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Things You Need To Know About Forex Account Funding

When you are just starting out in Foreign Exchange trading, it can be difficult to determine how much working capital is needed to be successful at Forex trading.

Depending on the type of account you want to open, different Forex brokers have different minimums. On the surface, a beginning Forex trader would assume that the account minimum would be sufficient to safely trade on the Forex markets. However, more experienced traders will tell you that the account minimums are meaningless when it comes to determining the required level of capital.

What does determine your capital needs is your trading plan. This plan should be specific about what your goals are in your trading and also describe your trading system.

Trading Forex for a living will obviously take more capital than someone who is trading as a hobby or for simple investment purposes. In order to replace a $50,000 per year income you will need to produce a 100% annual return. With a 100% annual return you would need to start with $50,000 in your Forex account.

A 100% return is certainly an aggressive goal and you will also have to replace employer funded benefits such as insurance and retirement contributions. If you want to be a full time Forex trader and support your current lifestyle you will need to start with the correct level of capital. Underfunding a Forex account is common mistake beginners make.

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