How to Trade Forex with $100
In this article post, we’ll share what to do if you have but a hundred USD to trade. We’ll guide you through the steps and how you can deploy your little hundred USD seed money.
Let’s get into it.
Trading Capital should be your Disposable Income
First, we want to state that the money you deposit into your trading account should be your disposable income irrespective of the size.
Meaning, it should not be some money that you cannot afford to lose, like your rent, school fees, grocery money, etc.
Are you done with backtesting on historical data and demo trading?
With the talks of disposable income out of the way, before you move on to trade with a hundred USD account, make sure that you’ve gone past the backtesting and demo trading of different trading strategies and come up with a system that suits the market regime you want to target.
Trading Strategy/ Semi-Automation that Fits your daily routine
Ensure that the trading strategy you pick fits into your everyday routine.
I know this may shock many newbie traders as they are so much in a hurry to flip their hundred USD account without proper research and putting many trading ideas/strategies to the test.
People’s attention span keeps shrinking daily; thus, most people can’t spend, say, six months studying what works and what doesn’t before diving into live trading.
Some trading strategies work best on intraday time frames, which will require that you sit at your trading desk for hours.
If you can’t sit at your desk for long hours, we’ll suggest that you build a trading strategy around the daily time frame giving you time to do other things during the day since you’ll be placing your trade at around the everyday open price.
Although we frown against using automated trading bots (Expert advisors – EAs) that you did not build, we believe in building semi-automated trading strategies that you fully understand the logic behind the trade entry, exit, position-sizing, etc.
Trade the money like you’re a fund manager
To trade like a fund manager means you have to understand the framework and processes that fund managers follow on a daily, weekly basis.
So, what do fund managers do?
Fund managers have a deep understanding of risk and volatility. They understand how to utilize volatility to their advantage while managing risk at the same time.
They also understand global macroeconomics indicators, sentiment analysis, pattern recognition, and how they reflect on price charts, consequently driving currencies’ price.
It means you have to develop the right trading strategy, money management and develop the proper winning habits/routine, AKA mindset.
You can look into trend following strategy for a trading strategy and examine currencies that trend a lot. You can also scan for a mean-reverting trading strategy and consider pairs that work best following the approach.
Okay, let’s say you have a proven trading entry/exit strategy with a basic understanding of dollar-cost averaging into positions as a money management strategy.
The next thing is to make sure your trading strategy works on currencies with low spreads, this way; you won’t be paying too much to your broker.
Shop Online For an FX Broker that’ll allow you to trade a Cent/Nano Account
Today there are many online FX broker firms out there that’ll allow you to trade with as little as even 2USD on a cent account.
Now, don’t think because you’re allowed to trade with such a low deposit amount implies that you’ll make six figures in no time.
You have to understand your brokers’ motive in all of this and that your job as an FX trader is to manage risk plus stack the odds in your favor.
You don’t want to end up being an employee for your broker if you end up with a broker that takes the opposite side of your trade.
So, shop online for an FX trading broker who’ll allow you to trade with a hundred USD deposit without a conflict of interest, a good example is ForexTime.com.
We’ll recommend the cent account, as it allows you to trade a lot size as low as 1pip to 0.01 cent.
Remember, your goal here is not to horridly make millions from a hundred US dollars, but to trade and understand how your trading strategy performs in a live environment.
As you advance, you’ll understand that you may have to make adjustments to some parts of your strategy, like exit/entry and your average trade holding time.
So, you want to make sure that while you trade your 100USD account, you’ll follow a long-term approach to trading the Forex market, which will allow you to make a profit and understand what works in real live trading.
You’ll want to reinforce what works and eliminate what doesn’t; this way, you’ll have grown a track record that you can use to attract investment capital.
Keep in mind that investors/prop trading firms are only interested in trading performance with low drawdown, say 5% on your trading account for a period of 6months to a year, while making good profits at the same time.
Your account’s size doesn’t matter if you play the long game, be ambitious, and play the long game.