Ahaaaa!!!
Did I just see your eyes light up while staring at the phrase “startup capital”?
I am not surprised, because, this is the single most asked question by most soon to be traders. Truth is, the question is not out of place and I also think its a question most traders rarely discuss.
Just like every other business you are venturing into, it’s only natural for you to inquire about the capital needed in order to start your trading business.
The two types of capital needed:
Now, let’s get something straight, the number one capital you would need is EXPERIENCE.
YES…,
A bag full of experience, and such experience comes from actively trading over time.
Hey…,
Don’t look at me that way, I haven’t said anything new.
Gaining experience in any business is the first capital you should be concerned about. It’s no news that a corn’s seed planted today, cannot be harvested today, and nobody becomes an elite fashion designer in just one day. It’s just a natural rule of life.
That’s better…,
Now that you are no longer frowning, let’s proceed.
Once the EXPERIENCE part is gotten, we can now talk about the CAPITAL needed.
For the purpose of this article, I will assume that you are an experienced trader, and you have the propensity to generate 5% returns on investment (ROI) on a monthly basis.
Did I hear you ask why 5%?
Good…,
A rough sketch of most trader’s monthly earnings
Statistically, most profitable traders fall within the range of earning between 2 – 10% monthly ROI . This returns is not fixed, it varies on a monthly basis.
Some months a trader may earn NOTHING (breakeven), other months he may end up with a NEGATIVE PERCENTAGE VALUE, and some good months he is rewarded HANDSOMELY.
So, since we have agreed to peg our ROI assumptions to 5%, let us ask ourselves two key questions.
- What does your current lifestyle cost you monthly? and
- Where are you currently residing (State in Nigeria)?
Based on your LOCATION and monthly EXPENDITURE in Nigeria, I will divide the different lifestyles into three major categories:
- King’s lifestyle
- Prince’s lifestyle and
- Subject’s lifestyle
How these two factors also influence the startup capital needed to invest in an fx trading business will also be discussed.
For example:
An aspiring fx trader who enjoys a King’s lifestyle in a state like Abuja, would definitely need more money as startup capital compared to another aspiring trader enjoying the same King’s lifestyle but resides in Ibadan.
NOTE: For those who may not be familiar with some of the cities (Abuja, Lagos, Ibadan and Ibadan) in Nigeria that would be mentioned, I sincerely apologize.
A brief intro about the states goes thus:
Abuja is the capital city of Nigeria, currently the second most expensive city in Africa and the most expensive city in Nigeria.
Lagos is a mega city, and also the financial centre of Africa. Its the second most populous state in Nigeria and the second most expensive state in Nigeria
Ibadan is geographically the largest city in Nigeria. It is a beautiful city to live in with loads of historical places to visit. Ibadan is also a very affordable city to live in.
Benin is the capital of Edo state, it’s also the centre of Nigeria’s rubber industry and they are also into a significant production of palm oil. Most importantly, living here is also very affordable
So, let’s jump right in, and focus on just two cities (Lagos and Benin), and how your cost of living/lifestyle could influence the capital needed to startup your forex trading gig
1. KING’s lifestyle
A King in Lagos:
Let’s assume the King in this article refers to an eligible bachelor/bachelorette who stays in the posh area of Lagos, he/she owns a brand new Korean or Japanese vehicle, and probably enjoys occasional trips abroad.
These are the guys that have a fair collection of designer shoes, clothes, watches, and other accessories that really matter.
The King earns N1,000,000.00 (One million naira) monthly.
Oh yes…,
I mean how else can he afford a rented apartment worth over N2m or drive a car worth over N6m?
So, if this trader is earning N1m/month, it only means his monthly income in dollars is approximately $2778 (N1m ÷ 360)
NOTE: Assuming the Dollar to Naira exchange rate as $1 = N360.
If this dude want’s to go into forex trading solely, he would need a start up capital of $55,560.00 which is N20,001,600.00 ($55,560.00 × 360).
I can see your eyes almost popping out of their socket…, Calm down friend,
If you are currently enjoying the KING’s lifestyle category, you really DO NOT need to save up that capital to invest into fx .
I always advice traders to build their account up through trading actively and practicing other trading account building techniques which are listed here
In summary
A King’s Lifestyle in Lagos
| Monthly Income (N) | 1,000,000.00 |
| Monthly Income ($) | 2,778.00 |
| Capital Needed (N) | 20,001,600.00 |
| Capital Needed ($) | 55,560.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
A King in Benin:
Benin city is a small beautiful city situated in the southern part of Nigeria, the best part is the affordable life you get to enjoy
Living as a king in Benin’s posh district demands a lot more less when compared to Lagos.
For instance, some of the coolest apartments in choice areas are leased for a little over N400,000.00K and guess what?.
A king’s lifestyle in Benin city does not necessarily need a brand new car….
Eh eh eh.., I ain’t throwing shade here.
Don’t get me wrong. If you live in Benin and you purchase a brand new car, all in the name of trying to express your King-hood lifestyle, kudos to you.
But…,
trust me, most times you just wanna settle for a great second new Japanese vehicle in almost perfect working condition, which wont give you hassles when the time for maintenance comes along.
A king’s lifestyle in Benin attracts an income of at least N500,000.00K per month. This translates to approximately $1389.00.
For a trader living in Benin City, and flexing a King’s lifestyle, he would need a startup capital of $27,780.00 which is N10,000,800.00.
In summary
A King’s Lifestyle in Benin
| Monthly Income (N) | 500,000.00 |
| Monthly Income ($) | 1,389.00 |
| Capital Needed (N) | 10,000,800.00 |
| Capital Needed ($) | 27,780.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
Now that we are done with a King’s lifestyle in both Lagos and Benin, lets see how a prince copes in both cities.
2. PRINCE’s lifestyle
A Prince in Lagos:
A prince still has a lot of things to contend with in Lagos. A decent accommodation for a prince in a good neighborhood would still go for at least above N600,000.00.
Though he may not be bothered about a brand new car, however a good second new Japanese car in top shape would do. He may enjoy some of the luxuries the King enjoys, albeit a little more conservative.
A Prince’s lifestyle is what every young man or lady who is just starting their career easily aspire to attain.
To support a Prince’s lifestyle, we will peg his income down to N600,000.00/month, that is approximately $1667.00.
This means that the Prince would need $33,340.00 as start up capital in order to maintain his/her lifestyle.
In summary:
A Prince’s Lifestyle in Lagos
| Monthly Income (N) | 600,000.00 |
| Monthly Income ($) | 1,667.00 |
| Capital Needed (N) | 12,002,400.00 |
| Capital Needed ($) | 33,340.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
So, let’s go over to Benin City
A Prince in Benin City:
A Prince’s lifestyle in Benin is bliss.
I am serious. You don’t need much for a Prince-hood’s lifestyle. A good accommodation in Benin in a good location will cost you just a little above N150,000.00/year.
Life is so so affordable here that when you go to the market to purchase food stuffs or groceries, you will be amazed at what money can buy you.
For this reason, I personally believe that a Prince will fair well with N200,000.00 per annum. I mean, what groove do you dream of to make life meaningful?.
Is it clubbing, or just hanging out at your favourite joint with friends, eating some well garnished and grilled catfish?, or perhaps inviting your friends over to your crib to spend some nice time watching your favourite series or movie?
A forex trader with the Prince’s lifestyle, residing in Benin city may not need much as capital in order to start up
In summary:
A Prince’s Lifestyle in Benin
| Monthly Income (N) | 200,000.00 |
| Monthly Income ($) | 555.00 |
| Capital Needed (N) | 3,996,000 |
| Capital Needed ($) | 11,100.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
Alright alright alright, enough of the ritzy poshy swanky talk, lets talk about us, the ladies and gentlemen at the under-story layer, in the heart of the amazon forest.
Let’s talk about those still hustling to get to that level where they become inspirational to a larger audience.
Aha, I am talking about no other than those still in the Subject’s lifestyle
3. The SUBJECT’s lifestyle
A Subject in Lagos:
A subject in Lagos maybe a little confused about where he or she truly resides, he has gone far beyond the borders of Lagos state original map.
You ask why?
For the mere reason of enjoying an affordable life, a place he can find some form of solace for his body and soul.
Accommodation in such places could be affordable if he wanted it to be so, however a fair location with an apartment worthy enough to still woo a decent lady would go for at least a little above N300,000.00.
The location a Subject resides makes life cheaper when it comes to feeding and paying some bills that are inevitable. This allows us to place a Subject on a monthly salary of N200,000.00.
Owning a car in this lifestyle category is born out of choice or luck, and what I mean to say is:
Luck – may give you an opportunity of owning a car passed down to you by a rich aunty/uncle/sister/brother/friend who collected a meager payment from you just to make you feel a little responsible
or
Choice – may goad you into purchasing a third “new” vehicle from a shabby user, and all you are left with is the carcass of a once promising automobile.
Papa yusuf the road side mechanic and Semiu the re-wire, whose workshop is two streets away from where you reside become your closest allies
In summary:
A Subject’s Lifestyle in Lagos
| Monthly Income (N) | 200,000.00 |
| Monthly Income ($) | 555.00 |
| Capital Needed (N) | 3,996,000.00 |
| Capital Needed ($) | 11,100.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
A Subject in Benin City:
Oh dear,
Though a subject is hustling hard to make his life better, a subject in Benin may not have too much to contend with. At least he or she is most likely not pressured to keep up with the Jones’s, hence there is a certain level of comfort this brings to his heart.
A nice self contained apartment in a fair neighborhood should go for a little above N50,000.00. Now…., please, don’t ask me if the subject in Benin can afford a car.
Most often than not, he is not really keen on doing so, transportation is very affordable and navigating through the small city is not much of a big deal.
The subject in this town earns at least N100,000.00/month. This pay may not be too impressive, but I bet you the lady or gentleman in this category could be another urban super hero.
Constantly cancelling the debts of friend’s and families while also rescuing those close to him from the harsh realities of life. A stage/category in life which if not carefully managed carefuly, may become a norm for the rest of one’s life.
In summary:
A Subject’s Lifestyle in Benin
| Monthly Income (N) | 100,000.00 |
| Monthly Income ($) | 278.00 |
| Capital Needed (N) | 1,999,800.00 |
| Capital Needed ($) | 5,555.00 |
| Assuming ROI (%) | 5 |
| Assumed Ex. Rate. | 360 |
In conclusion
The different analogies used to buttress the capital needed to start up forex trading, may not be entirely true, however they are a close representation of how our location could affect the startup capital needed to live off of fx trading.
I also continue to encourage traders who are new to trading to keep up with the hard work. Becoming a profitable trader takes a lot of work. This is the only way you can get the experience we talked about.
Once the experience is there, we can start talking about the capital needed.
That said… Do have a beautiful day ahead champ!
