“How much money do I need to start Forex trading in South Africa?”. This is a question that gets asked a lot by people who are aspiring to be Forex traders. There are multiple answers to this question, technical answers and answers based on reality.
Technical answer
The minimum deposit that you need to open an account with most reputable brokers is $50. Which roughly translates to R800; however, some brokers will require you to have at least $100.
You will need a broker/trading platform to be able to make trades, brokers usually charge fees for a number of things. A broker provides you with most of the information that you need to make a trade. The technical answer is than you can start Forex trading with only R1 000.
Reality
The reality is that you are not going to make a lot of money from R1 000. Forget all the stories of people coming from a disadvantaged background that are now Forex millionaires. For everyone of those, there is hundreds of thousands of people who lost their money. That’s unfortunately how Forex works. Chances that you will grow your account of R1 000 into a multimillion Rand account are very slim.
Most professional Forex traders make between 1 and 10% in returns every month. 10% is a lot, you as a newbie are not likely to make returns of 10%. Let’s assume that luck is on your side and you successfully make 10% every month for 1 year. You would still have less than R5 000 at the end of the year. Your total amount would be roughly R3 100.
That is an incredible rate of returns but it’s not one that will make you a millionaire very soon. You would need to wait for 6 years, considering that you are not withdrawing any money for yourself. A 10% return is unrealistic for a newbie.
The reality is that you will likely be making a return of 4% per month if you stick to the best practices of Forex trading.
You have to start with at least R10 000 in order to make money trading Forex. A starting deposit of R10 000 can ensure that you reach R1 million within a period of 10 years. That’s if you consistently get a return of 4% per month and you allow the money to compound.
Full time trader
You need at least R100 000 if you want to be a full time Forex trader. We assume that you will use the profits to support your lifestyle. Assuming that you consistently get a return of 4%, you would earn R4 000 every month. Which is not really enough money to support a family, but it is enough money for anyone to survive on. Starting with R260k would guarantee you an income of around R10 000 per month, which is about comfortable for most people.
Conclusion
This was a guide on how much money you need to start Forex trading in South Africa. Do you have any thoughts or questions? Comment below.
