Learn how to start forex trading with a small capital and avoid common beginner mistakes?

17, Oct - BLOG

Trading was once the domain of the elite few and wealthier people, but times are changing, so now it is becoming more and more democratic and accessible. Although some people believe that you need a lot of capital to start trading, but this is not a correct judgement. In this article, you will learn that a small capital is all you need to start trading, because the most important thing is to start trading! And like more people, if you're here, it's because you're wondering if you can become a profitable trader.

Myths: How much capital do you need to trade?

In the collective imagination, trading is still the domain of the elite, the traders who work in the tallest towers in the biggest cities. Even if this is still true for some of them, today it is no longer an absolute reality, far from it. Firstly, because many traders now work from home.

But also because trading is no longer just for big companies, it is now also available to individuals, especially novice traders. According to Euronext data published by Reuters, the number of investors in Europe doubled between early 2019 and mid-2020. Today, there are more than 15 million people investing in Europe's financial markets and this figure is set to grow as most of them are under 35 years old.

Is it a good idea to invest all your capital when you start trading? Unfortunately, this is a trading myth that should be forgotten when entering the financial markets. You should always remember that you should only invest the amount you are willing to lose. You should not invest money that is necessary for everyday life, such as paying for housing or paying off loans. The reasons for this are clear: if you lose all the capital in the beginning, it can harm your current projects, and if the invested money is critical for you, it will affect your morale, which is crucial for successful trading. Psychology plays a key role in trading, and controlling your emotions is one of the most important factors for a successful start.

The main reasons why you should not invest all your capital at once:

• The possibility of losing capital: This could jeopardise your day-to-day expenses;
• Impact on your emotional state: If money is vital, it will affect your psychology, which hinders effective trading.

How much do you need to invest to start trading?

Do you need to determine the amount of capital when you start? Yes, as this will allow you to determine a strategy based on your goals. The amount depends not only on your financial resources but also on your investment goals. For example, you can invest a percentage of your salary if you are working, but it is important to remember that trading requires strategy and preparation on several levels, including money management and technical analysis.

You can start trading with as little as euro100, as many brokers do not require a minimum deposit. Although it is difficult to achieve financial independence with such capital, it will allow you to get a feel for the market and learn how to analyse charts. Almost all brokers offer demo accounts to help you practice without risk. Information and training are important for successful trading, something that is often ignored by novice traders.

Invest in education and training before you start trading

What if you dedicated a portion of the capital you want to invest in the financial markets to education? At first glance, this may seem like an offence, as you are not investing this amount directly. However, learning at the beginning of your trading journey will save you a lot of time and help you avoid mistakes. Not only is it a time saver, but it is also an important investment in your ability to earn profits.

When you start trading, you should not make quick investments in stocks or currencies right away. You need to think through your steps in advance to avoid mistakes. Whether it is the stock market, trading or cryptocurrencies, it is important to understand the market structure and keep up to date with the latest developments. Follow specialised media that analyses market trends on a daily basis.

Capital to make a living from trading

Is it possible to make a living trading? Yes, but it takes time and effort. You should not believe the promises of getting rich quickly through trading currencies, stocks or cryptocurrencies, because success comes through work and sticking to a strategy. Everyone has different expectations about their standard of living, but it is extremely difficult to start earning with a small capital, such as 100 euros, and stories of sudden wealth are most often exaggerated.

Conclusion: Capital for trading

Today, the capital you need to trade can be minimal. You don't need to have huge financial resources to start investing in the financial markets, you need training to make profits, because that's what your investment is all about! There is nothing wrong with trading with a small capital; what's more, it is gratifying because it shows that you are ready to take action. In fact, many people think about investing but never decide to do so. Trading, even with a small capital, means that you are giving yourself the opportunity to succeed.