Forex Funds – Forex Academy

It simply isn’t possible to become a successful Forex trading without implementing a solid money management plan. Fund management and market analysis are indeed the keys to successful trading. Here, we provide you with three vitally important tips for managing your funds while trading FX.

Tip #1: Figure Out If you Have a Spending Problem

Consider how much money you make, how much you spend on bills, and where the rest of your money goes. Do you have money in savings? How much do you eat out on a monthly basis? Do you frivolously blow money on random things that you don’t even use? Or perhaps you’re prone to paying those pesky overdraft fees after overspending if you have a bank account. If you do use a bank, try looking at your previous spending over the last few months and figure out your monthly total. You might be surprised just how much you spend on unnecessary items, eating out, overdraft fees, subscriptions you don’t use, and so on. You can then move on to create a record of your spending habits. A pie chart is useful for this, as it can break down just where your paycheck is going.

Tip #2: Create a Budget

Once you figure out where your money is going, you need to give yourself a realistic budget that you can actually stick to. Don’t deprive yourself of everything you like but try to cut down in some places. For example, if you spend $100 eating out every month, try to lower that amount by at least $20. You could also cancel some of those old subscriptions that you barely use to save $10 or more every month. It’s easiest to cut down on frivolous spending but take a look at some of your bills as well. Maybe you could be saving on car insurance, home insurance, your cell phone bill, or something else. You might even realize that you barely use your cable service and consider canceling in favor of streaming services. Once you analyze your budget and make cuts, you’ll have more money to save.

Tip #3: Invest in Trading

Once you have more money in hand, you could always follow traditional means by putting it up in a savings account. However, you could also consider investing this money to make more money. This can also lead to more benefits down the road, as it can contribute to paying for family vacations, Christmas, and can even help you float through retirement someday. You won’t get rich overnight if you do decide to take up trading, but we highly suggest it if you’re willing to put in the hard work. After all, you’ve already thought about your spending and where you could cut back, so why not invest the money you’re saving? This is one of the best financial tips out there for anyone that is looking to make more money without getting a second or third job.

With forex trading becoming ever more popular, more and more people are wanting to get involved, the problem is that not everyone has $10,000 to invest into their trading, so instead they are looking to open up accounts with smaller balances. Brokers are now allowing you to sign up from as low as $10 or even $1 but those balances are just too low to be considered as a profitable starting balance. So if we up things to $100, it is still highly affordable, but it may also offer slightly better profit potential. We are going to be looking at whether or not it is worth trading with a balance of just $100 and whether or not you can be profitable, as well as what it takes in order to be successful with such a low starting balance.

The question of can you trade with $100 is a simple one to answer, yes you can, you can very easily find a broker that will allow you to open up an account with just $100 and you can very easily trade using 001 lot trade sizes. There are of course a few issues with trading with such a low balance, you are not really able to put many risk management plans in place, as you have such a small balance to begin with, it can be hard to maintain it and to survive any losses. With trading, you need to be prepared for losses, especially at the start, so we indeed consider whether you are able to survive those loose switches with a $100 balance.

So the better question to ask would be whether or not you should trade with $100 rather than can you. So we now know that you no longer need huge balances to trade on the forex markets. We will start with the usual, can you afford to lose that $100, for many that $100 is not a lot of money, but for others that $100 could be a couple of months wages, so think about your own situation, if you can afford to lose that $100 without it affecting your life, then we can move forward. We also need to lower our expectations, much like in life, in order to make money, you need money. So your expectations should be set low initially, you will potentially be making money, but with a balance of $100, the profits will be very low to begin with. So if you are expecting huge returns, you should consider not starting with just $100 as you will most likely over-leverage or over-risk your account.

Let’s imagine that we have signed up with a broker and deposited $100 into our account, how are we going to trade with this balance? There are different types of accounts, standard accounts are the normal account you see in most places, where you $10 is exactly that, $100, there are also then mini, micro, and nano accounts. This is where the broker allows you to trade with eve smaller trade sizes to the usual 0.01 lots. It magnifies our balance, so a $100 account would act like a $1,000 or $10,000 accounts as examples. For the purpose of this article and because it is the most common type of account, we will be considering a standard account, so our balance remains at $100.

Now that we are ready to trade, we are going to consider some of the things to think about in order to be successful with this account balance.

Education

It is far harder to trade with a small account than it is with a large account, there are a lot of things that you cannot do with a small account, so we are going to have to be on point with our education. Ensure that you are up to date, you fully understand the assets that you are trading and what you are looking for, as well as your own rules being in place for when you decide to make some trades.

Leverage

When you have a smaller account, leverage has a much greater effect on your account. Many brokers are now offering huge leverages on smaller accounts, as high as 500:1 or even 2000:1 which is a little excessive and we suggest not going quite that high. If you understand how leverage works, the higher the leverage is the more you can trade, however, it also means that you are able to lose your money a lot quicker. So when you have a large account, going for leverage of 500:1 may be great, but when trading on a smaller account you may want to go a little lower,t this is a way of keeping your account a little safer, preferably around 100:1 should be a good level for a $100 account.

Don’t Think About the Money

We know that you are trading to make money, but when you have a small balance, this should not be your focus, if it is then you will most likely be disappointed as it will not be increasing by a huge amount. Instead, you need to focus on your process and your trading habits, hone them and you will be set to make a lot more money once your account balance does grow. Do not rush decisions, do not rush trades, take your time, use this as a learning process, if you are able to succeed with this small account, you will be able to with a larger one too. This also includes honing your risk management plan, creating some rules for your trading, and then sticking to them.

Realistic Expectations

Do not go into it thinking that you will double your money each well, it won’t happen, instead set some realistic expectations. With a small account these need to be low, consider a couple percentage a week, bo more, the higher you set your goals the more risk that you will be putting on your account, and unfortunately at this stage of your trading career, you cannot afford to put too many risks as it is very easy to blow a smaller account.

Control Your Emotions

Emotions can have a devastating effect on a trading account. Letting them take over can cause you to risk the entire balance and many people have blown their accounts simply due to letting their emotions take over. If you are feeling greedy, overconfident, anxious, or even bored, try taking a step away, there is no harm in taking a break, your account and the markets will still be there when you get back. It is very easy to become greedy, to want that extra percent, but at extra percent that you are running for is an added risk to the account that you have not previously accounted for, so simply don’t do it, walk away and then come back with a clear mind.

Journal Your Journey

Create a trading journal for your trading account, jot down everything that you do and the trades that you make, this will give you some great insight and will allow you to see both the good things that you are doing as well as the bad, use this to develop your style and to ensure that you are staying on top of your risk management and that your account remains safe.

So we asked the question of whether or not you can trade with an account of $100. The answer is yes, you certainly can, this does not mean that you should though. It takes a lot of patience, a lot of dedication, and a lot of self-discipline in order to grow a small account. However, if you are in the situation where you can only invest that $100 and no more, then there is no reason why you cannot, simply reign in your expectations and take things one trade at a time, there is no reason why you cannot be successful with a $100 account.