In today’s program, you will learn how to start foreign exchange trading with 100 USD (this is not what you think).
So listen now…
Hey, hey, how are my friends? In today’s program, I want to discuss how to start foreign exchange trading with 100 USD. I know that many of you do not have a large trading account, and maybe $100 is all you have. I have a few things to share with you.
1. Management expectations
I am here to tell you that you will not turn that 100 dollars into 100,000 dollars or 1 million dollars. If you think along these lines, you are dreaming. If someone assures you that it is possible, then they are either scammers or just a few, and they are the lucky few who succeeded in doing it.
99.99% of traders fail when they try to do so. This is the first thing to remember-manage expectations. You will not turn that 100 dollars into a lot of money anytime soon.
2. Application risk management
Many of you may think, “Hey Rayner, for just $100, or just 20 cups of coffee, I can afford to lose $100.” But the problem is that as you grow as a trader, you will invest more Capital and own more trading capital.
Suppose you end up with a $1,000 trading account or a $10,000 trading account, but you did not master risk management at the beginning, then you are likely to lose these trading accounts as well.
Although the trading account is small, you must master risk management.
3. Look for brokers who provide nanohands
Some of you may be considering how to apply risk management using only a $100 account. Assuming that you follow the typical 2% stop loss rule, this means that if the trade goes against you, you can only lose $2 from a $100 trading account, which sounds very rare.
And I agree. This is why you must find a broker that offers nano hands. In the foreign exchange market, a standard lot is 100,000 units, a mini lot is 10,000 units, a micro lot is 1,000 units, and a nano lot is anything less than 1,000 units, which may be 100 units.
If you can trade nano lots or 100 units, it means that 1 point is only worth 1 cent to you. If you have a stop loss of 100 points and you only trade 100 units, this means that the potential loss of the transaction is $1. Can you see how useful nano lot numbers are?
Yes, you will never make a lot of money, you may make little and insignificant money, but it teaches you how to respect the market and apply proper risk management.
This will bring dividends for the rest of your trading career. This applies whether you are trading an account of $10,000, $100,000, or $1 million. Risk management still applies. If you can master this by using nano batches, then your journey will be smoother.
4. Increase your trading account
With a $100 trading account, your account size is unlikely to remain in this state for the rest of your trading career, because you should seek to increase your trading account with $100. You should add more funds to your account so that you can trade more funds.
When you can trade more money, you can make more money in nominal value. Let’s put it this way, for a $100 account, the 10% return is $10. If your account is 10,000 USD, 10% is 1,000 USD. Can you see where I am from?
The same risk management also applies. The only difference is the notional value of your transaction. Don’t think of $100 as a panacea, but as a stepping stone to expand your account to a larger scale, because this is how you earn large sums of money in market transactions.
5. Short transaction time
If your broker does not provide you with nano-lots, but you still want to insist on using your broker while respecting market risks, then the only thing I can think of is to change the time frame of your trading.
Suppose you trade EUR/USD in a daily time frame. The reasonable stop loss in the daily time range is between 150 and 200 points, and the range is quite wide. If the best that your broker can provide is a micro lot, then the potential risk of using a micro lot to make a 200-point stop loss is 20 dollars.
What you can do is reduce to a lower time frame, which may be EUR/USD within a 4-hour time frame. In that time frame, you can set a 50-point stop loss, which may be reasonable in a 4-hour time frame.
Again, if it is just a micro hand, then 50 points multiplied by 10 cents, this is a potential value of $5. Depending on the size of your account, $5 may be a potential loss you are willing to trade, because this is within your risk management parameters.
If your broker does not provide you with nano hands, the last thing you can still do is to trade in a lower time frame, because your stop loss tends to be smaller compared to a higher time frame .
- Manage expectations when trading a $100 trading account
- Risk management still applies
- Find a broker who will provide you with nano hands
- Wet your feet, but expand your trading account over time
- If you can’t find a broker that provides you with nano-lots, trade in a shorter time frame with a smaller stop loss
Having said that, I wish you good luck and a good deal. I will talk to you soon.