Forex Mini Account Trading Explained
Forex mini accounts are ideal for just about anybody who is starting out in forex trading. You would have to be very rich or very confident to start right out with a standard account if you are a retail trader (i.e. somebody trading on their own account from home). A mini account lets you get started without risking so much money and this makes it a very attractive option for most people.
With a mini forex trading account you can generally trade with just 1/10 of the normal lot size. Meaning 10,000 units of currency rather than 100,000.
Of course you do not have to have this much in your account. Currency trading works with leverage. If you are using 100 times leverage then you need $100 to control $10,000 in your mini account or $1,000 to control $100,000 for a standard account.
The mini trading account is so attractive for most people because $100 or 100 units of other currency per trade is enough to commit to a trade when they are starting out.
In a mini account the pip size is also usually smaller. Pips are units in which you will measure your costs, profits and losses (the spread). Depending on the currency pair that you are trading, the lot size and other conventions of your broker their dollar value can vary. A common mini pip size is $1 and standard pip size is $10.
Some brokers are now quoting prices to 5 decimal places which technically would make one pip 0.00001 of the quoted price, but we will continue to use the standard 4 decimal place pip for this example.
So with a standard forex account you can expect to put up $1,000 on each trade, measure your profits in $10 units and be involved in trading lots of $100,000.
With a forex mini account you can expect to be involved in trading lots of $10,000 with $100 committed on each trade and measure your profits in $1 units.
So that you do not have to risk all of the money that is committed to the trade, you can set stop losses. But your losses will be measured in terms of pips so these too will be 10 times greater in the standard account.
If you are successful and your fund grows, you may want to move up to trading greater sums. You can still do this in your mini account by trading more than one lot at a time. So if you want to trade a standard lot size you would just trade 10 mini lots. This has the advantage of still giving you the ability for fine control of your stops because your pip size is still just $1.
High speed internet connections and powerful home computers have made it possible for the ordinary person to trade from home. Now many people who used to only have the standard account available to them are trading regularly. The forex mini account is a development that has opend up the market to people who may not have the money but have the technology for standard currency trading investment.
If you want to risk even less of your money, you could look at forex micro accounts which allow you to make even smaller trades. Be aware though that the spread is often a little high and you might find it difficult to profit with a micro account. It may be better to use a demo account until your confidence builds and then open a forex mini account for real trading.
I'm sure you probably have a lot more questions about forex mini accounts... - 23208
With a mini forex trading account you can generally trade with just 1/10 of the normal lot size. Meaning 10,000 units of currency rather than 100,000.
Of course you do not have to have this much in your account. Currency trading works with leverage. If you are using 100 times leverage then you need $100 to control $10,000 in your mini account or $1,000 to control $100,000 for a standard account.
The mini trading account is so attractive for most people because $100 or 100 units of other currency per trade is enough to commit to a trade when they are starting out.
In a mini account the pip size is also usually smaller. Pips are units in which you will measure your costs, profits and losses (the spread). Depending on the currency pair that you are trading, the lot size and other conventions of your broker their dollar value can vary. A common mini pip size is $1 and standard pip size is $10.
Some brokers are now quoting prices to 5 decimal places which technically would make one pip 0.00001 of the quoted price, but we will continue to use the standard 4 decimal place pip for this example.
So with a standard forex account you can expect to put up $1,000 on each trade, measure your profits in $10 units and be involved in trading lots of $100,000.
With a forex mini account you can expect to be involved in trading lots of $10,000 with $100 committed on each trade and measure your profits in $1 units.
So that you do not have to risk all of the money that is committed to the trade, you can set stop losses. But your losses will be measured in terms of pips so these too will be 10 times greater in the standard account.
If you are successful and your fund grows, you may want to move up to trading greater sums. You can still do this in your mini account by trading more than one lot at a time. So if you want to trade a standard lot size you would just trade 10 mini lots. This has the advantage of still giving you the ability for fine control of your stops because your pip size is still just $1.
High speed internet connections and powerful home computers have made it possible for the ordinary person to trade from home. Now many people who used to only have the standard account available to them are trading regularly. The forex mini account is a development that has opend up the market to people who may not have the money but have the technology for standard currency trading investment.
If you want to risk even less of your money, you could look at forex micro accounts which allow you to make even smaller trades. Be aware though that the spread is often a little high and you might find it difficult to profit with a micro account. It may be better to use a demo account until your confidence builds and then open a forex mini account for real trading.
I'm sure you probably have a lot more questions about forex mini accounts... - 23208
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posted by X - Men @ 1:15 AM
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