Broker to Trading

Some brokers offer a low minimum deposit. The selection here includes brokers which have a minimum deposit requirement of $50 or less. A broker which has a very low minimum deposit may have a higher requirement for some account types. A broker which has no minimum deposit will let the trader deposit what they wish, but there may be a minimum which can be sent from a particular payment provider.

To trade on a real trading account, the trader opens a trading account with a broker. When the account is opened, a deposit of at least the minimum deposit specified by the broker is necessary to trade. This allows the trader to trade markets on the online trading platforms provided. Whether a particular market can be traded depends on a number of factors.

Factors determining whether a trader may trade a market include the capital in the account, the value of the market, the leverage used by the trader and the trade size chosen by the trader.

The capital in the account is important because there needs to be enough to open the position and more besides to cover other open positions as well as adverse moves against the trade, which are to be expected as Forex pairs retrace (move in a direction opposite to the traded direction, decreasing the value of the account). There is a stop out level set at 50% of the account in the European Economic Area (EEA), at which all positions will automatically be closed. This is to protect the capital in the account, as otherwise it could be eaten up by adverse moves.

Smaller trade sizes for example micro lot Forex brokers or even smaller Cent accounts, may enable positions to be opened with a smaller account size and allow the trader to use lower leverage, as increasing leverage increases risk. When using a smaller trade size the value of each move (a pip) is smaller as well, thus reducing the effect of moves against the position on the account balance (although sudden sharp moves in Forex also happen, which is one reason why a guaranteed stop-loss is important). Some brokers may not offer Cent accounts (which are associated with MT4 and MT5) but may allow for a small minimum order size.

The expectation might be that a beginner may wish to trade with a low minimum deposit Forex broker, as they may want to cautiously trade with smaller account sizes (though being aware of defeating the purpose by having positions sizes too close to the account stop out). However this is not necessarily so, as experienced traders may appreciate a broker which does not have a high bar to trade on a live account. There is nothing stopping a trader putting on more than the minimum deposit or having tested it out to their own satisfaction, putting a larger deposit to give more flexibility in opening positions and trading.