Everyone wants to become successful in the trading business. The new traders jump into the retail trading industry without having any clear knowledge. They blow up the trading account within a very short period of time. Unlike them, the experienced UK traders use defined logic to find great trades. They never take any unnecessary risk even though they have enough money to trade. So, how much money do you really need to make a decent living out of trading? To be honest, the answer greatly depends on the trader’s mentality and other important variables. Let’s discuss the key facts which determine the amount of money which you should invest in trading.
Your financial status
Before you invest any money in the Forex market, you need to consider your financial status. If you are living your life from hand to mouth, you should never trade the Forex market. Some of the retail traders often borrow money to trade the market. But this is not the way to start your trading career. Unless you have financial backup for at least six months you should never trade the real market. Use the demo account to learn the art of Forex trading. Never jump into a big investment without having a strong financial backup.
Those who are really experienced in the trading profession can easily find great trades. In fact, they can easily make a huge profit by using a high leverage trading account. So, even with a small amount of money, they can secure financial freedom within a short period of time. On the other hand, the new traders will definitely have some lacking. They will not be able to make a decent profit with a small trading account because they will have a low win rate. So, it’s obvious that new traders will need more money to support their family at the initial stage.
The amount of money which you need to support your family greatly depends on your trading strategy. Those who have the potential to spot high-quality trade setups by using the best trading platform, can easily increase the risk factors and make a decent profit even with a small trading account. But make sure you never risk more than 2% of your balance in any trade. In order to trade the market with a small trading account, you need to have a trading strategy which will help you to find trades with a very tight stop. At the initial stage, developing such a trading strategy will be really hard. Once you start to understand the nature of this market, things will become easier.
Know your goals
How much money do you really want to make from this market? You need to define your goal to find the size of your investment. The very best traders in the Forex market manages to make 5-10% profit per month. But this the best-case scenario in the investment business. So, use this data to analyze how much money you should really invest to support your family. Some of you might think you can easily make more than a 20% profit per month but this is not the proper way to trade the market. You have to limit the risk factors in every possible way or else you will blow up the trading account.
By now you know the key parameters which determine the size of your trading account. Those who are still confused should start demo trading the market with the different account balance. You need to work hard and find a suitable balance which suits your trading style and meets your financial needs. The pro traders always prefer to trade with big trading account since it allows them to trade with low risk. So, try to invest more money as you gain experience in this market.