Mini forex trading was created for new traders entering the forex market. This means new traders do not require a lot of money in order to be able to access this market and start placing trades. The Mini Account uses a different leverage calculation than a regular (100k) account. This means that instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which in turn greatly reduces the amount of money you risk in each trade you enter.
In a Mini Account the smaller lot sizes have correspondingly smaller pip values. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 value they have in a regular account. The Mini Forex account offers up to 200:1 leverage, this means that just a $50 margin deposit will allow you to trade lots worth roughly $10,000. The mini forex account is beneficial for new traders to improve their forex trading skills while being exposed to less financial risk on the market.
Success in the forex market and becoming a profitable trader depends on a lot of practice and experience. It is still essential to practice first with the demo trading software to enable you to get comfortable with the trading platform and to get a feel of the real market. Once you get an idea of what to expect in the forex market, it is wise that you should open a mini forex trading account. Now you are dealing with real money.
Although you might risk losing real money, a mini forex trading account only requires a small investment of money. You'll be profiting less from a successful trade and also losing less if the trade goes bad . For example, while a 20-pip loss on a 100,000 USD/JPY position would be $200, the same loss on a 10,000 USD/JPY position in a Mini account would amount to only $20. Mini forex trading reduces the risk of your loss. You can always make another deposit if you lose. The key to mini forex trading is to enhance your skills until you are ready to trade with the big traders.
To start with a mini forex account, there are some characteristics you should know:
• Required minimum account deposit = $100 - $300 (this is known as margin)
• Recommended account deposit = $2,000
• Traded in 10,000-unit currency lots
• A default margin: set at 0.5% ($50 per mini-lot)
• Leverage up to 200:1
Mini forex trading has little disadvantages than a regular forex account. You will be enjoying all the benefits that full-size Forex account holders enjoy, this can work in your advantage. You will have access to the same trading software, charts, resources, and tools from your broker. Mini accounts are ideal for new Forex traders to develop a proper, disciplined forex trading strategy without the fear of losing money.
Another great feature of using a mini forex trading account is that there is no maximum trade volume and you are not limited to trading one lot. You are able to trade 10,000 units or even 200,000 units even if the standard size of a mini forex account is 10,000 units. This enables you to develop your skills, trading strategy and technique before slowly increasing the size of your trades. The ability to customize the size of the trade will allow you to have a better risk management of your money
The mini forex trading account is ideal for beginners or novices that are just starting to enter the world of forex trading. Here, the risk is real and the money is real. With Mini Forex trading it is easier to develop the confidence needed to be a successful currency trader, without the anxiety and distractions that come with large profit and loss swings.
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