Forex: How Much Money Do You Need
to Trade the Daily Timeframe

Forex: How Much Money Do You Need to Trade the Daily Timeframe - Turn $50 to $1 Million in 3 Years - InvestGrowRepeat.com

The answer might surprise you how much money you need to trade the daily timeframe in forex. If your forex broker uses standard lots, then in order to trade one micro-lot of 1,000 you only need minimum margin of $20 with 50:1 leverage.

This assumes your forex broker does not have a required minimum deposit (most don't).

Although, if you use a broker similar to OANDA who does not use standard lots, then you can trade with exactly the number of units you want. If you want to trade 731 units then you can, which means with OANDA there is no minimum amount of money you need to trade the daily timeframe.

This might not seem like a lot, but I'm going to show how you can turn $50 to $1 Million in 3 years trading forex long-term.

Related: Stocks vs Forex: Why Trade Forex?

In order for your trade to be able to handle market swings without getting a margin call, you should trade with only a maximum of 40% of your available margin. So if you want to trade with $20, then you should have at least $50 in your account.

Even if you live outside the US (and have access to 100:1 leverage) you should never use anything close to 50x leverage. In order to win in forex, you have to use a sustainable amount of leverage. With 50x leverage, you can lose half of your account value from a 100 pip loss, which is not sustainable long-term.

Using 40% of your account value with 50:1 leverage is equivalent to using 20:1 leverage:

  • $20 x 50 = 1,000 units (40% with 50:1 Leverage)
  • $50 x 20 = 1,000 units (100% with 20:1 Leverage)

In both cases, the trade size is the same, but with 50:1 leverage you only need $20 in margin for 1,000 units which means you have $30 unused margin available to avoid a margin call.

A margin call is when your account has less margin than what is required for the trade size, and unrealized profit (or loss) is used when calculating available margin. If you use $50 for margin and only have $50 in your account, then when the trade goes -$2 against you it will appear to your broker that you have $48 margin available even if the trade would ultimately go in your favor. Thus, you receive a margin call - they will force close your trade if you do not resolve it.

Turn $50 to $1 Million in 3 Years Trading Forex Long-term

So now you know you can trade the daily timeframe in forex with as little as $50, but what can you do in forex with only $50?

I'm going to show you how you can turn $50 to $1 Million in 3 years trading forex long-term using the daily timeframe. First, as examples, let me show you a few graphs.

The first one shows the GBP/NZD trending at an average of 23 pips per day for 2 months:

If you had bought the GBP/NZD towards the beginning of this trend and sold the pair towards the end, that's a guaranteed average of 23 pips per day (even if you had sold the pair late, it still would have averaged about 20 pips per day).

Next, let me show you a graph of the EUR/USD trending at an average of 10 pips per day for almost a year:

Note: These are not cherry-picked graphs. Some trends can even average 25-50 pips per day for several months.

I just want to show you that a guaranteed average of 10 pips per day is very feasible trading forex long-term with the daily timeframe. But what can you do with only 10 pips per day?

10 pips per day translates into an average of 200 pips per month. If you are trading with 40% of your money with 50x leverage, then that translates into a 40% average gain per month!

  • $20 x 50 = 1,000 units
  • 1 pip = $0.10
  • 200 pips x $0.10 = $20

Gaining only $20 from 200 pips may not seem impressive, but keep in mind that if you grow your account to $5,000 then you will use $2,000 as margin and potentially gain $2,000 in one month.

The following graph shows what happens to $50 if you can maintain only a 33% growth rate per month – $50 to $1 Million in 3 years!

Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term TradingTrading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term Trading

There is a lot of information in the above graph, so I have broken it down into each individual year so you can see what is happening.

In year 1, $50 turns into about $1,100 with a consistent 33% growth rate:

That may not seem very impressive to turn $50 into $1,100, but that's a 2,200% increase in one year!

Year 1 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term TradingYear 1 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term Trading

Then in year 2, that $1,100 turns into $35,000:

Year 2 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term TradingYear 2 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term Trading

Finally, in year 3 that $35,000 turns into about $1 Million – $50 to $1 Million in 3 years!

Year 3 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term TradingYear 3 - Trading Forex: Turn $50 to $1 Million in 3 Years - 33% Monthly Return Long-term Trading

How to Maintain a 40% Growth Rate on a Long-term Trade

Now that I have shown you what is possible with only a 33% growth rate (turning $50 to $1 Million in 3 years), let me show you how to maintain a 40% growth rate on a long-term trade.

If we go back to the first month, you would have $20 used margin, $30 unused margin, and approximately $20 in unrealized profit. Your forex broker will generally consider unrealized profit as part of your available margin, which means you will appear to have $50 available margin again ($30 unused margin + $20 unrealized profit).

If you add 40% of your unrealized profit as an additional trade, pyramid style, then you can maintain the ratio of 40% of your money being in the trade.

Your new trade size is:

  • $20 x 0.40 = $8
  • $8 x 50 = 400 units

Thus, you would have a trade of 1,000 units that is about 200 pips profitable, and you just now added a trade of 400 units. With $20 unrealized profit your account value would be $70 and you have $28 used margin out of $70 available margin.

Obviously, if you use a forex broker that only has standard lots, then you may have to wait until you can safely add an additional 1,000 units to the trade (requiring another $20 margin). Technically, this is already possible because trading 2,000 units only requires $40 as margin. But if you have $70 available margin, you are using almost 60% of your account value trading 2,000 units.

Of course, using more than 40% of your available margin will obviously accelerate your monthly growth rate, but it can also cause you to get a margin call if the trade goes against you for a few days before going in your favor.

Alternatively, you can just use a broker like OANDA who lets you trade with however many units you want.

Consistently Profitable Forex Traders

As I mentioned, using 40% of your money with 50x leverage is the same trade size as using 100% of your money with 20x leverage. Many profitable forex traders actually use even less than 20x leverage, because of the unsustainability of losses from high leverage.

Most consistently profitable forex traders use less than 10x leverage, which is the same as using only 20% of your money with 50:1 leverage.

It will take a lot longer to turn $50 to $1 Million if you are only using 20% of your available margin (or use 10x leverage), but with less leverage comes less risk. If you want to be successful long-term, then it is important to understand the Top 3 Consistently Profitable Forex Trader Characteristics.

If you did decide to only use 20% of your account value with 50:1 leverage (equivalent to using 10x leverage), then in 3 years you could be making over $5,000 per month trading the daily timeframe from an initial deposit of $50.

Even that achievement is pretty amazing!

Want my advanced forex knowledge?

Learn how I win with advanced risk-reducing techniques and leverage management, as well as the buy/sell signals I use. Normally available for $50, you can have access for only $29.

 

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Disclaimer: Purchasing does not guarantee success, although it may significantly increase your chances of success – you are always trading at your own risk. All transactions are final.

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