Trading is already possible with small seed capital. Thanks to electronic trading, you only need at least €1 starting capital for trading. Many brokers do not even require a minimum deposit. Real money accounts can be opened from €0. However, there are also restrictions on certain financial products. With Traders with Edge, you can trade from currencies to indices.
Use a free demo account first:
Another method to get started with no seed capital at all is the demo account. It is an account with virtual credit (play money). Trading simulates real money trading under the same conditions. All well-known brokers offer a free demo account. This has the advantage that beginners can try trading first before investing real money.
When trading in the demo account, you will not incur any costs. In addition, most demo accounts are unlimited and you can recharge them with virtual money at any time. Beginners and advanced traders can try new markets, strategies, and trading methods risk-free.
Which financial products are suitable?
Not every financial product is suitable for small start-up capital. Overall, there are countless different financial products that are traded either directly on the stock exchange or over the counter (OTC).
Forex (currency trading)
When trading between currencies, only a very small starting capital is required. Positions can be opened with just a few cents of risk. It is also possible to work with leverage and thus increase your profit.
CFD (Contracts for Difference)
CFDs are offered on all possible markets. It is an over-the-counter trade between the trader and broker. The advantage here is that you can use very little capital. The CFDs are mapped to a value on the stock exchange. Here, too, leverage is used, which can affect profit and loss.
Stocks and ETFs
Stocks allow you to participate in companies. Gains and losses resulting from price fluctuations. In addition, a dividend is distributed by the company. The starting capital for this can vary depending on the share / ETF price. Depends on the price of the stock/ETFs. Some shares cost over 1,000 euros, others under 5 euros.
For futures contracts, you need a larger starting capital, because the position sizes and the tick value are very high. With accounts under €5000, you shouldn’t start with futures in my opinion as it doesn’t really make sense. Very high starting capital of €5000+ required. The position sizes are very high despite the low margin.
Options and certificates
These are popular leverage products with conservative investors. The starting capital here is in the middle range. Options can be traded for just a few hundred euros.
Read also: Should Forex Trading Be Considered Art?
Forex and CFDs are best suited for any retail trader
Do you want to start trading? – Then Forex (currencies) and CFDs (contracts for difference) are best suited. The advantage here is that you can variably adjust your position size in small increments. Denominations and very small as well as large position sizes are possible. The Forex market is one of the most liquid markets in the world and is also very popular because there are many trends.
Forex and CFDs are also offered with leverage. This allows the trader to trade larger position sizes with a margin (security deposit).
Stop Loss. The risk is determined with a stop loss. It is an automatic loss limit that closes your position at a certain price. If your position of €3000 now loses the value of €100 and is only worth €2900, you will automatically close the position.