Assuming forex and binary options are the same thing, this question applies to both forms of trading. In fact, it also applies to crypto, and to any form of trading at all. How much is enough? Can you start with 20 dollars? If yes, then how does one go about it, and if no, then why do many brokers offer opening balances as low as $5?
Well, there are many key points to consider before arriving at an answer. Be warned; this post will have what may be described as an overly positive note. Probably because the writer has done it – more than once.
Doing it has provided some clarity as to what is possible and what is not, and also about what circumstances make it possible to trade with such a small opening balance.
You Can Trade With 20 Dollars If
You have the patience: patience is a necessary quality for successful trading; it is what helps you wait until the right conditions are met before entering trades. With patience you are not in a hurry to enter trades, regardless of how inviting they may be. With patience you are also not in a hurry to double your balance.
That calmness of mind is a key ingredient because you wait for the trades to come to you, rather than rush into them – leading to losses.
Have a strategy: Know how to win trades. A strategy is an approach to the market – it is how you read the charts, and how you identify opportunities in the market. Of course, there are literally hundreds or thousands of strategies out there; most of them are developed by individual traders as their own cheat sheets in this business.
Your strategy should not be only about making money – it should also be about managing losses. Losses are part of the business of trading. They cannot be avoided. It is also important to ensure that the strategy helps you to manage your funds along the way.
Have experience: with luck it is possible to flip $20 to $200 in a short time, but the difference between luck and experience is that the former soon runs out while the later continues to increase. With luck the money may soon be lost, while with experience the trader may continue to break more records.
The problem with experience is that it is only gained through pain. While one may trade with $20, and then turn it to a huge amount, it is unlikely that it can be done at the first go. It may be done after several goes, meaning that the trader must have made several losses before this current success.
That means the trader is not really starting with $20, but with the sum total of his previous losses, plus the current $20. In some cases, that could amount to several hundreds of dollars.
Have a good broker: this may be a bit of an irony because most of the best brokers have higher minimum balances. Nevertheless, it is possible to find some decent brokers who will accept even $10 as a starting balance.
Finding a good broker is necessary because this business is hard enough as it is. Having to deal with thieving brokers can make it a mission impossible. Thieving brokers can manipulate the charts so as to ensure that traders lose, and then they take the money. They can even refuse to pay successful traders. Just imagine going through all that stress, only to find that you cannot withdraw your earnings.
Have a good psychology: many traders focus on having a good strategy, forgetting that a strategy is only good if you maintain a calm head long enough to use it. Therefore, it is just as important to build the mental muscle needed to keep following your strategy no matter what the markets throw at you.
A good psychology is as good a tool as any other; it is what empowers the trader to make the best of the markets, and to trade for the long term. This psychology may be obtained by reading books and other instructional materials, but some insist that it only comes through pain. The pain of experience.
The Bottom line:
The goal should not just be to trade $20 into $200 or more, and then lose it – it should be to trade successfully. Trading successfully means reaching your full potential as a trader; building a business around what you do, and changing lives. Making money as a trader is the basic thing, but sadly, it is something that most people never quite manage to do.
That's right; even with $2000 you are more likely to lose your money than you are to make profits in the long term, unless you are an elite trader.
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