In this article, we will talk about whether you can start forex trading with 50 dollars. Also, we talk about how much you can expect to make with only $50 in your trading account.
Can you start forex trading with 50 dollars?
Yes, you can. But you have to consider a few things when starting to trade with $50. First, you need to choose a broker that allows you to start trading with a minimum deposit of $50.
Also, it is important to note that you won’t make any significant amount of money trading with just $50 dollars. Now, let’s talk about how to start trading with $50 dollars step by step.
How to start trading with $50 dollars step by step
The first step is to choose the right broker. There are several things you should consider when choosing the right broker. These are:
Minimum Deposit
Does the broker allow you to start trading with $50 dollars? Some brokers require you to deposit a large amount of money in your trading account to start trading with them.
Regulations
Is the broker regulated? It is extremely important that you choose a broker who is highly regulated. We recommend that you completely avoid brokers who are not regulated. It is great if the broker is regulated by a tier 1 regulator such as the Australian Securities and Investment Commission (ASIC).
Customer Service
Does the broker provide you with 24-hour customer service? Does the broker provide you with your preferred method of communication such as live chat, email, or phone?
Trading Platform
This depends on what platform you prefer trading on. If you prefer trading on a mobile platform, whose a broker who provides you with a good mobile trading platform. If you prefer trading on the web, choose a broker who provides you with a web trading platform.
Also, if you prefer doing automated trading, you have to choose a broker who provides you with a MetaTrader 4 or 5 trading platform. (These are the best platforms for automated trading). Below are the recommended brokers for trading with $50 in your trading account
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The second step is to learn how to make profitable trades. For this, you need to learn about different forex trading strategies. There are 1000s of forex trading strategies out there but most of these trading strategies do not work. A good trading strategy depends on what type of trader you are and what you are comfortable with.
Usually, forex trading strategies come down to two different types. These are price action-based strategies and strategies based on technical indicators.
Price action-based strategies include trading with supply & demand, candlestick patterns, chart patterns, and support & resistance. Technical indicator-based strategies include trading with moving averages, Bollinger bands, and other technical indicators.
If you are interested in learning about all these profitable trading strategies make sure to check out our completely free forex trading guide here.
Risk Management
The third step is to understand risk management. As a rule of thumb, we tell traders to only risk 1%-2% for each trade. So even if the trader loses a trade they only lose 1% of their trading account. If a trader risks more than 10% per trade, they are risking a lot of money. But this depends on how much capital you deposit.
In this case, you are planning to deposit only $50. That means that, if you are trading with $50 and you risk 1% you are risking 0.5 cents per each trade. This is extremely low and you will never make a significant amount of money just by risking a few cents per each trade.
Since $50 is not a huge amount, and we assume that if you lose this $50, it won’t impact your life in any way then you can risk half of it (50%). which is $25.
Also, when it comes down to risk management, you need to learn how and where to place your stop loss and take profit. Also, based on the market conditions, you have to decide whether to use a trailing stop loss or a stationary stop loss. We go through all of these in our free course, so make sure to check it out.
Mindset
Developing the right mindset is extremely important when it comes to trading with only $50 (or any amount). You should set the right expectations. With only $50 in your account, you must know that you will not be able to make a significant amount of money.
Previously we talked about risking $25 per trade when you have only $50. If you are a beginner trader with no experience you might actually end up losing the $50. You should be okay with it. In trading, you have to lose first to learn and gain experience in trading.
Also, you need to develop emotional resilience, because most traders get emotional when trading because they’re risking their hard-earned cash. You should not let this negative emotion get to you.
Also, you have to create a proper trading plan and stick to the trading plan. To do this you need to cultivate self-discipline.
Journaling Trades
Last but not least, learning how to journal your trades is extremely important. If you don’t journal each trade, you will not be able to see patterns in your trading.
By journalling each trade you will see where you went right and where you went wrong. Also, you will know what strategies work, and what strategies don’t work.
You must get a good trading journal. There is so many trade journaling software out there which are not that great, and they charge you a monthly or yearly recurring fee.
The best trading journal out there is our trading journal which is completely free (based on google sheets, and works in excel as well). You can check it out here.
Now let’s talk about developing a trading plan/game plan for trading with only $50 in your trading account.
3 step Game plan for forex trading with $50
First Step
The first step to trading with $50 is to sign up with a broker who allows you to trade with a minimum of 50 dollars in your trading account.
Some brokers require you to have a large capital but some brokers require only a minimum of $10 for you to start trading with them. Below are the best broker for trading when you have only $50 in capital.
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As discussed previously if you have only $50, you shouldn’t expect too much profit from trading. If it is possible try to invest at least $1000 into trading.
Second Step
Learn about different trading strategies based on technical analysis. You can learn all about different trading strategies with our free course as discussed earlier.
The key is to choose 2 strategies that you understand and are comfortable using and master these 2 trading strategies. Ideally, one trading strategy should be when the market is trending, and another strategy when the market is ranging.
The third & final step
Plan your risk management. Determine how much you want to risk per trade. As discussed before with only $50, you will have to risk at least 50% to make some significant profits.
Also, you have to think about your risk-to-reward ratio as well. Let’s say you have a risk-to-reward ratio of 1:2, that means you will be risking $25 to make $50. If you win a trade with 1:2 then you will have a total of $100 in your trading account.
Your goal should be here to build your account to at least $1000, which is possible but you have mastered your trading strategy and have good risk management.
Then when you grow your account by $1000, reduce the amount you risking per each trade. Do not risk 50% on each trade with $1000 in your account because if you have a losing streak you can blow your account with just 2 back-to-back losses.
It is a good idea to reduce the amount you are risking to 2% per trade. That means you will be risking $20 per trade.
That means if you have a risk-to-reward ratio of 1:2, and you win a trade, you can make $40. If you properly do your technical analysis, you will be able to find trades in which you can have a risk-to-reward ratio of 1:3. Then you can make $60 for that trade. But it is not easy to find trades with 1:3 RR or more.
We recommend you take 2 trades a day 5 days a week (Mon-Fri). Let’s say you have a win rate of 50%. This is very achievable for any trader. Then if you have a 1:2 risk-to-reward ratio for each trade you make, you should make on average $20 in profits every trading day.
Since you have a 50% win rate you will lose on average 1 trade a day and win 1 trade a day. For your losing trade, you will lose $20. For your winning trade, you will win $40.
Your net profit will be $20. Now, remember this will not happen this smoothly. You might lose 10 trades consecutively and then win 10 trades consecutively as well. This is totally possible.
So if you are making $20 in profit for each trading day, you will be making $100 ($20 x 5) for each trading week. That means you can expect to make $400 /month with $1000 in your account by risking 2% and having a win rate of 50%.
We recommend that you reinvest the profits you make back into your trading account. Then you can easily grow your trading account to $10,000.
When you are at this stage we recommend you reduce the amount you risk to 1% per trade. That means that you will be risking only $100 per trade. With a 50% win rate, you should be able to make $100 in profit for every trading day on average.
This is $3000/month which is full-time for most people. But getting to this point will not be easy. You have to have a good trading strategy and a good trading mindset to get to this level. If you can make at least $1000/month with $10,000 in your trading account, you are a good forex trader.
To have a comfortable living with forex trading we recommend traders have at least $50,000 in their trading account. As discussed if you are starting with $50, you can grow your account, you just need patience and focus and not take profits out of your forex trading account.
Conclusion
In this article, we discussed whether you can trade with $50 in your trading account. As discussed you can trade with $50 but you will not make any significant profits with only $50 in your account. If you are interested in learning how to trade step by step make sure to check out our complete guide here.
