How Much Will it Cost to Start Trading Forex?

The forex market is the most volatile market in world and it boasts a handsome $80 billion traded every day. In order to be successful in this investment activity you must either gain the knowledge required to place your own trades or pay a professional trader the required sum to do the investing for you. It is becoming increasingly popular to trade the forex market from home as a sole trader, so in this article I am going to concentrate on the cost for that particular venture.

It is contrary to belief that you need thousands of pounds or dollars to start trading on the forex market. There are many spread betting platforms that now allow you to trade in increments as low as 10p a pip/ point, so you could quite happily start with as little as £100. Depending on your financial situation and your investment power will depend on what level you wish to invest at. You should gauge your initial investment by allowing only to invest a maximum of 5% of your balance on any one trade.

An example of this would be; if you invested £1000 and placed a trade with a 25 pip stop loss at £2 a pip your maximum risk is £50 on that particular trade or 5%. The reason this risk management is undertaken is to ensure you do not deplete your trading balance by having a few losing trades on the run which does often happen. Even with a system of 80% success rate you could still lose 5 trades on the run before having 10 winning trades.

When it comes down to training and the cost to start trading forex, again this is up to how fast you want to be trading for real money. There is enough information on the internet to self teach how to trade on the forex market but this method would involve testing what you have learnt with a demo account over a period of time. You can pay a lot of money to be taught by one of the forex gurus’ if you want to go straight in at the deep end or there is now many forex clubs available.

Forex clubs are a group of people that tend to trade together over a webinar, although your monies are kept to yourself and it is your responsibility to physically place the trades, entry and exit points are normally done together. These clubs are coordinated by a professional trader who will suggest entry and exit points and it is up to the individual trader to act on their information. This method of group trading is a great way of sharing the cost of the professional and often enables beginners to start trading straight away.