How to Become a Day Trader with $100

If you are new to online investing and day trading forex, it would be an excellent judgement call to start with a small amount of capital. The tragic fact is that most new forex traders have a high probability of losing their investment.

Don’t let that discourage you. It doesn’t mean you don’t have a chance of making money as a forex trader. What it means is that new traders make mistakes, so make your mistakes with a smaller amount of money.

Many brokers allow you to begin trading with just $100 and sometimes even less than that.

What if you want to become a day trader but cannot afford to deposit more than $100, is it still possible to make money trading forex? Yes, it is.

Follow this guide to understand how you can become a forex day trader with just $100.

1. Wait for high-probability trade opportunities

Because $100 gives you a limited amount of trading capital, any losses will cut back your available trading margin and may prevent you from taking future opportunities with a higher probability.

Focus all of your attention towards only the most likely trade opportunities and ignore anything that has a shadow of doubt. When trading with a small account, there isn’t a lot of wiggle room for failure.

2. Don’t be too greedy and stick to your risk-reward ratio

With a risk-reward ratio of three-to-one and risk tolerance of just 2% on an account with $100 means that your potential profit of each trade would be only $6.

It’s easy to feel like it’s not a lot of money for the time you spend analyzing the market and setting up your trades.

If you go for larger positions, you will probably lose more, and it’s not a case of if, but when.

The goal is neither to make as much money as you can, nor to make money as quickly as possible.

The objective of trading with a $100 account is to slowly grow it over time and compound your profits, meanwhile gaining valuable experience as a trader.

If you can eventually turn your $100 account into a $200 account, you can double your reward, without taking on any additional risk in proportion to your account balance.

3. Don’t place your stop-loss orders too close to the market price

When you place a stop loss closer to your entry price, it allows you to place your take-profit order further according to your risk-to-reward ratio.

The problem is that the closer your stop-loss is to your entry point, the higher the likelihood of it being triggered, simply because there is no much of a breathing room for any pullback.

Even if your trade set up is correct, you will still lose money just because you did not allow for moments of downside.

Where you place stop-losses should not only be defined by your risk-to-reward ratio and where you expect to exit a trade but where the market could move before it reaches the target.

4. Utilize maximum leverage provided by your broker

When you execute a trade, it consumes margin from your account balance, leaving you with less margin to maintain the trade and possibly execute an additional trade.

When you take maximum leverage, it allows you to accommodate a bigger swing without worrying about a margin call.

If a trader has low leverage, more money will be held up as margin requirement for the trade, thereby lowering the margin level by a significant proportion.

When compared to a trader with high leverage, the trader with low leverage will get a margin call first if the trades go against both of them.

5. Take a more proactive approach to manage your trades

The usual advice when trading forex is to define your target and stop-loss before you enter the trade and stick to the plan, thus preventing you from closing the position too early and leaving profits on the table. It prevents you from getting weak hands and letting go of a position during natural periods of drawdown.

However, with a small trading account, you may want to take an even more proactive and precise approach. For example, you could;

● Close a profitable position when the 15-minute timeframe breaks the underlying uptrend or downtrend,

● Close a position when the currency pair makes a new higher high or lower low,

● Close a position before the end of a trading session or before rollover,

● Close a position before any of major economic news reports,

● Adjust your stop-loss order to entry price when a trade makes you +20 PIPs,

● Close a position when the current trend looks exhausted.

6. Review your trades and learn from any mistakes

As you are trading with a small account, it may not feel like you are making financial progress as you make a few dollars here and there.

Make sure you embrace this as an educational experience and focus on developing and growing as a trader so you may one day be managing a much larger trading account.

One way to ensure you improve as a forex trader is to review your close trades regularly, The more you analyse your past performance and try to pinpoint any mistake you made, you can correct areas where you went off track.

Think in terms of percentages. If you can risk 2% of your $100 and make 6% in a trade, it doesn’t matter your account balance. You can still achieve the same result with a $50,000 account.

It’s the strategy, not the money.

As you are on this journey, don’t forget that you can depend on educational resources such as the Scope Markets daily webinars, created for determined traders looking to improve their skills.

How to Be a Part-Time Forex Trader

Forex trading is one of the most flexible investment environments, which is why it attracts so many part-time traders.

Because the market is open for literally 24-hours a day, Monday through Friday, you can trade whenever you prefer, from wherever you are.

Unlike the stock market in your country, which most likely operates during the same hours that you work your full-time job, the forex market will be waiting for you once you finish work.

Trading forex when you feel like, isn’t strictly considered part-time trading.

By becoming a part-time trader, you should acknowledge what it really means.

Part-time implies that you will not be trading eight-hours per day, but it doesn’t mean there should not be any schedule or structure behind when you trade.

Part-time trading is often confused with casual trading, where trading is treated as a hobby or interest and not a job.

There are quite a few disadvantages to casually trading forex. Meanwhile, there are many advantages to becoming a part-time forex day trader.

In this article, we will explore the primary differences between part-time trading and casual trading to see what the main differences are between these levels of commitment to trading.

Trading Forex Casually

If you plan on trading forex from time-to-time, with no fixed agenda, it means you would be considered a hobby trader or a casual trader.

Casual trading isn't a recommended trading style, because it suggests you haven't done the necessary planning or market analysis to be familiar with current behavior and price development.

Because casual traders have a very relaxed approach, they often take several days off from trading.

When they do trade, they often find themselves trading from their mobile phones, possibly while distracted by TV or a podcast. The lack of attention is likely to lead to wasted time and money.

The lack of structure associated with a casual trading schedule makes it hard to follow a trading strategy or maintain a journal that can be reliably reflected on.

The forex market behaves differently depending on the day of the week and the time of the day.

For example, Tuesdays and Thursdays are usually the most active days of the week with the second half of the European trading session and the beginning of the US session are the best times of the day to trade volatility.

With a casual trading schedule, there is a chance you will miss the best moments to trade and are unlikely to develop your skills as a trader due to the lack of structure. Therefore, establishing a part-time trading strategy offers several merits.

Trading Forex Part-Time

As mentioned earlier, there are only a few hours per day which offer the most opportunities.

Therefore, it doesn’t make sense to keep your eyes glued to the screen of your mobile, computer or laptop when there are no worthwhile opportunities to reward you for your time.

Many traders use that time for doing other stuff in their lives, working on their trading strategy, back-testing or engaging other forms of employment, such as freelancing or another part-time job.

Traders who fully commit to trading full-time, i.e. they have no other source of income, usually find trading more stressful because they are driven to earn money to pay for bills and other living expenses.

The necessity can drive traders who depend on the income to take low-quality trade ideas and ultimately head down a dangerous path of over trading.

Trading part-time may imply spending a couple of hours a day doing research and analysis while waiting on the right moment and trade level to make a market entry. Managing open trades may be done on a schedule that has time intervals of say one hour or even after every 4 hours.

When you examine the schedules of most full-time traders, you would probably notice their agenda looks a lot like that of a part-time trader.

The reason for this goes back to the notion that there are only a few opportune hours each day in the forex market.

Trading forex can be a stressful experience; this uncomfortable emotion can lead to quitting, particularly for traders who don’t necessarily need the money.

It can also be challenging for new traders to maintain a strict part-time schedule. It can be especially tricky if they have a full-time job and family obligations; which is why we recommend joining one of the daily forex trading webinars hosted by Scope Market, the best investment platform in Kenya.

Even if you don’t find the time to place orders every day, at the very least, attending a webinar will keep your mind focused on the market, keeping you sharp for when you’re able to get more screen time.

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