Can you really start to trade Forex with as little as $200? Let’s take the short and sweet answer here, yes you can. Many brokers allow you to open up accounts for as little as $10, so it is incredibly accessible, however, should you be trading with just $200 let alone the $10 entry requirement? This is where the answer is not quite as straightforward and we need to consider a number of different things before deciding whether to go ahead with such a small balance.
Many people often ask the question of how much they are able to make with a balance such as $200. Forex and trading as a whole is very much a have money to make money industry, so you may well be held back by your capital at one point or another. But we aren’t here to look at how to get rich, we are simply going to look at whether or not it would be advisable or sensible to trade with a balance as low as $200.
The first thing that we need to consider when going for such a low balance is how your risk management skills are and whether they are at the standard that you will require. The lower your balance, the stricter they need to be and the less wiggle room you will have. Have you actually tested with a balance similar to what you want to go into? Many people get the wrong idea when they sign up to a demo account and it comes with a balance of $50,000. The risk management that you can do on that account is far higher than you can on a small account, the little mistakes are hardly noticed, while on a small account, those little mistakes could potentially blow the entire account. One thing though, is that it would be a real credit to your risk management skills if you are able to grow a small account. Many people try and the vast majority of them fail, so if you are able to then it simply means that you have a knack for trading and know what you are doing.
You won’t be making millions on your $200 account, that this is perfectly clear. You can, however, make money and in the future, that may be considerably more than it is now. The wonders of compounding, this where you add whatever profit you have onto your next trade to trade slightly larger. Over a long period of time this can add up and that $200 account can grow to something substantially bigger, it will take time but it is possible. So having the motivation to carry on and to start small can mean in the future you are doing quite well for yourself.
So starting with a small account you should still be thinking about the usual risk management, things like only risking 1% of your account per trade as an example, of course, 1% of a “400 account is only $2, while on a $10,000 account it is $100, so the wiggle room is a little smaller. The good thing is that it will really allow you to hone your skills and to develop much stricter management of your funds and your account. Something that you can use in the future to really benefit yourself. Then whatever you have learned to do on your small account, it should be pretty easy to use the same techniques on a larger account in the future should you get there.
More than 20% of traders these days start with accounts lower than $999 which is often referred to as a micro account, so you are certainly not alone in starting with a smaller balance. Not everyone has the money available to trade and some are simply not serious about it, simply dipping their toes in to try it out, there are many reasons why people open up smaller accounts. It is important to remember that the higher the balance, the more flexibility that you will have. Build your account up with patience, do not risk more than you need to, and simply take your time, treat this as a long term business, and not a short term get rich quick scheme.
We touched briefly on a demo account, something that you should have been using before going into a live account. Try and get one set up that is at a similar balance to what you are going to be using with your live account. This way, the risk management that you are using on the demo account can simply be transferred over to a live account. There is no point practicing on a $50,000 demo account if you are going to be using a $200 account, as when you transfer over your skill, the account will most likely blow pretty quickly.
So some final thoughts to think about. If you are thinking of joining with a small balance, it is certainly possible for you to be successful, it will simply take a lot longer to achieve than it would if you start with a larger balance. It is important that you are on point with your risk management skills, do not try to push them as your account will not have the wiggle room available to do this, stick to the plan and do not deviate from it. One of the benefits of having a small account is the damage is limited, you can only lose what you have put in. So the loss of $200 will be much easier to take than the loss of $10,000, however, we know for some, that $20 is an awful lot, even or reason to ensure that you are taking your time.
So to answer our original question, yes you can trade with a $200 account. It will simply be a long and rather slow process, but something that if you are able to achieve. You can be proud of saying that you have achieved something that a lot of traders have tried but failed at.