How much do you need to start trading forex?

The forex market is one of the largest and most liquid financial markets in the world. Traders can use derivative products, such as spread bets or CFDs​, to speculate on the appreciation or depreciation of currency pairs. This is through margin trading, which allows you to open a much larger position using a small amount of capital, which is referred to as your deposit.

When trading on margin, you’ll be able to deposit a percentage of your full trade value, which starts at 3.3% for major currency pairs like GBP/USD and USD/JPY at CMC Markets. This is also expressed as a leverage ratio of 20:1, which can equally help to magnify profits and losses, depending on if the trade is successful or not. Read more about margin in forex trading​.

A pip or ‘percentage in point’ reflects the smallest amount that a currency can move in the market. For most pairs (except the Japanese yen), a pip is equivalent to 0.0001 or 1/100th of a %, whereas for the JPY, it’s 0.01 or 1%.

For example, if the GBP/USD moves from 1.4035 to 1.4040, this represents a five-pip move, or if it moves to 1.5035, this is a 100-pip move.

To calculate your profit or loss from a trade, you would multiply the stake value (e.g. £1 per pip) by how many pips the pair moves by. Learn about pips in forex​.

When trading with us, there isn’t a minimum deposit required to open a live account. However, you won’t be able to get started properly and place a trade until there are sufficient funds to cover your position.

For example, you can spread bet from a stake size of £0.30 per point on EUR/USD, GBP/USD and USD/JPY, and from £0.40 per point on EUR/GBP. When you open an order ticket on our platform, we calculate the estimated margin requirement for you to open a forex trade on your chosen pair. So, if you want to open a buy position for the EUR/USD which is trading at 1.11278, your minimum margin requirement would be £111.49. If you want to sell the GBP/USD at 1.31228, you’d need £131.49 as your estimated margin.

To view the minimum trade size for all instruments, open its trading chart on the platform, click on ‘Product overview’ and then ‘Betting and Position Limits’.

The table below shows five of the most popular forex instruments on our platform with their applicable margin rates and prices, which you can get started trading on today.

With the above key explanations in mind, let’s now calculate a forex trade using our most popular product, spread betting, which is a tax-free option* for traders in the UK and Ireland. We’ll use the GBP/USD or “cable” pair as an example.

Buy price = 1.3139
Sell price = 1.3138
Margin rate = 3.3%

Imagine you want to open a long position because you think the value of the GBP/USD will increase over time. You place a ‘buy’ bet at £1 per point, which is your stake size. As the margin rate of this currency pair is the lowest at 3.34%, you will only be required to deposit this amount as your position margin.

Minimum margin = £438.89

Therefore, you’ll need to transfer a minimum of £438.89 into your account in order to open the position. Don’t forget that you’ll also need to cover other potential costs, such as spread costs and overnight fees if you plan to hold your position for more than one day.

Let’s say that your prediction is successful, and GBP/USD rises in value.

New buy price = 1.3618
New sell price = 1.3617

As you bought the pair for 1.3117, you could now ‘sell’ and close out the position at the new sell price of 1.3617. This is a 50-pip move. To calculate your profit, you would multiple this by your initial stake size of £1 per point.

£1 x 50 = £50

If this scenario had gone the other way and GBP/USD fell by 50 pips, you would calculate losses in the same way, so your capital loss would also be £50. You would need to transfer sufficient funds into your account in order to cover your losses when the position was closed.

In the tables below, we’ve calculated some more examples to show how a trader could hypothetically make a profit or loss on their positions, based on the daily average true range of the currency pair in 2021. These pairs differ in margin rates and minimum stake sizes, so they would bring differing returns on average.

Remember that trading with leverage​ is a double-edged sword, meaning that if the price moves against you, you could lose the entire value of the funds in your account.

Yes, if you take the following steps:

Given the risks of trading with margin and leverage, many traders decide to incorporate risk-management controls in their positions, especially when trading on a short-term basis, like intraday trading or scalping.

Examples of order types that you can apply to your forex charts include traditional stop-loss orders (the most common type), trailing stop-losses (which follow behind the price when it moves in a favourable direction helping to lock in potential profits), and guaranteed stop-losses​. Whereas the first two controls don’t take into account slippage or gapping within price charts, GSLOs can close you out of your position at the exact price you specify, regardless of both circumstances, for a small premium fee.

Read our money and risk-management guide​ for further information on how to protect your capital.

In summary, you could live off trading currency for profit if you dedicate enough time, energy, and diligence into your trades.

Depending on the capital in your account, you would need to determine a specific pip value and stake size in order to capture profits over the long-term and see what works for your strategy.

For example, starting with a larger amount of capital would give you more flexibility and allow you to bet with a greater stake size, such as £10 or £20 per point, compared with a smaller amount of capital that would cover a £2 or £5 stake size. This would multiply with your pip movements also, so the greater the currency price movements, the greater the potential for profit (or loss).

However, this will differ for each individual trader, so there are no fixed figures that everyone should strive towards.