6. How much is the minimum initial capital, the minimum investment for each trade, and the maximum leverage?
The Minimum Initial Capital
Every beginner first starts his/her trading experience in the financial markets with a virtual Demo Account, but he/she cannot experience the influence of emotions like greed, fear, and revenge on his/her trading until he/she opens a Real Account. These psychological effects generally cause many traders to have unsatisfying results in their first Real Account or even they lose all of their initial capital.
Therefore, it is very important to use the minimum possible initial capital if you are opening your first Real Account. However, all brokers give you the option of opening a virtual Demo Account; the minimum initial capital required to open a Real Account is different for each broker.
The Minimum Investment for each trade
The minimum amount of investment for each trade is probably more important than the minimum capital in your real account. If you use very little capital in a trade, then your emotions do not have much of an effect on your decisions. So, as your experience grows, you will increase the amount of capital you invest in each trade.
Today, many brokers offer Standard accounts with minimum investment of one Lot (100,000) or Mini accounts with minimum investment of one Mini Lot (10,000) for each trade. But, some of them also offer smaller accounts like Micro accounts with minimum investment of one Micro Lot (1,000) or even Nano accounts with minimum investment of one Nano Lot (100).
As a result, if you are just starting to trade in the financial markets with your real account, then it is better to select a broker who offers Mini, Micro, or even Nano accounts to experience real trading while minimizing destructive emotional effects.
The Maximum Leverage
One of the attractive qualities of trading in the financial markets today (particularly for beginners) is using Leverage. Leverage offers more capital to the trader for trading. Although you can get more benefits out of more capital, consider also that your losses will be more. However, the losses increase just as much as your present capital (Balance). So, if you do trades with the total loss of more than your present capital, the broker will close all of your trades on loss and all of your capital will be lost (Call Margin).
The National Futures Association (NFA) defines the Maximum Leverage of USA brokers equal to 1:50 to prevent traders’ capital from falling into this risk. But the international brokers out of USA always present leverages equal to 1:200, 1:500 or 1:1000 too.
Briefly, your losses and risks grow by the increase in leverage. So do not use high leverage when you are still not a professional and most of your trades do not close with profit.