FOREX Mini Accounts
FOREX mini accounts are meant for
traders who are either new to the FOREX market or want to start off with a low
investment. They can open a mini account with as little as $250, as against a
regular FOREX account which typically requires a minimum investment of $1,000.
The good thing is that owners of mini
accounts don’t suffer from any trading disadvantages. A mini account gives them
the same benefits that the regular FOREX account gives to large traders, like
free trading platform, small spreads, etc.
What’s more a mini account also comes
with the added benefit of leverage as outlined above. A trader who has a mini
account needs to deposit only $100 as the margin deposit for a $10,000 lot
trade. This gives the trader a leverage of 100 to 1. My recommended limit for
leverage. Keep in mind that the benefits and risks of using margin accounts
apply equally to Mini accounts as they do to full size ones.
Another advantage is that a mini FOREX
contract size is usually 1/10th the size of the standard contracts where lot
sizes are usually 100,000. This reduces the potential loss of a trader. For
instance, a FOREX trader holding a regular account will loose $250 if they sets
a 25-pip stop loss.
The loss for a mini account trader for
a similar strategy will be $25 because the value of a mini lot is 1/10th of the
standard lot. Conversely though, the potential profit upside is also smaller.
Consequently, the smaller trader has
more flexibility in customizing the size of the trades and managing the risk.
Thus the traders who want to trade with less than $1,000 would do better by
opening a mini account.
This will give them more flexibility
in implementing different strategies and more staying power in the FOREX market
since they will be able to take advantage of multiple trades without suffering
debilitating losses.
