How much should you fund your account with? - DailyFX Forex Forum

Sean Hyman · #1 (**permalink**) 05-18-2009, 10:17 AM

I'm often asked the question in our courses...."How much money should I start my account with?"

Good question. Let me give my personal opinion on this.

A micro account CAN be started with $25 and a standard mini account CAN be started with $2,000.

However, the less you start with, the bigger percentage of your account that you have at risk generally. So one way you can increase you chances of success is to have a well funded account.

Let's say that you have a 100 pip stop on one lot. That would be a $100 loss in the mini account and a $10 loss in the micro account.

Let's focus on the micro account, since that's the best place for most beginning traders to start out anyway.

If I have a $25 micro account and lose $10...then I've lost 40% of the account balance. However, if that balance were $100, then I've lost 10% of my account balance. I'm much more able to recover from a 10% loss than a 40% loss. Emotionally speaking too...it's easier to handle the loss of 10% than it is for 40%.

Now, if I had an account balance of $200, then my loss would be 5%.

This is why I suggest people start micro accounts with at least $500 to $1,000 and start off trading only 1 micro lot at a time. In the end, you'll be glad you started this way vs. starting with the minimum.

Again, this is strictly my opinion as a trader and as an instructor. Ultimately, it will be your decision as to what you feel is the most prudent thing to do for you.

However, a lot of people don't think about the impact of their "beginning balance" upon their trading and the likelihood of their success and that's why I bring it up here.

Happy trading!

P.S. - Once you're ready to open a live micro account, just click here: http://www.forexmicrolot.com/open-an-account.jsp

Sean Hyman