How to trade forex with $5

Forex Trading Nigeria

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Posted by on Tuesday September 20, 2011 19:32:54:

Trading forex with just $5 can be considered a waste of time and energy which would probably cost more than $5 but if you choose to, you can still make a profitable trade with $5 and grow the capital

There could be many strategies you can use to trade with that amount but here is one that I would recommend for trading the Eur/Usd

- Currency pair is the EUR/USD
- Divide your $5 by 20 to get 0.25
- Now limit your risk per trade to 25cents or $0.25
- Use the 1:100 leverage to trade currencies worth $25
- Set your exit target to $0.5 or 50 cents
- Always enter with a buy or sell stop and set your profit ans loss prices immediately

This simple means that for every win, you would gain 50 cents and for every loss, you would lose 25 cents. Now, you would need to make ten wins to get a $5 profit and hence double your capital.

Let's take an example:
Assuming, you are trading the Eur/Usd which is currently at 1.3500
- Target is 40 pips i.e. 1.3540
- Stop loss pt is 20 pips ie. 1.3480
- No of units to buy 125
- Cost of purchase is 125*1.3500 = $168.75
- Leverage available is 1:100 ie $500
- Percentage of leverage we are using is 33%

If you win and Eu goes up to 1.3540, you would gain:
125*0.0040 = $0.5

If you lose and Eu goes does to 1.3480, you would be losing:
125*0.0020 = $0.25

Ten wins will give you $5 and ten losses will give you $2.5, hence, if you are able to make good decisions for each position you take, you will be able to stay long in the game.

If you are good at knowing when to buy or sell, you will certainly make more wins than losses so something like 6/10 wins would be ok to be a successful trader.

Tip: Try to buy at day's low if buying and sell from day's high if selling.