Can You Start Trading Forex With Just $100?

Start_forex_with_$100

Happy Friday!

This week’s question comes from Claire, who asks:

Can I start trading Forex with just $100?

There is a big difference between what you can do and what you should do. That applies to trading as much as to life in general.

Just because you can do something doesn’t mean you should.

Forex brokers have offered something called a micro account for years. The advantage for the beginning trader is that you can open an account and begin trading with $100 or less.

Some brokers even decided that micro wasn’t small enough, so they began offering “nano” accounts.

To those with limited funds, the flexible position sizes and small minimum deposits may seem like the ideal solution.

But just know this–

A Forex broker is not your friend. If they didn’t need your name to open an account they wouldn’t ask, because they simply don’t care.

Their number one priority is getting you to deposit funds. This is precisely why the micro and nano accounts were created. It gave Forex brokers access to clients who are unable to fund a standard account due to financial constraints.

In other words, these unconventional account types were designed to benefit the broker, not you.

I’m not some bitter trader who has it out for these brokers. I’m extremely pleased with my broker and have been for quite some time.

Send me an email if you’d like to know who I use.

But it is important to understand that just because they offer you a way to start with $100 doesn’t mean you should.

In this post, I’ll answer the question of whether you can and should start trading Forex with $100. We’ll discuss the various account types and position sizes and I’ll also share some tips on how to determine the right account size.

Let’s begin.

Forex Account Types and Lot Sizes

I’m not going to spend a lot of time on this subject because it isn’t the primary focus of this post.

However, it is a good idea to familiarize yourself with these terms, particularly if you intend to move forward with a micro or nano account.

For this post’s purposes, there are four common types of Forex accounts. I’m sure there are others, but these are what most Forex brokers will offer.

  • Standard;
  • Mini;
  • Micro; and,
  • Nano

These three names refer to the number of units you’re allowed to trade. This brings us to the names of various lots or units that you will buy or sell.

Lot Number of Units
Standard 100,000
Mini 10,000
Micro 1,000
Nano 100
 

As you can see, a nano lot is a 1,000th the size of a standard lot. So if a 1 pip move on the EURUSD equals $10 with a standard lot, it would equal just $0.01 with a nano lot.

If you open a standard account, you will likely still be able to trade mini or micro lots if you so choose. The same does not necessarily apply if you wish to trade standard lots using your mini or micro accounts; the idea with these restrictions is to keep mini, micro and nano accounts from trading standard lots.

With that said, I’ve seen some brokers completely disregard these restrictions which makes me wonder why they have boundaries at all.

But that’s the general idea. So as you can see, the ability to trade lot sizes so small that 1 pip equals $0.01 means it’s possible to begin with just $100.

Possible but Not Probable

forex_probabilitiesWith the advent of micro and nano accounts at many Forex brokers, you can, in fact, start with as little as $100. Heck, I’ve seen some offer a minimum deposit of just $1.

Many of those brokers also provide up to 1:1,000 leverage. Combine that with a $1 minimum deposit and they have created a ticking time bomb for the unsuspecting trader.

But luckily, the fact that you’re here reading this means you won’t be suckered into one of these schemes.

Just because you can do something doesn’t always mean you should. So if a Forex broker offers a way to start for $100, should you take it?

That depends on several factors, but if it were up to me the answer would always be no.

We’ll get into the specifics a little later, but for now, just know that it comes down to probabilities. What are the odds that you or anyone else will turn that $100 account into $100,000?

Pretty darn slim.

It’s hard enough to turn a $5,000 or $10,000 account into a six figure sum, but doing so with just $100 is as close to impossible as you can get.

Your job as a Forex trader is to stack the odds in your favor. You likely already do this when evaluating trade setups, but it’s just as important, if not more so when deciding the starting size of your account.

Money and emotions

money_and_emotionsMoney is a powerful thing. Lose too much of it while trading and you may be put off by the notion of risking money in financial markets altogether.

But there is another side to money and emotions that plagues us traders, and that is a feeling of accomplishment and satisfaction.

Let’s assume for a moment that you move forward with your plan to start trading Forex with $100. You make the deposit and a couple of days later the account is ready to go.

At this point, you’re feeling on top of the world. After spending ample time with a demo account (I hope), you’re now ready to start making the big bucks!

On the very first day of your newly funded account, the EURUSD forms a bullish pin bar at a confluence of support. It has all the markings of an “A+” setup.

Without hesitation, you open your account and submit a buy order risking 2% of your account balance which is $2.

After four trading days the pair has hit your 2R profit target, which equals 4% of your account. Excited to see your freshly minted money you open your account and there it is…

A profit of $4.

Now, in a perfect world you would relish the idea that you just pulled out a 4% profit in just four trading days.

Notice I wrote 4% and not $4.

Remember, everything is relative, so any trading performance should be measured by percentages and ratios rather than dollar amounts or pips.

But here’s the thing…

You’re human just like everyone else. This means the excitement from your first real profit will fade when you realize it’s only $4. Not only that, but it took four trading days or almost 100 hours to do it.

That alone can lead to overtrading and overleveraging the account because that $4 isn’t going to keep you satisfied for long.

Scared money is not an option

scared_moneyThe reason I shy away from telling someone to begin trading live with $100 has to do with financial security.

I obviously don’t know Claire’s situation or anyone who asks this question. But when someone hints at the idea of starting with a hundred bucks, I get a bit nervous for them.

Here’s why…

Whatever amount you deposit into a Forex trading account should be 100% disposable. That means you can afford to lose the entire amount without it affecting your day to day life. You can still pay all your bills, provide for your family, etc.

So if you tell me that you only have $100 of disposable funds, that makes me nervous. It tells me that your financial situation might not be as secure as it should be to be able to support the risks involved with trading.

Now, I could be completely wrong. For all I know, the person asking this question could have $100,000 in the bank and zero debt.

But my experience tells me otherwise.

My point here is that you should only consider trading Forex – or any market for that matter –  once you can afford to lose money.

If you can’t, my suggestion is to work on getting your finances in order and then save up for a live trading account. We’ll get to how much you might need for that in the next section.

If you want to win at trading, you can’t be afraid to lose.

A Better Question

a_better_questionIn the last section I examined whether you should take a broker’s offer to start with just $100.

Well, I have a better way of asking that question…

Do you have $100 of disposable money?

In other words, if you take $100 out of your bank account or wherever you keep your money, can you still pay the bills and put food on the table?

The loss of that money should not adversely affect your living situation.

If you answered no to the two questions above, you should not pursue that offer to start with $100. In fact, for the moment you probably shouldn’t be trading with real money at all.

Instead, spend some time demo trading and saving up enough money to get started. We’ll get to how much you might need shortly.

Now, if you answered yes to two questions above, here’s my next question for you.

Do you have $500 of disposable money to begin trading Forex?

Same rules apply here. If you answered no, you may want to stick with a demo account and work on stabilizing your financial situation first.

If you answered yes, you could entertain opening a live account with that amount of money but only after you’ve built up some confidence through your demo account.

Although you can begin with $500, the minimum amount I recommend is $1,000. Not because you need that much to open an account, but because it shows you’re serious. It also suggests that you’ve been trading demo for a while and are now ready for the big leagues.

Moreover, if you have $1,000 that you can afford to lose, it means you’re less likely to make emotional decisions. Nobody wants to lose $1,000, but if you do it won’t adversely affect your life.

Remember, scared money isn’t an option here. You should be prepared to lose whatever amount you deposit into a Forex account.

That doesn’t mean you will lose it. But if you go in knowing you can’t lose it, your emotions are sure to get the best of you. In other words, you’re putting yourself in a no-win situation.

What Amount Is Meaningful to You?

forex_moneyThe most important question here is, what amount of money is meaningful to you?

In other words, what amount will give you the best odds of success without breaking the bank if you lose it all?

As with most aspects of trading, the amount of money you start with is a personal decision. Only you can decide how much you need.

But keep in mind that it’s usually harder to build a $100 account than it is to build one that starts with $1,000. The reason is that a profitable trade on the lesser amount will leave you feeling unsatisfied. This can lead to overtrading and overleveraging the account.

That trader starting with $1,000 is also less likely to make emotional decisions because they can afford to lose it. There are exceptions to the rule, but I’ve found that tends to be the case more often than not.

In a perfect world, a beginning trader would judge his or her performance on percentages and ratios rather than dollar amount.

But we’re all human. This means that your starting amount will influence your decisions to some degree, so be sure to choose an amount that makes sense and resonates with you on a personal level.

Final Words

With the advent of micro, mini and nano lot sizes it is certainly possible to open a Forex account with just $100. Many brokers accept amounts as low as $10 and in extreme cases just $1 will get the job done.

But there is a big difference between whether you can start trading Forex with $100 and whether you should. And just because many Forex brokers allow you to start with that amount or even less doesn’t mean you should accept the offer.

Remember, these brokers are not your friend. Their only job is to get you to deposit your hard-earned money. That’s it!

So the next time you see one of these offers, stop and ask yourself: is this in my best interest, or my broker’s?

Starting with $100 sounds great until you realize that it puts you at a disadvantage compared to those beginning with $1,000 or more. Becoming a consistently profitable Forex trader is hard enough without the pressure of starting with insufficient capital.

Above all, be sure to choose an amount that you’re 100% comfortable with. Remember: never trade with scared money.

Your Turn: Ask Justin Anything

I’d love for this new weekly Q&A to be successful and provide an invaluable repository of answers to common Forex questions.

To do that, I need your help.

Here’s what you can do to get involved and have your question answered in next week’s post:

  1. Ask questions. Post them in the comments below or Tweet them to me @JustinBennettFX
  2. Help me answer questions. If I missed something or if you have something to add, don’t hesitate to leave a comment below.

Leave a Comment:

41 comments
paul says

i use forex.com whos your broker

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William Dela Rosa says

Out of curiosity, which broker or brokers do you use? I currently trade with FX Choice and have not had an issue with them yet.

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Eric says

Hi Justin,
My name is Eric and I live in Nigeria.
I am currently demo trading with FXCM, trying more than 15 strategies, and now feel that I am ready to go live.
Please which forex broker are you (currently) using, and are there others that you could suggest?
Thanks in anticipation.

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    Sam says

    I think he use FXCM. FXCM is a good broker, however, make sure its FXCM UK so won’t be caught up in FIFO rules.

    Reply
Akinbola Sunday says

I use FXDM. Who is your broker?

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Howard Smith says

Hi Justin, I am thinking about opening an account for $500, and I live in the USA. Which broker would be best for me, I was thinking of either Trade King or Oanda but would like your opinion if another would be better.

Thanks for your time
Howard.

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Abdul Mannan says

hi Mr. Justin !!!
im curious too. can i know who’s ur broker?? im trading with Hot Forex for the last 3 years or so. still have no probs with it.

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Hector says

Hello Justin, I appreciate your courses have been very valuable for me, could you please suggest me a broker?

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Sani zubair says

What broker do you use, and can you give me the list of other brokers that are trustworthy?

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Darth Dad says

“Send me an email if you’d like to know who I use.”

Now I wonder how many people actually read this article. Justin clearly states the above quote as he probably doesn’t want to publicly mention his broker… Of which is completely cool.

Good read, I wouldn’t say it’s an outright “no” but the general emotions behind the dollar amount is key.

Thank you!

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    Justin Bennett says

    You got it. I’m not going to publicly mention my broker, which is why I said to email me.

    Reply
Matthew Todorovski says

“For this post’s purposes, there are three common types of Forex accounts. I’m sure there are others, but these are what most Forex brokers will offer”

Sorry, I count four.

An otherwise EXCELLENT article! Great work Justin. As they say “common sense is not so common.” It is an obvious point you make, yet how many aspiring traders give serious consideration to this subject?

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Darius says

“In other words, these unconventional account types were designed to benefit the broker, not you.”

I think it is designed to benefit both. Because lets say I am succesful at demo. I still can open 10 $ account and see now if I am succesful with real money. And as you said we should not trade with scared money – 10 $ account will solve this problem.

If I will be succesful with demo, I think I will open 10-100 $ account. I can afford to lose even 1000 $ without affecting my life, but why should I when the odds are good that I will lose?

“What are the odds that you or anyone else will turn that $100 account into $100,000?”
who cares. Small account is just temporary for getting confidence, proving yourself that you can win not only with demo, but with small account.

I think after gaining more confidence, you can add more and more to your account. After you have confidence you can start thinking about making 100k. But at the start – I am thinking how much percent can I make without having much risk.

I also opened 100 euyr cent account (shows 10000 in balance) in roboforex and invested in a trader. Since June 19 he raised my account by 2 eur. That is 2 % in less than month. His profile shows max 18 % drawdown since maybe february, so looks stable comparing to other traders.
I just opened to see does this work or is this a big scam. I wanted to open just 10 eur for chekcing does this work, but 100 was minimum. Ok I thouth I can afford to loose 100.

So if he continues that way, do the math how much much it can make in a year. Keep in mind that if lets say he makes 2 % in a month and now my account is 102 eur, then it will make 2% from those 102 eur, which is bigger and bigger each month.

I of course do no feel that I become rich even if he makes 10 eur after the offer ends. But the point is that I will have tried the system. I will know how much % I can make and can do the math.

But there are few things which does not make it safe – who knows what is he thinking, maybe one day he will decide to play drunk and loose half my capital. Probability is low. But it still exists. With 100 eur its nothign. But if I invest like 5k eur, thats a lot of work for me to earn them.
Maybe I then should add my stop losses.
Another thing – maybe I should invest into like 20 traders or more to minimize the risk – diversify.

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Ntokozo Thungo says

Wow Justin this is so great buddy thank you for being an eye-opener as always your articles are informative. I learned something. Thank you be blessed.

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Endy says

Great job, Justin. But, let’s do a deeper examination of the issue here: ” these unconventional account types were designed to benefit the broker, not you.” The reason behind these unconventional accounts is the same reason behind the unconventional amounts offered in demo trading. Why do some brokers offer hundreds of thousands of dollars and even up to $1m for demo trading? In their demo trading, the average broker doesn’t offer what the average trader can invest in live trading, and why? Justin, don’t you see grand deception here?
Following this, isn’t it wise to invest minimal discretionary amounts when one is doing so as another level of practicing Forex trading? For me, starting with these small amounts is the real PRACTICE trading, to counter the deceptive demo trading offered by brokers. Because during demo, you’re almost taken away from the world of reality when you’re trading those deceptive amounts that you can’t even approximate in live trading. So, to get closer to reality, one may find it reasonable to invest a hundred dollars or less until one is better acquainted with the realities of live trading.
I know about someone who started in this strategy with only $20; in two or three days (definitely less than 70hrs) he was making about $130. Think that’s cool, yes.

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    Darius says

    “I know about someone who started in this strategy with only $20; in two or three days (definitely less than 70hrs) he was making about $130. Think that’s cool, yes.”

    I think that was gambling, he had to risk huge % of capital to make this so fast. Unless that 20 is only part of his capital.

    Reply
    Justin Bennett says

    Endy, it’s always a good idea to demo trade with an amount that is equivalent to what you will likely deposit into a real account. As for your friend making $130 from a $20 account, the only way to do that is through severe overleveraging, which I don’t suggest anyone try.

    Reply
ganesh says

good information. which broker u r used. please tell me

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Claire says

Hi, Justin.

Thanks for answering my question. I totally get it now. I opened an account anyway and funded it with $100 but now I will only continue using my demo account while I continue to save and add money to my real account until I have at least $500 (preferably $1000 if I can be patient enough)

Thanks again

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    Justin Bennett says

    You’re welcome, Claire. Of course, this is just my opinion and it’s important that you do what makes sense for your situation.

    Reply
neville marchand says

Dear Justin
Thanks for the good advice,I often wish that I lived in a GBP or US $ country, here in RSA a $ is 13 to 1, I have already taken a $70 acc to over $900 in less than a year with Oanda with a 50 to 1 leverage. ! or 2% is far too much, the amount I use is .005% that means that every 200p won my acc doubles. After my deposit when I am in the plus I am now trading with the brokers money and am not stressed at all. When I first started trading I thaught that $1000 was necessary and I blew it as I had no experience.Any one can trade trends but after my wife passed away and I took a long break from trading, the fx has changed completely with massive spikes supposedly created by the market makers I feel that its impossible for them to do this as they even paid Tom De Mark to create special indies so that they could buy into dips and sell into rallies. Thanks for your systems . Kind regards Nev

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Henry says

Goodmorning Justin, thanks for your guide & materials. Please brokers can you recommend?

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Eytan says

i am for 0.5% 10 pips risk 200pips
Iuse the 4 hr fite up 10 to 16 trafes

I did not have a losing trade but if i did it is equal to 2 days trading
using this method i am increasing my account to more then 100% per month
Each week ichange pip value
So a lose if accour will

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Gabriel says

To me from my five years experience in Trading, you can even trade a good live account with $50 but your Strategy has to be 75% effective and you must be discipline

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Bill says

Hi, Yes I would like to know who your forex broker(s) is. I have used FXCM previously and still have an account with them which I haven’t traded for a couple of years and only yesterday they sent me an email saying they were changing it to a mini account if I don’t notify them to keep my standard account current. Regards, Bill

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Olayemi Shogo says

with $500 is it okay to trade 1pip to $1.00

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Mimi says

I agree with some of the people suggesting putting $100 towards a live account to gain experience trading live as I’ve seen too many traders using demo accounts for way too long and then blowing it when they go live. There is a huge difference trading live vs demo. Nothing is real money until you trade with real money, although many say they treat demo accounts as ‘live” accounts and if that’s true, why don’t they trade live accounts?

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Sydwell says

Only facts,coming to think of it I demo traded for a while,didn’t feel anything,then decided to go live Start small go big,that’s when I realised that I got all wrong wanted to make millions with a nano lot account can you imagine now I know that this is mission impossible which leaves no choice but to sort out my financial lifestyle then come back with a bigger lot size make real money like you said,this piece clears a lot of things for me,I always wondered why other professional traders not scampers though those who have proven themselves still go around looking for people to trade for them in “trade4me” accountsthanks Jabs

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Kim Chi Nguyen Duong says

I think that the first we have to practice on demo market, then open live account 100$ for improve our psychology. Forex is wonderful, but we have to experience enough (experience is years), almost Justin’ advice very useful for us. Thank you Justin so much !!!
(My English is not good, please try to understand this content)

Reply
    Justin Bennett says

    You’re welcome. The most important thing is to find something that works for you. That could involve demo trading or using a small live account.

    Reply
Mthandazo says

True

So how long should one hold a position when a trade is profit?

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JuliusAkolo Affiku says

Is it really appropriate to use more than one trading strategy? For instance, using Trendline Strategy, Trendline Breakout Strategy, Pin Bar Strategy and Price Action.

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    Justin Bennett says

    Julius, price action isn’t a strategy as much as it is a style. There’s no harm in using multiple trading strategies, but it is a good idea to learn one or two at a time.

    Reply
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