Secrets of Forex Mini Account Trading Revealed
Forex mini accounts are a great deal for those just getting started in forex trading. To start right out with a standard account you would have to be very confident or very rich if you are a retail trader (i.e. somebody trading on their own account from home). With a mini account you can get started without risking so much money which makes it a very attractive option for many traders.
The normal lot size of currency is 100,000 in forex trading and mini forex trading accounts generally allow you to trade with 10,000 units or one tenth the normal lot size.
Currency trading works with leverage. So, of course you do not have to have this much in your account. You need $100 if you are using 100 times leverage 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.
The pip size is also usually smaller in a mini account. Pips are units in which you will measure your profits, losses and costs (the spread). Their dollar value can vary depending on the currency pair that you are trading, the lot size and other conventions of your broker, but a common standard pip size is $10 and mini pip size is $1.
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 if you have a standard forex account you can expect to measure your profits in $10 units, be involved in trading lots of $100,000 and put up $1,000 on each trade.
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.
The standard account used to be all that was available before so many people had powerful home computers and high speed internet connections that made it possible for the ordinary person to trade from home. The forex mini account is a development that has opened up the market to people who have the technology but not the money 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... - 23226
The normal lot size of currency is 100,000 in forex trading and mini forex trading accounts generally allow you to trade with 10,000 units or one tenth the normal lot size.
Currency trading works with leverage. So, of course you do not have to have this much in your account. You need $100 if you are using 100 times leverage 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.
The pip size is also usually smaller in a mini account. Pips are units in which you will measure your profits, losses and costs (the spread). Their dollar value can vary depending on the currency pair that you are trading, the lot size and other conventions of your broker, but a common standard pip size is $10 and mini pip size is $1.
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 if you have a standard forex account you can expect to measure your profits in $10 units, be involved in trading lots of $100,000 and put up $1,000 on each trade.
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.
The standard account used to be all that was available before so many people had powerful home computers and high speed internet connections that made it possible for the ordinary person to trade from home. The forex mini account is a development that has opened up the market to people who have the technology but not the money 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... - 23226
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posted by X - Men @ 2:38 AM
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