Forex Trading with Just $200
If you are just starting off in the world of Forex trading, you may not have that much starting capital. For instance, many people want to start Forex trading with just $200 or $300. There is no denying that this is hard, but Forex trading with just $200 is possible if you do it right.
Forex Trading During Safe Market Hours
One of the best ways to ensure that you are successful when Forex trading, when you are starting off with just $200 in your account, is to make sure that you only trade during safe market hours. When it comes to the safest trading hours, between 9 AM and 6 PM GMT tends to be best.
Remember that if you do not live in the GMT time zone, you’ll need to make the appropriate adjustments to get the best window for your specific time zone. On the other hand, trading between 6 PM and 11 PM GMT tends to be by far the worst time to trade.
The fact of the matter is that if you plan on growing that small $200 Forex account, you need to win as many trades as humanly possible. The less money you have to spare, the more important this is, and therefore, if you trade during the right time, you minimize the risk of loss.
Don’t Trade During High Volatility Market Hours
Another important rule for Forex trading with such a small account, such as $200, is that you really do not want to trade during high volatility market hours. Of course, volatile means unstable and unpredictable. If you cannot accurately predict market movements, even with solid technical and fundamental analysis, then you are in trouble.
If you only have a very small trading account, you place a couple of trades, and due to highly volatile conditions, they may go south real fast. The more volatile the market is, the more dangerous it is. Now, yes, volatile markets do offer some great trading opportunities with high profit potential. However, this is all about risk management.
A high reward usually goes hand in hand with high risk. Therefore, during very volatile market times, you may make a lot of money, but you may also lose it all. Seeing as you only have a few hundred bucks for Forex trading, every win count and every loss can be a disaster.
Forex Trading with The Economic Calendar
Alright, so we did say that if you only have a very small Forex account, you should not be trading during volatile market conditions. That said, how do you tell if the market is very volatile? With the economic calendar, that’s how.
We always recommend going to investing.com, and then checking out the “economic calendar” for your specific time zone. One of the main things you are looking for here is 3 Bull News.
If there is a 3 Bull News release slated, you know that the market condition is going to be volatile, specifically for the exact country or currency which that 3 Bull News is going to apply to. If you 3 stars, this means there is 3 Bull fundamental market news, so do not trade during these times! The problem is that you don’t know what exactly that news release is going to be, so you cannot accurately make a prediction.
Forex Trading with Small Lot Sizes
One of the biggest mistakes which may newbie Forex traders with small accounts make is to put all of their eggs in one basket. In other words, some people will invest the whole $200 into a single trade. Folks, if the trade loses, you lose it all. In stock trading, this is what we would call diversification.
You’re better off placing lots of smaller trades rather than placing one or two huge Forex trades. If you place 2 trades and 1 loses, then you lose 50% of your capital. However, if you place 10 trades, and 2 are losers, then you only lose 20% of your capital. Here, for the first 1 to 2 weeks of trading, stick to a lot size of 0.01 lots.
As you trading account increased in size and value, you can then also increase the lot size of trades. In theory, this is all about risk management. You can’t risk it all in just a few trades. Sure, you might make it big if you get lucky, but the odds are definitely stacked against you if you trade this way.
Limit Daily Trading
Another tip we can give you when it comes to Forex trading with a small account, such as a $200 account, is that you need to limit your daily trades. We would recommend placing no more than 5 trades per day.
Once your account balance increases to over $1,000, you can then start placing 6 or 7 trades per day. This is especially true with open trades. Sure, you can place more than 5 trades per day, but never have more than 5 open at the same time, or else you might blow your account up.
Best Forex Trading Pairs for Small Accounts
The other rule for Forex trading with a small account is to never trade with volatile, unpredictable, and unpopular currency pairs. Don’t start trying to trade Indian Rupees against Russian Rubbles, it’s not going to go well.
You want to stick to basic and highly traded currency pairs, ones that are easily predictable. Some of the best currencies to trade with include USD, EUR, CAD, GBP, AUD, JPY. In other words, you want to stick to major currencies and major currency pairs.
Forex Trading with a Small Account – Final Thoughts
The bottom line is that with only a few hundred dollars for Forex trading, you do need to be careful, smart, and strategic. If you want to learn more about Forex trading, we’d recommend checking out Andrew’s Trading Channel, as well as the Income Mentor Box Day Trading Academy.