Forex (foreign exchange) market is the most accessible financial market. Thus, starting a day trading in the forex market is easy. If you want to go with a broker, their minimum capital requirement for forex day trading ranges from $100 or as low as $50.
Basically, in forex day trading, there is no legal minimum amount required.
Even after you want to start with $100, you can use some scenarios involving some potential risks and rewards.
Risk management
In your trading plan for day trading, you should not risk more than 1% of your forex account in a single trade. That is because even the professional forex traders still get strings of losing trade. Thus, you need to keep your risk on every trade small to avoid losing capital in a streak.
That risk is determined by the difference of your entry price and the price where your stop-loss order goes into effect. After that, the number is multiplied by the position size and the pip value.
The Pip Values
Forex market moves in pips. A pip is the move of the price of a currency pair. For almost every currency pairs, a pip is 0.0001. For instance, if the price of the EUR/USD formally 1.305 becomes 1.306, that is a one pip move.
Forex pairs trade-in units. The units range from 1,000, 10,000, or 100,000. They are called a micro, mini and standard lot.
When USD is listed second in the pair, as in EUR/USD or AUD/USD (Australian dollar-U.S. dollar), and your account is funded with U.S. dollars, the value of the pip per type of lot is fixed.
Also read: How to Calculate Stop Loss in Day Trading?
Stop-loss Orders
In trading currencies, you need a stop-loss order, especially, if the value of your base currency goes to the opposite direction of your bet. It usually is 10 pips below the current price if you expect the rising price. Or else you make it 10 pips above the current price once you expect the price to fall.
The Example
$100 in the Account
Assume you open an account for $100. You will want to limit your risk on each trade to $1 (1% of $100).
If you place a trade in EUR/USD, buying or selling one micro lot, your stop-loss order must be within 10 pips of your entry price. Since each pip is worth $0.10, if your stop loss were 11 pips away, your risk would be $1.10 (11 x $0.10), which is more risk than you want.