Finance & Business
How much money is required for forex trading?
Anyone who is interested in Forex trading will naturally want to start trading immediately. But first, the future trader should carefully consider how much capital is available to him. It is not easy to give a general answer to the question of how much start-up capital is needed.
- The ideal amount depends on various factors. The age, the assets, the risk tolerance of the trader and of course the type of investment play a decisive role.
- The average private investor has a starting capital of about four to fifteen thousand euros at his disposal. Some have a little less, others have considerably more.
- The decisive factor is that only money is used that is not immediately needed urgently and that can be dispensed with in the worst case, total loss.
- However, the available money should not be invested entirely in risky investments.
Forex StrategiesMost private investors are always surprised how easily and quickly money can be earned from home with the Internet. Nevertheless, the investor must remain realistic. With a small starting capital no so large profits are to be obtained, as evenly with a higher starting capital. For example, if someone wants to earn 2500 euros a month, a capital of around 5000 euros is unrealistic and simply too small. Realistically, although not always easy, 2500 euros with a capital of 50000 euros to achieve.Transaction costs and withholding tax, however, must still be deducted from the profit.
Pay attention to trading hours
The Forex market is open around the clock, but not all times are equally good and not all hours have the same quality for trading on the Forex market.
If more markets are open at the same time, i.e. if more markets are active at the same time, then naturally more trades will be executed at the same time. The movements and achievable profits are particularly lucrative at this time. It is recommended to trade rather in the middle of the week, because at this time quite often the greatest liquidity and the greatest movement in the market can be observed. It is not possible to trade in the period from Friday evening until late evening on Sunday. On Sunday at 10 pm the trading week begins again, which then lasts until Friday evening.
24 hours trading
One of the reasons why many traders are enthusiastic about Forex trading and prefer it is certainly the Forex trading hours. While stock trading closes in the evening at the latest and takes a break, the opening hours of the Forex market practically extend from Sunday night to late evening on Friday. This 24-hour trading is possible because the trading systems take place exclusively via the computer. Many orders are executed fully automatically.
Background info
Another reason for the long trading hours is that foreign exchange is traded on all continents. Due to the different time zones of the individual countries, it is therefore always possible to trade somewhere and speculate with the currency. For example, if the forex trade closes in America, the forex trade starts at the same time in Australia. Trading is based on the 24-hour basis without interruptions, but some actions have very special trading hours. Trading may also vary due to public holidays, unusual liquidity conditions, particularly unusual global events, or due to regional or seasonal time adjustments.