How to trade forex with $100 [ small cap trading strategy ]

so you want to start trading and want to know How to trade forex with $100, then keep reading. For the last 20 years or so, brokers around the world have allowed retail traders to jump in and start trading currencies. Believe it or not, at one point in time you needed at least $1 million to trade currencies, and you would have had to have done so through specific banks. This spread would have typically been several handles, meaning hundreds of pips. This of course has changed in the 21^st century as the retail sector has gained so much in popularity.

That being said, attracting a lot of retail traders does open up some specific questions now, due to the fact that retail traders typically trade with small amounts of money. Yes, there will be some people who have significant amount of money to trade with, but most of the people are simply entering the market with little in the way of trading capital.

How to trade forex with $100 – Need to consider

Being undercapitalized can be dangerous

One of the most dangerous things for a retail trader is to be undercapitalized. This is because with high leverage, you can quite often trade 50, 100, or even more times the amount of margin available to place a trade. The biggest problem of course is that although you can enjoy massive gains, being able to trade larger positions also means you can suffer massive losses. Being undercapitalized and not understanding the market is one of the most dangerous combinations the traders come into Forex with.

With all that being said, it does not necessarily mean that being a smalltime trader is a death sentence. You need to have a bit of money management practiced in order to survive. When you are a small Forex trader with a small account, survival is absolutely paramount. Fortunately, Forex accounts quite often can trade with as little as one penny a pip. In other words, it is quite often that you can take very minimal risk. Ironically, it is the high leverage that attracts traders into the currency market that is also their biggest enemy most of the time.

Expectations must be realistic

You must keep your expectations realistic. For example, you cannot expect to open up an account with $100 and become a millionaire by the end of the year. A simple statistical analysis and an understanding of compound interest will tell you just how impossible that is. However, that does not mean that you cannot grow your account over time. If you have a small account, you simply must be more patient with your gains. For example, if you have a $100 account, doubling it will only turn it into a $200 account. Doubling an account is quite a feat, and certainly something that would be an achievement to be proud of. Doubling an account is something that very few traders do unless they are thinking longer-term and protecting their accounts from significant losses. In some ways, trading a smaller account is much more difficult than trading a larger one.

Do not forget you can add to your account

Compound interest will work for and against you. However, one thing that you can do quite easily is simply add a little bit to your account as you gain. For example, you can set incremental deposits into the account, raising the value of account right along with your gains. This is the way to “supercharge” your account, and perhaps grow it into something that is quite profitable over the longer term. At the end of the day, if you choose not to add to the account and simply start with a small deposit, time and patience will be what you need more than anything else. This will be accomplished by using money management and keeping your expectations realistic. You have to keep your position size in line with what your trading, otherwise it is only going to take truly little in the way of losses to wipe you out.

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