July 13, 2011
Spread Betting Forex Full Time - How Much Money Do You Need?
I was recently asked (by a UK-based trader who has just opened an account with Tradefair) how much money you would need to make a full time living spread betting the forex markets, so I thought I would answer this question on this blog.
I often trade forex using one of my spread betting accounts because it's quick and easy. You don't need to worry about lot sizes or anything like that. You simply enter your stake per point, ie £1, £5, £10 etc, enter your stop loss and target price, and then place your trade.
The question of how much money you need to make a full-time living is an interesting one.
If you were looking to make some extra cash to supplement your income, say £100 per week, then I would say you probably need anything between £1000 and £3000 as a bare minimum.
£1000 would enable you to risk £50, ie 5% of your capital, per trade, which is just about acceptable providing you have a really good trading system in place, and would give you a good chance of making your £100 per week.
However if you are looking to make a full-time living from spread betting the forex markets then you probably need to be making at least £400 - £500 per week, and even that's on the low side with inflation going through the roof right now.
So on that basis I would say that you need £5000 as a bare minimum, but more realistically a trading pot of around £10,000.
You could probably get away with £5000 but you would need a tried and tested system that has very few losing trades, and rarely has two or more consecutive losing trades.
A trading pot of £10,000+ gives you a little more freedom because you could risk say 3% per trade, which I believe to be an acceptable level of risk, and still be able to make £500+ per week.
The key point is that however big your trading pot is, you need to have a proven trading system in place if you are serious about generating a decent profit every week. You also have to bear in mind that although you may be able to generate a full-time income, you will always have the occasional losing week.
I do this full-time and generally make some good returns, but still have weeks where I lose money, as you will see if you read my 'Weekly Trading Updates' every week. However if you control your risk and take time to find a reliable trading system, then you can make a full-time living from spread betting without needing more than around £5000 - £10,000 to start off with.
If you don't have this much money to start with, then you can always start off with a small amount and try and build it up to a manageable amount. This can be done although you either need to trade only the very best set-ups or take a few risks.