One of the most exciting things about forex trading is that entry barriers are low. You do not need to be sitting on massive piles of cash to participate. Many forex traders start with relatively small accounts.
What do we mean by “small accounts?” There are forex brokers out there that will let you open an account with just $1! So, your account can be tiny.
That being said, there are some challenges specific to trading with a small account. Being aware of those challenges going in can help you to align your expectations and give yourself the best chance at growing your account and becoming a successful and profitable trader. Let’s go over what you need to know.
1. You need to choose a broker with small enough lot sizes.
The first thing you need to know about trading forex with a small account is that the restricted size of your starting bankroll will limit which brokers are suitable for you.
You need a broker with a low enough minimum deposit size for you to open your account and start trading. But something else that is essential is lot size.
To manage your money conservatively and responsibly, the standard recommendation is to risk no more than 1-2% of your account on each trade.
Here’s the thing—if a forex broker forces you to trade a minimum lot size that exceeds 1-2% of your small account, then you cannot follow your money management plan.
When you do not have a lot of money to start trading with, this situation is more common than you might expect.
There are two possible workarounds:
1-Pick a broker that sets a minimum lot size that is within your budget.
2-Find a broker that offers fully customizable lot sizes, letting you trade the exact tiny amount you need.
Technically, there is a third option, which is simply to wait to trade until you can afford to trade larger amounts. But it is not necessary to put yourself through that since there are brokers out there that offer small lots. That brings us to our next point.
2. You don’t need a large account to start trading forex.
We cannot emphasize enough that it is entirely possible to trade without a lot of money. Whether you have $1,000, $100, or even $10, you can trade forex when you choose a suitable broker. So, do not let your limited finances hold you back.
3. It is going to be slow going at first—really slow going.
The one caveat with trading forex with a small account is that you need to be aware that your progress, in the beginning, is going to feel like a crawl.
Let’s explain why this is the case with a simple example where you open an account with $100.
If you are going to trade 2% of that amount on each trade, that is just $2. Think how slowly your balance will be ticking up.
The good news is that you can recalculate 2% every time your account balance goes up, so you will be gradually trading more and more money and winning larger and larger amounts. That is how exponential gains work.
So, eventually, when your account adds up to $10,000, you will be risking $200 on each of your trades. Winning $200 on every trade will have you growing your account rapidly!
But you are not there yet—so, be patient (see below).
4. You are going to need patience and commitment.
It is not easy to keep staking a small amount of money on your trades again and again, as you will need to do starting out.
Far too many new forex traders have done the worst possible thing for their accounts by trying to take a shortcut. They think, “What is the harm in just risking 10% for my first few trades? After my account grows a bit, then I will drop down to 2%.”
This is a recipe for disaster, however, even if you have a high win ratio. A losing streak of 10 trades is not implausible at all, especially for a beginner.
And even if you get away with it for a while, it presents another problem: you have broken your rules. That means that you may be tempted to keep breaking them. Sooner or later, that mistake is going to catch up with you.
So, be prepared to be extremely patient, and commit yourself to going as slowly as you need to in the beginning to follow your money management plan.
If it drives you crazy, you might find it easier to keep demo trading a while longer while you save up for a larger Forex account.
5. It is important not to withdraw from your Forex account as you grow it.
Because your account is so small right now, it is extra important to be strict about withdrawals while building it up.
Every time you withdraw funds from your Forex account, that is money you will have to replace before you can move forward with growing your account.
So, only withdraw from your FX account if 100% necessary.
Remember, you should not be taking money out of your forex account to pay your bills right now. Since you are just getting started, you need to be relying on your day job to pay your bills.
You should only start withdrawing from your Forex account when you are making so much money trading that you can continue growing your account even when you are using it to keep up with your bills and expenses.
6. A Forex no deposit bonus can help you get started.
One more thing that is useful to know when you are starting trading with a small account is that forex no deposit bonuses exist.
A forex no deposit bonus is simply a bonus you can claim without making a deposit. Once you claim the bonus, the funds will appear in your account. You can then use them to trade.
Here is what to know about forex no deposit bonuses:
- Yes, you are trading with and for real money.
- You usually cannot withdraw the bonus.
- You can withdraw the winnings.
- You may be required to make a deposit to withdraw the winnings.
So, what you can do for example is this:
1. Open an account with a broker that offers a no deposit forex bonus.
2. Claim the no deposit bonus.
3. Start trading with the no deposit bonus cash.
4. When you are ready, you can make your first deposit.
5. You will now have more money to trade with than you would have had otherwise. You will have the funds you deposited and those you have won trading with the no deposit bonus. This gives you a head start to growing your account.
Start Trading Forex with a Small Account
Whether you have $1,000, $100, $10, or even $1, you can get started trading forex. If you are ready to take the next steps, browse through our list of top forex brokers. You can use our comparison chart and reviews to quickly locate brokers that offer low minimum deposit requirements, small and custom lot sizes, no deposit bonuses, and other features that are ideal for trading with a small account.