When you begin on Forex, it is normal to have lots of questions including one of the most popular, ‘how much should I invest?’.
Although the sum you will invest depends mainly on your particular financial resources, and your expectations, we will endeavor to help you make the best possible choice whilst limiting your risks.
Here therefore is some advice to follow when considering how much to invest.
Investing in cryptocurrency is similar to exchanging your money in a new country. Bitcoin trading, Litecoin, and Ether are a few examples of “foreign currencies” that work in a very specific context within certain online communities
Understanding the risks and opportunities
In every case it is highly recommended for beginner traders to start by training themselves using the free demonstration accounts available to investors through the majority of online brokers. From that point always check that the money you invest is not needed at all for your possible budgetary spending requirements.
It is only by testing the currency exchange market conditions in real conditions that we learn to truly appreciating the value of money when speculating on the Forex market.
Do not invest very small amounts
Generally speaking, it is advised to make a deposit of less than $200 even if the brokers offer to take smaller deposits such as $50. As the foreign exchange market is subject to a strong volatility a small investment can push you to lose money through a lack of funds. It is therefore recommended to those of you who do not wish to start with too much to still deposit around $200 or the equivalent.
If you only have a few hundred dollars or euros, the amount of $200 in fact represents an ideal sum for trading on the medium or long term at $10 per trade. Of course, with such a sum, the profits will take a while to start becoming really interesting. This is why we suggest to traders who have a few days of experience to pass directly to an investment higher than $400 that will enable the possibility to generate small profits in a repetitive manner. Even so, it is still imperative to apply good management practices to ensure the generation of maximum profit.
TIP: Get a real-time overview of how world currencies are traded against each other atForex HeatMap.
Make the best use of your welcome bonus
Apart from the profits you will make through your investments on the Forex, you can also substantially increase the sum on your trading account through the welcome bonus that is offered by the majority of brokers.
This bonus will increase your initial capital by an amount equivalent to a percentage of said investment. In this way, the more capital you deposit in the beginning, the more your initial investment is actually worth and the higher the bonus.
The most common error committed by novice traders is to divide their investment deposit according to the registered wins and losses. As the welcome bonus is a once only payment it is better to deposit the whole investment sum in one go.
When and how to start investing more money
Once you have understood the ins and outs of online trading you can, if you wish and if you have the means to do so, start investing larger sums of money. For smaller budgets, investments of several thousand Euros offer strong advantages as they enable more significant investments and therefore better profits.
Please note however that above an investment of €20,000 one should have a solid experience in trading and the foreign exchange market to sufficiently master the risks and better manage a complex portfolio. Such sums are therefore better reserved for experienced traders that have already perfected an efficient trading strategy.
