On this occasion, we will discuss how to play forex with small capital. But before that, do you know how to play forex safely and correctly? To avoid the risk of losing capital, you need to learn all the things to consider when learning forex online that we have explained previously.
When you first create a forex trading account, then how much capital do you deposit? Is it under $ 100 or above? Thanks to the ease of minimum deposits that are now adjusted to the conditions of traders from various circles, so that large capital is no longer a major problem when you want to open a trading account. But now the question is, do you need a special strategy to maximize the capital that is issued quite small?
Trading Forex with Minimal Capital
If the forex broker you use allows a minimum deposit of $ 10. But will you really start trading with a deposit that small, and can you manage an account with a general forex strategy? The answer is no. In fact, how to play forex with small capital must require several important adjustments.
Surely you have heard the underestimation of traders who rely on small capital to play forex. Deposit only $ 10, of course the price movement of 1 pip is already bankrupt. This is not wrong, but it does not mean that this perception is 100% correct.
That’s why there are some simple tricks that you can prepare to process an account with minimal capital. That way, you can get profit from low capital is no longer impossible. So, what are these tricks? Let’s see the explanation below.
Choose the Right Broker
So that how to play forex with small capital can run smoothly, of course you have to look for a forex broker that does accept low deposits. For example, you can prioritize brokers who allow deposits with a nominal of $ 100 and below.
You don’t need to worry about having difficulty when looking for a forex broker like that. There are so many brokers that allow you to apply how to play forex with small capital. An example is FirewoodFX. At this broker, the value of $ 100 is the minimum deposit limit for a Premium account, while in Micro and Standard accounts, you can deposit starting from only $ 10.
However, the definition of small capital is different for each trader. For traders with deep pockets, capital above $100 is not a problem. Therefore, to determine the most suitable broker for playing forex with minimal capital, determine how much capital you will use, then adjust it to the minimum deposit conditions of the brokers.
Consider Leverage Wisely
Do you still remember about leverage? As one of the main components in online forex trading, leverage has an important role that is useful for making it easier to play forex with minimal capital. Without leverage, it is impossible for you to open a trading position with a deposit of only $10, unless you trade on a cent account. However, cent accounts are still quite rare because they are rarely provided by brokers.
In fact, there are already many forex brokers who offer low minimum deposits because they will adjust it to high leverage. For example, if you have a capital of $10 and use a maximum leverage of 1:1000, then the volume that can be traded will multiply to $10,000. Thus, you can open up to 10 trading positions, each of which is 1 micro lot.
However, it should be noted that high leverage does not mean that you have to choose the maximum limit. The rule that contains ‘leverage is directly proportional to risk’ should also be considered carefully if you want to successfully run forex trading with small capital. Even though it is supported by leverage, the margin taken from small capital will be quickly depleted if the price moves against your position.
Therefore, you should decide the leverage level very wisely. If the trading volume size is too high, then leverage will only give an illusion, as if you can open a position with a large size, even though the capital resistance is very small. So, choose the ideal leverage and do not lead you to a high-risk forex strategy.
Reduce Time Frame
Next, you need to reduce the time frame. Price movements are divided into several time frames, each chart representing a certain period. The principle is that the higher the time frame, the wider the range of price movements that you observe. In order to get the ideal range, use a low time frame such as a minute or hourly chart (1 hour and 4 hours).
However, you must be aware of the risk of trading in a low time frame such as a 1-minute chat. Because it displays such fast price movements, noise and fake signals will arise, as a result when analyzing in a time frame like that it is quite impossible. Therefore, to maintain the quality of the analysis, choose a low time frame but do not choose the extreme option of a 1-minute chart.
Adjust the Trading Lot
In terms of size or trading lot, it is the most important aspect in how to play forex with small capital. The micro lot type is often the main choice for traders, because it is only 1000 currency units. This is certainly different from the standard lot which makes a volume of 100 thousand currency units. In addition, you need to know that by minimizing trading lots, you can also lighten your own psychological burden.
Tighten the Risk Reward Ratio
Along with trading size, determining money management is a crucial component in playing forex with small capital. By setting the money management component, you can create a long-term plan to protect your account from major losses. So, even if you use small capital, your trading funds can survive.
One of the recommended money management tricks is the use of the risk reward ratio. Here, you can set the ratio on a small scale, for example 1:2 or even less. The reason is to anticipate uncertain price movements even though it still takes longer for the price to reach take profit compared to the stop loss target.
Conclusion
For beginner traders, it is certainly very risky to jump straight into the forex business. Not only minimal capital and lack of experience, you also need to make more effort because trading forex with minimal capital will also give you more risk.
Therefore, thorough preparation, training and direct practice are needed so that you are proficient in forex trading even with minimal capital. One effort is to use a demo account to learn more deeply. In addition, in order not to experience a significant loss, choose a trusted and best broker so that they can guide you until you succeed in getting sufficient profit.
That’s all we can say about how to play forex with small capital but can generate profit. Hopefully useful!
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