The most effective means of successful forex trading entails the use of a forex broker, which is a faster, more streamlined and more cost effective way of trading forex than through a traditional bank account.
The majority of forex brokers have a minimum deposit requirement for opening a live trading account with them, and the size of this deposit will vary depending on the broker, their offering, and their targeted trading market.
While there are some forex brokers who don’t have a minimum deposit requirement, most brokers won’t allow you to start trading without having first deposited into your live trading account. Generally, the minimum deposit requirement across the broad range of brokers starts at £100, while with those brokers who don’t have a minimum requirement you could technically begin trading with as little as £1.
That said, trading with such a low initial investment will present several obstacles, such as the available maximum leverage at your disposal or the minimum position sizes which you can open.
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Minimum Deposit for Day Traders
Day traders, also referred to as scalpers, should aim to start with a minimum deposit of between £120 to £240 with brokers offering micro lots, and at least £12 for those offering nano-lots. This deposit will mean that you won’t risk more than 0.5% of your investment, as day trading usually involves stop losses of about 5 to 10 pips.
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Minimum Deposits for Position Traders
Position traders should aim to start with a minimum deposit of at least £2 500 to £3 750 with a broker offering micro lots, and at least £250 to £375 with those offering nano-lots. This means you won’t risk more that 0.5% of your account when trading, as position traders typically need to use stop losses of approximately 100 to 150 pips on trades which last several days or weeks.
Deposit Sizes for Effective Risk Management
As a rule, it is considered best to risk only a small percentage of your account on any single trade. When trading forex, it is inevitable that you will incur losing trades, whether you are a scalper or a position trader says Madelien van Der Merwe from Forexrecommend.com. Markets tend to go through winning and losing streaks, and traders should also account for sudden price movements that will incur slippage which goes beyond a trader’s stop loss.
As such, taking these inevitable losses into account, when deciding on the best deposit size for effective risk management, you should weigh the percentage of your account you are willing to risk against your worst drawdown. Therefore, it is suggested that you should aim to risk no more than 0.5% of your account on any trade if you don’t want your account to be down by more than 20%.
Minimum Deposits to Start Forex Trading In General
This question will depend on the type of trading you intend to do, but from a position-size perspective, you should never trade more than you can afford to lose. Most brokers allow you to open an account with a minimum deposit of £100, as this is an amount that is affordable for most traders without bringing them unnecessary risk of loss. In the forex market, there is a place at the table for nearly every trader, no matter your investment size of your style. Starting with a minimum deposit of £100 will allow most traders to open positions on leverage without incurring too much risk as they steadily grow their portfolio.