Mini Forex Accounts
Leverage has long been a hallmark of foreign currency trading, and a thing that permits both the professional trader and the beginner trader to equally gain access to large amounts of money to trade inside a FX account with little capital investment. A common forex account these days is called a mini account and it is about one tenth the size of a standard forex account. The problem with a large forex account is this : when your new to trading in the forex trading market, you may be somewhat hesitant to throwing down $1000-$5000 to get started on a forex account with a company you haven’t any previous relationship with. That is certainly understandable, and why a mini forex account may be just your solution.
Forex Standard accounts have been around a long time, and they date back pre-internet era when forex trading was done by phone. You would speak with a dealing desk and they would place your fx order for you. You had to have a large amount of capital, much larger than even today’s standards, as were talking about $10k – $50k 10 years ago, and that was significantly more money back then. These brokers did not provide the smaller accounts they do now. For a standard account you could get 100 times leverage on a $1000 deposit and control a standard lot size of 100,000 currency units. You can still type of an account from an online forex broker, and these days the leverage has been seen as high as 200 times.
The mini forex account can get you started trading for a mere $100. What this equates to is that you are trading $100 on each of your trades. If you can’t afford $100 or not comfortable with putting that amount at risk, and yes there is quite a bit of risk in the forex market, then you should reconsider a mini forex trading account.
You have one alternative to the mini account. Its called the micro account and your risk, and your gain would again be reduced by an additional 10x allowing you control of $1000 for just $10 in your account. This gets to be a very safe alternative, as the losses are very minimal, but again so are the gains, and you may find it takes a very long time to get anywhere with this type of account. Your goal would ultimately be to have enough funds in your account to convert this account to a mini forex account so you can trade at a higher margin with increased profitability.
When trading with a mini forex account, you should take into consideration the fact of why you started the account in the first place and truly determine that you have money to lose. You should not trade using any account if you cant afford to to lose the capital in that account. You can do things to minimize risk, like a stop loss that will prevent your account from losing too much capital, but in forex trading, a stop loss has to be well placed due to the volatility that can occur in a market frequented by fluctuations of currency of values.
Opening a mini account online is easy, and you can usually open one for around $250. Of course its always better to have a good capital investment of $1000 or more if your getting into the forex market. Remember, your putting in capital, which means that is what your account is worth, not necessarily what your trading. So if you can’t afford $250, then consider the micro account, and always make sure you can still get buy if you lost that money in the market.
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