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Especially beginners, who want to trade currency pairs for the first time, have to familiarize themselves with numerous technical terms used in Forex trading (foreign exchange trading). But even with less technical terms, such as minimum deposit, it is important to first find out why this condition is important and what it involves.
Apart from the trading platform, it is usually above all the trading conditions that attract more attention when comparing brokers. The trading conditions in Forex trading, in turn, also include the minimum deposit. Therefore, in the following guide, we would like to go into this condition in more detail and also deal with whether the broker FXCM requires a minimum deposit and if so, at what level this is set.
- The minimum deposit when trading with FXCM is $50.
The minimum deposit at a glance
On the one hand, the term minimum deposit is already self-explanatory for many traders. On the other hand, however, especially newcomers to Forex trading and CFD trading have to deal with so many unfamiliar terms and characteristics that it is perhaps not yet clear what the minimum deposit actually means or says. By the way, many brokers use the term minimum amount that must be available on the trading account as an alternative to the term minimum deposit.
Forex brokers operating in the market can be divided into two groups when it comes to the minimum deposit. One group of brokers now do not require a minimum deposit, while many other brokers insist that the customer deposit a certain minimum amount of capital into his trading account. FXCM is one of the second group of brokers, as it requires clients to deposit a certain minimum amount of capital, depending on the account model chosen.
In simple terms and in one sentence, the minimum deposit is the minimum amount of money that the trader must deposit into their trading account. Many forex brokers follow a similar approach to FXCM in terms of minimum deposit, namely by making the amount of the required minimum deposit depending on which of the offered account types the trader has chosen.
Most of the time, the higher value account types with numerous services and additional benefits also include a higher minimum deposit than the mini accounts. FXCM Broker is a good example in this regard as well, since, depending on the account model, the minimum deposit varies between 50 and 2,000 USD, or a transaction volume of at least 50 million USD.
The minimum deposit is only interesting when trading on a small budget
As mentioned earlier, there are not only brokers like FXCM that insist on a minimum deposit. Instead, some Forex brokers increasingly waive the requirement for a minimum deposit, which is not at all illogical. If the client wishes to actively trade forex or CFDs, which is the rule, a minimum amount is practically automatic and must be available in the trading account.
On the one hand, every broker has a margin requirement, which must be kept in the trading account. On the other hand, there is almost always a minimum transaction amount, which, in combination with the leverage and the margin, results in a certain amount of capital that must be available on the trading account anyway. The following example illustrates the relationship between minimum deposit, margin, leverage and minimum transaction amount:
- Currency pair: Euro / US Dollar
- Security deposit (minimum): 0.5 percent
- Lever: 200:1
- Minimum transaction amount: 100.000 USD (1 lot)
- Necessary account balance: 500 USD
- Official minimum deposit: 50 USD
This example clearly shows that although the broker FXCM requires a minimum deposit of only 50 USD on the mini account, this would not even be sufficient for the planned transaction. On the basis of the figures given in the example, the customer would have to have at least 500 USD in his or her trading account in order to be able to order the planned trade.
The situation is similar with a very large number of trades because, on the basis of the security deposit required by the broker and the minimum transaction amount, there is almost always a low three- to four-digit euro amount that must be used for trading anyway and should therefore also be available on the trading account.
Experts suspect that despite this, many brokers still demand a minimum deposit because they assume that clients are less willing to switch to another broker once they have deposited money into their trading account and thus fulfilled the minimum deposit.
Does the minimum deposit differ between account types?
Broker FXCM has chosen to offer its clients three different types of accounts. Currently, the trading account is available in three variants: Mini, Standard, and Activ-Trader. The account variants differ in particular with regard to the following features and conditions:
- Minimum deposit
- Lot size
- Number of tradable currency pairs
In addition, there are sometimes significant differences with regard to the services included in each account type. For example, the customer can use the MirrorTrader and the NinjaTrader with both the Standard and Active Trader accounts, which is not the case with the Mini account. There is also a significant difference in terms of order execution, which is carried out on the dealing desk for the mini account and on the non-dealing desk for the Standard and Active Trader accounts.
As far as the minimum deposit is concerned, the minimum deposit for the selected mini account is 50 USD and is therefore automatically considered a general minimum deposit that traders must meet with the broker FXCM. It is also interesting to note that the mini account also has a maximum account balance requirement. This can only be up to 20,000 USD.
If the balance is higher, the mini account is converted into a standard account. Traders who choose the standard account must make a minimum deposit of 2,000 USD, which is 40 times higher than the minimum deposit for the mini account. The account balance is not limited to this. With the Active Trader account, the requirements are somewhat different. Here, the broker does not talk about a minimum deposit, but the customer must meet the condition that he trades a volume of at least 50 million USD. Of course, this already includes the leverage provided by the broker, which is usually either 100:1 or 200:1.
The aforementioned minimum deposit requirements at broker FXCM apply exclusively to retail clients, i.e., private speculators and investors. However, the Broker does of course make its services and capabilities available to other clients, such as corporations, affiliates, or institutional investors and traders. For those customers who receive a separate trading account, a significantly higher minimum deposit of 10,000 USD or 10,000 units of the respective account currency applies. If a separate custody account is even maintained, the minimum deposit must be 250,000 currency units.
Conclusion: The minimum deposit is not a real deal
Broker FXCM is one of the providers that continue to require a minimum deposit from clients. The amount of the minimum deposit depends on the account model chosen, so that, for example, only 50 USD is required as the minimum deposit for the mini account.
For the standard account, the minimum deposit is considerably higher at 2,000 USD. If the customers are companies or other institutional traders, there is even a minimum deposit of 10,000 USD or 10,000 currency units in the respective account currency. In comparison with other brokers, the minimum deposit of 50 Euros (for the mini account) is relatively moderate, even though there are of course now a few other Forex brokers who do without a minimum deposit completely.
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