How Much Should Be the First Deposit Amount?

How Much Should Be the First Deposit Amount?



After doing some demo trading and conquering the virtual market, every trader starts sooner or later thinking about opening a real account and depositing their hard-earned money. The question of 'How much should I deposit?' arises soon, and the answers are many. The first one may think of is funding the account with the minimum deposit amount or the minimum investment amount defined by the broker. However, when choosing this option, one should understand this may lead to losing the deposit quickly if the market goes against you. Meanwhile, the losses at early stages are very bad for any trader's psychology, and overcoming such losses is not an easy task. Thus, sometimes, continuing demo trading is much better than investing a minimum amount.

Another popular option described across the web is that a trader should invest so much money as they are willing to lose. In other words, a trader ought to believe they will be wagering their money, rather than investing. This could be partly true, as deeming this money lost from the very beginning will solve any future emotional problems in case this money is really lost. On the other hand, however, this may make the trader think their trading activity is unimportant, as if it were a mere game of chance. This is actually why most novice traders do not trade but rather wager, and only one out of ten, on average, is successful.

We believe everyone asking themselves the How Much Should I Deposit question should first understand their purpose. If you are in the markets only to play a game, it does not matter how much (or little) you are going to invest. Whether you play with a hundred or two of bucks in a cent account or even continue demo trading, makes virtually no difference.

If you are about reaping profits, then you should think rationally. Answer yourself a question: will you be able to make enough money, trading with a few hundreds or thousands of bucks? Do you have a working trading plan or system to start working in the long run?

Many beginner traders think they could turn $100 into millions in a month. Is it realistic? Long story short, you will have to double your deposit every single day. This is barely possible, even mathematically. So, every time you start thinking on saving up your cash and putting in a minimum deposit, multiply this amount by 10 or even 20. This won't guarantee you any profits either, but will at least allow your account to have some financial support, preventing it from getting 'blown' in a flash.

Rationally thinking, the first deposit amount should be in line with the average weekly or monthly gain the trading system is ready to provide you with. Thus, if you want to earn, say, $1,000 per month, and your system gives you 10% to 20% monthly, you should deposit between $5,000 and $10,000.

We all understand, however, that financial conditions of every single trader matter, too. Some would say $1,000 is a large amount, while for others 100,000 won't be enough. Everyone has to make their own choice, and should remember at all times that even a huge deposit does not guarantee profits without the appropriate attitude to trading.

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