How much capital you need to start: work back from cost, not from the minimum deposit

The usual answer to this question is a number from the broker’s signup page: Exness accepts from $1, XM
and HFM from $5. The number is correct, but it answers a different question — what the broker will
accept, not what you need in order to trade meaningfully.

The right calculation works backwards from cost.

Why the minimum deposit is not usable

Suppose you deposit $50 and trade 0.01 lots of EUR/USD — the smallest size possible. The spread cost on
that trade is about $0.10–0.20. Negligible, apparently.

But for a $50 account to produce meaningful income you have to increase size. And increasing size on a
small account sends margin usage soaring — a 30-pip move against you is enough to reach
stop out. A small account leaves you no room to be
wrong.

Working back from the risk rule

Start from the 1%-per-trade principle, the most widely used. With
a 30-pip stop on EUR/USD:

The table shows something rarely said out loud: below $500 you cannot trade by standard money
management — the calculated size comes out smaller than the broker’s minimum. You are forced to
break the rule, and that is why small accounts blow up quickly.

Cent accounts: the way out for small capital

Some brokers offer Cent accounts, where one lot is 1,000 units rather than 100,000. On one of those,
$100 behaves proportionally like $10,000 on a standard account. It is a sensible way to practise the rules
properly with small capital instead of breaking them.

The trade-off is that absolute returns are small in proportion. A Cent account is a learning tool, not a
living.

Fixed costs that weigh more on a small account

• The conversion spread on funding — about
  0.5–1.5% each way. On $100 that is $1–3 for a round trip,
  1–3% of capital, before a single trade.
• Inactivity fees — some brokers
  deduct monthly if the account goes quiet. On a small account the erosion is visible.
• Overnight financing — charged on
  volume, not on capital, so the proportion of a small account is much larger.

Realistic figures

Taken together, these thresholds mean different things:

• $100–300 — enough to get used to real mechanics. Use a Cent account. Expect no
  income.
• $500–1,000 — you can trade by the risk rules on a standard account, at small
  size.
• $3,000 and above — room to scale in and to survive a losing run without breaking the
  rules.

And one thing that matters more than any figure above: the capital you put in must be money you could
lose entirely without it affecting your life. No level of capital makes
that stop being true.

How the rebate affects the number

A rebate does not reduce the capital you need — it reduces cost per lot. For a regular trader it extends
the life of the account: 20 lots a month at $8/lot is $160 a month not lost. On a $3,000 account that is
over 5% of capital a month.

But do not invert the logic: trading more than is sensible in order to collect more rebate is
the fastest way to lose money.

This article is for information only and is not investment advice. Conditions and fee levels are published by the brokers and can change at any time — check with the broker you actually use. Leveraged forex and CFD trading carries a high level of risk and can cost you your entire deposit.