How much USD can I start trading with?
I am in Nigeria and eager to start trading. Ideally how much USD can i start trading with?
Although Forex brokers allow very low deposits to start trading in Forex, it is crucial to know where the safety limits end and a simple "donation" to broker's pockets begin.
When deciding on the minimum deposit, considering the account size is not enough. A trader should also know such trading parameters as: the minimum lots size and the leverage, including the margin that comes with it.
How these parameters work together?
Leverage - it allows traders to increase(leverage) their buying power in order to control larger amount of money = trade with larger orders, which would be sufficient to earn a more or less meaningful income. A leverage of 10:1 up to 50:1 would suit an experienced Forex trader who is able to pour in a several thousands of USD into account.
For beginner traders, who look to start with a small capital, a leverage should be higher, otherwise they won't be be able to buy/sell anything at all. A quick example, if the smallest lot you can buy is 1000 USD, if a trader has account of $200 USD, he will never be able to execute a trade without a leverage. One he has a leverage of at least 100:1, his buying power increases 100 times (with $200 it becomes $20 000), and that's where the trading with $1000 lots can start.
Please review the answers about how to use leverage properly in order to never over-trade and put your investment at risk.
Lot size - every Forex broker has own conditions about the lot sizes available for trading.
There are three common lot sizes to trade Forex: 1 standard lot (100K), mini lot or 0.1 lot (10K) and micro lot or 0.01 lot (1K)
Your ability to buy a smaller or a higher lot will depend on the size of your account and, once you start trading and have several positions open, also on the available margin - the funds you have left besides open trades to continue opening new trading positions.
When talking about lot sizes, for a beginner a rule of thumb is - start with micro lots.
1 micro lot = 0.01 standard lot, so a trader is able to control only 1000 units of the base currency, and with it risk only 10 cents per pip. Speaking in simple words, with every up and down tick(pip) in the market, a trader will look to win 10 cents or lose 10 cents.
If to just straight to mini lots = 0.1 lot, there a trader risks $1 per pip.
As long as your account stays below $1000-$2000 it is strongly advised not to trade with mini (0.1) lots.
So, now going back to your original question: "How much money do I need to start trading?"
You can start trading with as low as $25, if your brokers provides you with at least 400:1 leverage and really low lots, called cents lots (which are smaller than micro lots and start from 0.001 lot).
Only few brokers offer this option, among them are: OANDA, Marketive, IFCMarket, Forex4you, E-Global Trade & Finance Group, FX|Clearing and EFX.
You can start with $100 basically on the same conditions as above. If you get a micro lot with it, you chancess to pull it out as a beginner are still too slim.
You can start confidently with $250-$500 and then you can have anywhere from 200:1 to 400:1 leverage and micro lots (only!)
You can start with $1000 and any leverage from 100:1, ideally also with micro lots option, depending on your skills level.
You can start with $2000-$5000 and have any leverage from 100:1, here you can start trading mini lots.
You can start with $10 000 or higher, although this is where you shouldn't be a Forex beginner already.