Have you ever wondered why traders in the Forex market have more losers than they win for themselves? Is it because the Forex floor is bad or not? And have you ever wondered how we ourselves got to the top of profitable traders? Today we are going to learn the importance of trading volume at a reputable forex broker and how much to invest in trading, especially we are going to explain an example of what a $ 500 Forex account can look like. How safe is it to trade?
Start trading on Forex
When you want to trade, you must start to familiarize yourself with the Forex market, prepare as complete and basic knowledge as possible, to find the most suitable forex trading method. Once you have chosen a trading method, you must open a demo account (Forex simulation account), because on this account you can practice trading free of charge and psychoanalysis of the forex market
You will practice trading and setting up a position type in Forex trading like a real account.
See also: Find out what is a demo account? Can this simulated account withdraw money?
Equip knowledge and psychology for real accounts
After mastering the operation and knowledge through the demo account, if you are ready to trade with a real account to start making profits, then know that the amount of money needed to start trading depends on the type of account you choose. This requires you to know for sure how much money you can invest and you shouldn't put all your money on Forex.
If you have little money, only 100$-200$, or have a lot of money but just want to invest with a small amount, you should open a micro account to trade, or some exchanges have cent account type, mini account… for new investors. For example, if you open a mini forex account with $ 100, you will only need to open trades with a trading volume of 0.01 lots and don't forget to use reasonable leverage.
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Likewise, if you can trade many positions at the same time and your funds can be significantly better then you have a choice of account types such as Standard or Professional which are offered by Forex brokers. Currently, there are many Forex brokers that provide financial services such as foreign currency trading, gold trading or stock trading, so choosing a reputable exchange also needs careful consideration. .
Pay attention to the amount deposited when trading
In Forex trading, your margin deposit determines the size of your trade. For example, when you open a micro account with a first deposit of 50$ and trade with a minimum volume of 0.01 lots. If the size is 100,000 base currency then 0.01 lot takes 1000 base currency, also when you use your 1:1000 leverage you will need 1 $ as deposit funds for trading, simple right.
See also: What is Forex Leverage? Leverage related information
Suppose you want to choose EUR/USD currency pair to trade and enter an order with a volume of 0.01 lot, your micro account will have 50$, your deposit will take about 1$, so you can trade by translating 49 more orders like this, with a volume of 0.01 lot, now your account has included the trading margin amount. So, did you estimate the amount of increase or decrease? For every pip that the price of the EUR/USD pair moves, you have the opportunity to raise or lower your $ 0.1. That is, if it goes in the same direction as your prediction, then for every pip you gain 0.1$, otherwise, if it goes in the opposite direction of your prediction, you will lose 0.1$.
See also: Find out what is Forex pip? Instructions on how to read pips in Forex
New Trader Common Margin Level
You can refer to the margin level for new investors to get an overview of the trading volume.
If you open an account and deposit 50$
When you accept 10% of risk for a trade, this equates to a value of 5$ for a trade. Then you choose a currency pair and enter an order of 0.01 lot, then you can stop the loss with 50 pips respectively. This number of pips is safe in trading. And so you can trade 10 more times to run out of money in your account if you lose in a streak in 10 trades.
If you open an account and deposit 200$.
In case you deposit an amount of 200$ and still your risk tolerance is 10%, corresponding to that amount is 20$ for one trade, keep choosing currency pair, trade is 0.1 lot, so in this case, each pip your profit /loss you will get is 1$.
With better volume, you have a chance to make money faster, if in case the price goes in the right direction you predict 10 pips, you can win 10$, with a risk of 20$, you have points. The stop loss will be 20 keys.
However, if you increase your risk up to 20% per trade, when you enter 0.1 lot your Stop Loss will be 40 pips, a much wider stop loss. And you expect a profit of 3 times the stop loss, you have a chance to get $ 120.
See also: What is Stop Loss? The most effective guide to placing stop-loss orders
For you to open an account and deposit 1000$
In this case, you open an account and deposit $ 1000, the number of trading orders you can open will be better.
For example, the risk you can tolerate is 10% on one trade, 0.1 lot volume and 1:1000 leverage. So now your risk level will be 100 pips, corresponding to the risk of you losing $ 100. However, this chance of winning could increase by more than $ 100, if you expect a return x3 times the risk then you have a chance to make a profit of $ 300.
Please note: you should pay attention to your margin balance to avoid Margin Call and automatically cut your order if there is a lack of margin. Because if Margin calls, it means your account doesn't have enough balance. force the exchange to cut part of your order to maintain the balance or you have to deposit more money to maintain the margin.
View more: The article compares forex and stocks where to invest
Conclusion
To trade Forex, it is simple to open an account and get used to it or with just a small amount of money you have joined the great family of trading businesses. At that time, you can buy and sell, update news on Exchange Forex Signals rates, etc. However, we still remind you again, you should equip yourself with enough knowledge, consult friends or news sites. To get high profits, avoid investing a lot of money, placing wrong orders, causing loss of assets in the account. At the same time, you should not skip more articles to learn what the risk reward ratio is, how to calculate the simple ratio in Forex. So please follow us.
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