What size Forex Broker Account do you need to Trade an Expert Advisor.
We often get this question asked of us on a daily basis. It is a very difficult question to answer because there are so many variables that go into determining the size of account you are going to need.
So let’s go through some of the major variables that determine Forex Broker Account Size.
Transaction size allowed by your broker account.
There are 3 lot sizes of Forex trading. A main lot, a mini lot and a micro lot. Many Brokers do not allow micro lot sizing for some of their accounts. So please state the minimum lot size accepted by your broker when asking the above question. In general, if you broker does not allow micro lots you will need 10 time more in your Forex account to trade mini lots and 100 time to trade main lots.
The leverage you are enjoying from your broker.
Leverage determines the amount of margin you need to enter into a Forex transaction. If you are enjoying say 400:1 leverage you may only need $200 in Margin for a particular transaction. If you however have 50:1 leverage you may need $1600 for the same transaction. This is another major factor.
The size of your transactions
If you are going to be trading 30 pips stops with 30 pip targets you will need a lot less in your account than if you were trading 200 pip stops and 200 pip targets.
The maximum open transactions you will allow on your account
If you are happy to allow 10 open transactions per currency that you will be trading, you are going to need much more in your account than a trader that will only allow 1 open trade per currency.
The number of currencies you will trade at the same time.
A trader trading say the EURUSD only will need much less money in his account than one who will be trading 12 currencies.
The Loss Drawdown periods you are assuming
All Forex trading system have periods where they make a loss or a few losses in a row. These loss making periods need to be financed with extra money in your Account
There are many other variables such as
- How much safety capital would you like to have,
- How long do you anticipate having your deals open for (risk on overnight charges)?
- whether the broker is commissioned based or spread based (could impact your success rate),
- Your local currency compared to the currency of your account (could be a 10% difference)
As you can see answering a question like how much do I need in my account is easy to answer.
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