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Forex Mini Account Trading: Why Is It Essential For Individual Foreign Exchange Traders


Currency trading mini accounts are optimal for just about anyone who is starting out in currency trading. You would have to be very rich or very optimistic to start right out with a standard account if you are an independent trader (i.e. somebody trading on their own account from home). A mini account allows you get started without risking big amounts of money and this makes it a very attractive alternative for most people.

Mini foreign exchange trading accounts generally let you to trade with just one tenth of the normal lot size. This usually means 10,000 units of currency instead of 100,000.

Certainly you do not have to have this much in your account. Forex trading works with leverage. If you are using 100 times leverage then you must have $100 to control $10,000 in your mini account or $1,000 to control $100,000 for a standard account.

$100 or 100 units of other currency per trade is enough for most traders to commit to a trade when they are starting out and that is why the mini trading account is so attractive.

The pip size is also generally 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 forex pair that you are trading, the lot size and other rules of your broker, but common standard pip size is $10 and mini pip size is $1.

Most brokers are now quoting prices to 5 digits behind decimal point 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 instance.

So if you have a standard forex account you could put up $1,000 on each trade, be involved in trading lots of $100,000 and calculate your profits in $10 units.

If you have forex mini account you can expect to put up $100 or its multiple on each trade, be involved in trading lots of $10,000 and calculate your profits in $1 units.

Of course you can set stop losses if you don not want to to risk all of the money that is committed to the transaction. 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 profitable and your fund grows, you may want to move up to trading larger sums. You may 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 benefit of still giving you the possibility for fine control of your risk because your pip size is still just $1.

The standard account used to be all that was available before so many individuals had powerful home computers and high speed internet connections that made it viable for the ordinary guy to trade from home. The currency trading mini account is a development that has opened up the market to individuals who have the technology but not the money for standard foreign exchange trading investment. Even if you are novice trader, using reliable forex signals you can rake up substantial equity within a relatively short time. Accurate forex signals should be an integral part of every individual traders' forex trading strategy.

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