
Forex Trading – How Much Money Should You Start With
Can You Make Money Every Day From Trading?
How to Choose a Good Forex Broker so You Don’t Get Scammed
The Essential Guide To Trading Multiple Timeframes
Hey, hey, what’s up my friends? In today’s episode, I want to discuss how to start forex trading with $100. I know many of you don’t have a huge trading account, maybe $100 is all you have. I have a few things to share with you.
1. Manage expectations
I’m here to tell you that you’re not going to take that $100 and turn it into $100,000 or a million dollars. You’re dreaming if you’re thinking along those lines. If anyone out there promises you that it’s possible, they are either a scammer or they are just a minority, a very lucky few who managed to pull it off.
99.99% of traders are going to fail while trying to do that. That’s the first thing to bear in mind—manage expectations. You’re not going to take that $100 and turn it into a huge sum of money anytime soon.
2. Apply risk management
Many of you might be thinking, “Hey Rayner, it’s only $100, or it’s just 20 cups of coffee, I can afford to lose that $100.” But here’s the thing, as you grow as a trader, you’ll put in more money and have more trading capital.
Let’s say if you eventually have a $1,000 trading account or a $10,000 trading account but you did not master risk management at the start, you will likely lose those trading accounts as well.
You must master risk management despite having a small trading account size.
3. Find a broker that offers nano lots
Some of you might be thinking about how you can apply risk management with only a $100 account. Let’s say you go with a typical 2% stop loss rule, this means that if a trade goes against you, you can only lose $2 out of your $100 trading account, which sounds quite little.
And I agree. This is why you must find a broker that offers nano lots. In the Forex market, one standard lot is 100,000 units, one mini lot is 10,000 units, one micro lot is 1,000 units, and a nano lot is anything below 1,000 units, which could be 100 units.
If you can trade nano lots or in terms of 100 units, this means that 1 pip is worth only one cent to you. If you have 100 pips stop loss, and you’re trading only 100 units, that means the potential loss on that trade is $1. Can you see how useful nano lots can be?
Yes, you’ll never make a ton of money, you’re probably going to make quite little and insignificant money, but it teaches you how to respect the markets and apply proper risk management.
This is something that will pay you dividends for the rest of your trading career. This will apply whether you’re trading a $10,000, a $100,000, or a million-dollar account. Risk management still applies. If you can master this by using nano lots, you’ll pretty much have a smoother journey ahead.
4. Look to grow your trading account
With a $100 trading account, it is very unlikely your account size will stay that way for the rest of your trading career as you should be looking to grow that $100 trading account. You should add more funds to the account so that you can trade larger sums of money.
And when you can trade larger sums of money, you can make more money in terms of notional value. Let’s put it this way, with a $100 account, a 10% return is $10. If your account is $10,000, a 10% is $1,000. Can you see where I’m coming from?
The same risk management applies. The only difference is the notional value that you’re trading from. Don’t look at the $100 as an end-all-be-all, look at it as a stepping stone to grow the account into something larger, because that’s how you make the big money trading the markets.
5. Trade a lower timeframe
If your broker doesn’t offer you nano lots but you still want to stick to your broker while also respecting risk in the markets, then the only thing that I can think of is to change the timeframe that you’re trading on.
Let’s say you’re trading EUR/USD on a daily timeframe. A reasonable stop loss on the daily timeframe is anywhere between 150 to 200 pips and it’s going to be it’s pretty wide and if the best your broker could offer is micro-lots, that’s a potential $20 risk for 200 pips stop loss using a micro lot.
What you can do is to go down to a lower timeframe, maybe EUR/USD on a 4-hour timeframe. On that timeframe, you can have 50 pips stop loss that could be reasonable on the 4-hour timeframe.
And again, if it’s just a micro lot, then 50 pips multiplied by 10 cent that’s about a potential would say $5. Depending on your account size, $5 might be a potential loss that you are comfortable taking a trade on, as that’s within your risk management parameter.
If your broker doesn’t offer you nano lots, then the last thing that you can still do is to trade on a lower timeframe because your stop losses tend to be smaller compared to the higher timeframe.
- Manage expectations when trading a $100 trading account
- Risk management still applies
- Get a broker that offers you nano lots
- Get your feet wet, but look to scale up your trading account over time
- If you can’t find a broker that offers you nano lots, then trade a lower timeframe with a smaller stop loss
With that said, I wish you good luck and good trading. I will talk to you soon.
Register at Binance