Full transcript of “How To Trade Forex With $100 (The Harsh Truth)”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:00 So, if you're trading with £500, you can risk manage. If you're trading with £2,000, you can risk manage and you can grow an account. However, you can't do this with a 100 account. So, in today's video, I'm going to go through the reasons why you shouldn't trade a personal account if you have a 100 pound net worth or you have £100 ready to risk in the markets and what you should do instead that kind of relates to trading with that £100 but not directly depositing but not directly depositing it into a brokerage account and then trading it trying to get rich. And that basically is the first point. You cannot become rich trading with 100
0:45 pounds or make it even worse $100 as that is around you know 80 pounds or something like that. You can make money obviously but you're not going to flip it to 100k overnight. You're not going to flip it into 10 grand in the next trade. That just is not going to happen. Technically, it is possible, but the chances of that actually happening to you is very, very, very, very slim. You might as well go and buy a lottery ticket in my opinion, just based on how difficult it is to actually flip an account of that size. And the reason why it's hard to trade an account of that size is because you cannot manage risk properly. And even if we're not talking about flipping the account at this
1:31 point, we're talking about normal trading, 1% risk, 10 pip stop loss, you just you just can't do that. Especially with if you're trading in gold, you're trading GBPUSD, maybe with a large stop loss, 30 pips, you can't risk 1%. With the smallest lot size possible, which is obviously a 0.01 01 lot size. Trading a 30 pip stop loss, you're going to lose £3 or £3. And this is obviously risking 3% per trade. Some people trading some people watching this video will have a yearly draw down of 10%. Or even 20%. So if you have a 20% max draw down per year, you're trying to trade $100, you're down 60%. And as we know
2:17 from stats, if you're down 50% of your account, you then need to make a 100% profit to make back that 50%. And because you can't risk 1% per trade, you're not going to be down 20%, you're going to be down 60% of your account. So, you can't trade how you would normally trade. Trading in trading in draw down with a smaller account will obviously be much more difficult just on the account size, having, like I said, to make back so much more profit that you shouldn't normally have to do. And the the main difference here is you go into your testing using most likely 100k account that is kind of the base balance that people tend to use and you see your results from there. You see the percentage gain. You see how much you're in draw down. Then you go and try and translate that onto a $100 account. It
3:03 just doesn't feel the same. For most traders, that is why they end up quitting or that is why they end up trying to flip the account to some astronomical number that in the back of their mind they know it's not entirely possible, but they try to do it anyway just for the sake of it and thinking they're going to get lucky. That is the biggest issue. Thinking you're trying to get lucky with your small amount of money. And in my opinion, you are just better off using that money towards your self-education. And for $100, you're not likely to be able to afford a course, but you can spend that money on useful things. And I'm going to give you some examples. So firstly, you can purchase a back testing software. I use FX Replay. I have an affiliate link down below if you want to check them out. I was using them before
3:49 I was affiliated with them, as you can probably tell if you scroll back years on the channel. I've been using them for a while. And the main benefit of this, you're paying a monthly subscription. So it's not obviously £100 right up front and you're getting access to full data on your strategy. You can back test any pair. You can back test any time frame. You can back test multiple pairs, multiple time frames. And then you're building the data that you can then implement into a strategy in the future. If you only have a 100 pounds to trade now, you shouldn't be focusing on trying to trade that. You should be focusing on investing that money into yourself as a trader to try and build a strategy so that once you do have money to trade, substantial money, not just £100 here or there, you can actually deploy your
4:35 capital and trade a strategy that you know works because majority of people going into trading with a small amount of money don't have the right strategy in place in the first place before they go in and try and trade live. So if you spend your money on trading view premium so you get obviously uh accurate prices. I've seen some people they trade with or they do their analysis on trading view but everything's delayed from the live markets because they don't have a premium package and this can be quite difficult. So you could have trading view premium you could have FX replay or any back testing software of your choice. You could also have a trade journal but at this stage I don't really think that's very necessary. Trade journals are usually quite pricey for what you actually get in return. I would
5:21 advise you to use an Excel spreadsheet. Just with the the right formulas in place, you can have it looking very very nice and it can calculate all of the stats that a trade journal would do anyway. But you obviously have to put in a bit of time up front. But at that stage with $100, you have the time, I'm guessing. And it's not really something where you'd want to just pay an extra £50 just to get it all done for you. That's something that comes later down the line. So those are probably the three best things you can actually do at that stage trying to build your strategy. Once you have the strategy, you're going to want to make money. And making money at this stage, the best way to do it is to not trade. is to not trade. I'm sorry, you probably didn't want to hear
6:06 that, but the best way to make money is by getting a job. It could be a part-time job or even a full-time job to fund your lifestyle, your expenses, and then save money if you're trading alongside. And what you're going to want to do is use a small amount of your savings towards a small prop firm challenge. This could be 10k account, 25k account. I'm going to go with a story of when I started trading prop firms. I started with a 25k account, very very cheap in comparison to other larger proper accounts and I could obviously afford a larger account but I didn't want to do this. I wanted to start small that was appropriate to my net worth at the time and scale up from there. You're going to get more experience trading with a lower account size than you are with a larger account
6:53 size. And the reason I actually think this is because trading with money that doesn't change your life means you focus more on the actual strategy. Trading going straight to a 200k account, these numbers are huge if you only have hundreds of dollars, you know, as your net worth. So, they're going to be a lot of psychological errors in your trading. You might not notice it at the time, but later on you will notice the mistakes that you're actually making. Whereas, let's say you start a 10K account. Each win is going to be, you know, a few hundred dollars or something like that depending on your risk-to-reward, but it's not going to be considered life-changing money. You'd have to make a 100% profit to make 10K. So, that's not likely to
7:38 happen. So, it is going to be easier to manage the positions to manage the profits and manage the draw down as well. So, once you've actually done this, you've implemented the back testing software, the trading view, and the journal. If you did actually purchase that too and now you are getting payouts. If you are able to get a payout then you can scale but not with the original £100. You don't just put £100 in try and scale it and then make tons of profit. No, you make use of that £100 by developing yourself as a trader. And even if that does take 6 months, 12 months, you're in a better position than the person who just tried to trade and flip their money for the first 6 to 12 months. And you'll probably see if you ask any trader that has been through these both of these phases in their
8:24 journey. I am one of those people who has been through both stages. I definitely wish I went through the back testing phase from the first day I actually started trading rather than trying to flip accounts rather than trying to make as much money as possible. It saves so much time. It saves so much stress. And at the end of the day, it saves so much money. 100 pounds here or there on an account flip. You do that four times, you could have bought a 100k challenge when you were ready. If you just save that money instead of trying to flip it on each account. And I'm guilty of this in the past. I started by doing that in 2019 2020, but now I obviously don't do account flips because I know it isn't a good use of my capital and I'd rather scale it with prop firms or other investment opportunities. So, if you are looking to trade with $100, do not put
9:11 it into account, try and flip it. Go the sensible route by back testing, spending the money on yourself as a trader, and then purchase the prop firm challenge that gives you access to more