Convention dictates that to trade like a professional Forex trader, you will need to have at least $100,000 in capital to begin with. For many Novice Forex traders, this large amount can be scary. Conversely, many Forex traders also recommended that you do not trade with mini accounts of $100 or even $500 as the profit margin gain are just too small.
Taking this into consideration, a lot of new Forex traders manage to set aside around $1000 that they feel comfortable risking in the markets. Truth be told, though, this still isn't really enough to let you start trading in earnest. Even worse is if that money isn't truly investment capital. If you're worried about losing your cash, you're at risk for letting your emotions rule your trading decisions, which is a recipe for disaster. That said, it is still possible to trade Forex with only $1000. Here are some tips for how to do it.
1. Consider a mini account
While it's true trading with a mini account doesn't give you the same experience as trading with a full account, it's far better to start off small than to be constantly worried about losing your investment capital. If you'd be truly upset to lose the $1000 you plan to start off, then it's better to start with $500 or $250 or some smaller amount that won't play on your nerves so much. This will leave you clear-headed enough to make good trading decisions.
2. Be realistic about risk management
Of course the need to minimize cost and risk is extremely important in Forex trading. But you also have to draw the line between what is reasonable and excessive management of risk taking. This is because many of those who are risk adverse tend to hold back on every single opportunity to invest in a trade for fear of losing their money. Rather you should adopt Intelligent risk management like how the Professional Forex traders do.
3. Develop your portfolio
If you adopt a flow of consistent accurate and profitable trades, you mini account will sooner or later grow in term of size. You will be able to achieve a sizable portfolio. Many novice Forex traders fail in this respect because, they hold back for fear of taking risks. If you do not take risks, then your account will never be able to grow in size. Having said so, it also good to be stress that you should not be taking reckless risks. Adopt a balance in your investment decisions by weighing all the pros and cons of a trade situation objectively.
4. Using Leverage
In Forex trading, even if you have a limited amount of capital you can take advantage of high leverage. By leveraging we mean, you multiply your returns many times over using margin account. However with higher returns also come higher risks. So if you wish to leverage your trade, you should try to keep to a portfolio of stable currencies where there are no wild fluctuations in the prices.
Many times, novices Forex traders make the mistake of starting to trade in the Forex market with insufficient capital. Although you can begin trading with an initial amount of $1000, you have to remember that there are only so much that you can do with that amount. The goal is to slowly build up that amount so you wont be stuck in a situation where you constantly have limited capital.
