How much money do you need to start trading?

That is a common question. New investors want to start investing as soon as it is possible. Many of them are losing money because their trading accounts are too small. Of course 5000$ is a lot of money, but in a stock market – not so much. When you are trading in forex, you should have even more cash! You have to know advanced techniques of trading like Fibonacci retracement or pivot points.

Remember about commissions

First, you have to remember that commissions you pay to your broker may be expensive. On average entering a trade may cost you around 10$. You also have to pay when you decide to close a position. That is another 10$. You have already spent 20$. Your profit must be much higher to cover commission costs of current trade, but also previous trades on which you lost money.

Small account = small chance for success

Another important thing you should remember about is that with small trading account few mistakes may take you out of game. With 5000$ trading account 10% loss means that you have 4500$ left. Another 10% loss and you have barely 4050$. You see how quickly it may go down?

So how much money do you need?

So what should be a size of your account? Some authors say that 20000$ is a minimum. Daniel from Fibonacci Trading School says it should be even more. I agree with that. This is an amount you can start trading and you will have chances to stay in the game.
What to do if you do not have that kind of money?

Save it. Take another job. Steal… or better not ;). Just figure it out. There are many ways you can earn some extra money and save it for your trading account.There is always a way:

Remember: do not try to invest with money you may need in a future. That mean that if you are in debt, or have some money saved for your kids’ education – leave it. Do not even think about trading with that money only because I said that you need minimum of 20000$.

Do not risk money you can't lose!

The money from your trading account should be not too important for you. I mean, even if you lose it all, you still will be able to pay your mortgage, bills and you are not going to end with heart attack.
Trading may be profitable, but do not be fooled by some success stories. Yeah, some people made their fortune and they were starting from some little amounts of money. But they were lucky and probably starting in a strong bull market, when it was easy to earn money. Now conditions are different, or just to say it short: conditions are hard!

You have to protect your capital, and it is not possible when you are trying to play with sharks having only 4000$ on your account!