Forex Mini Trading
Forex mini accounts are perfect for people who are new to forex trading market. The evolution of internet technology made it possible for anyone with a computer and fast internet connection to get involved in forex trading and mini forex accounts offered by the forex brokers increased the popularity of currency trading.
Why Forex Mini Account?
Until recently the forex market was exclusively controlled by big players like Banks and other financial institutions. The primary reason being the minimum amount of investment required to start currency trading. A standard trading needs a minimum lot size of 100,000 and depending upon the broker you may have deposit anywhere from $1000 to $10k to open a standard account. This means only rich traders who are willing to risk big sums could enter into forex trading. If you are small retail trader it will be impossible for you risk such large sums. With a forex mini account you can start trading without risking so much money and this makes it an extremely attractive opportunity for small traders.
Difference between a Forex Mini Account and Standard Account
Forex mini trading accounts normally let you to trade with just 1/10th of the normal lot size of a standard forex account. This means with a forex mini account you can trade10,000 units of currency instead of the standard 100,000 units.
You know that forex trading works with leverage. This means you don’t need $10k in your mini forex account to trade the lot size of 10,000. For instance if you are trading with a leverage of 100 times then you need only $100 in your mini trading account to control $10,000. In short, $100 (or Euro100 if Euro is your base currency) is an adequate amount of deposit to start currency trading (the minimum deposit amount may vary for different forex brokers) and that is why the forex mini trading account is so attractive for new traders.
Pip size of Mini Accounts
Usually the pip size is smaller for a mini account when compared to the standard account. (Learn more about Forex Pips here). The common pip size for standard account is $10 and pip size for forex mini account is $1 although this can be different for different forex brokers.
Assuming the above pip size you need to invest $1,000 on each trade with a standard trading account to trade 100,000 and profits are calculated in $10 units.
On the other hand when you trade with a forex mini account you only need to invest $100 on each trade lots of $10,000 and measure your profits in $1 units.
Trading beyond Forex Minis
As you become expert at forex trading your funds will grow and you might want to start trading for larger amounts. Instead immediately going for a standard account you can continue using your Forex trading mini account by trading more than one lot at a time. In other words if you want to trade a standard lot size of 100,000 all you have to do is to just trade 10 mini lots of 10,000 each. This also has the additional benefit of fine control of your stops since your pip size is still just $1. However you have to manage 10 trades instead of 1 and if you are not using a trading robot like forex autopilot robot, then it could be a hard task to manually control all the 10 trades at a time.
Forex Mirco Accounts
These days some forex brokers offer micro forex accounts which let you to make trades with smaller amount of money. Many people will suggest you to go for micro accounts to learn currency trading since you risk less amount of money. However in many cases it is extremely difficult to make money from forex micro accounts since spreads are often high for this type of accounts. Hence I suggest you to try a forex demo account (forex practice account) and improve your trading skills before you start trading on a live account. On the other hand spending some money on a micro forex trading account should make more serious about your trades since newbies often approach forex demo accounts casually. Either way until you are confident do not spend large sums on live forex accounts.
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