The foreign currency exchange is a global network of traders, speculating the value of various currencies. High leverage is involved in forex trading, in order to capitalize on the volatility of fractions of a currency unit. However, the daily variations in the rates of exchange may be small. Due to this, there is huge risk in forex and this risk, in turn, makes many people stay away from the Forex market. They do not want to take the risk of putting a lot of money in their trading account or bearing huge risks on each trade. For such traders, forex mini accounts are the logical option.
Forex Mini Account: What is it
The forex market operates 24 hours a day and trading is done in lots. A standard lot comprises of 100,000 base currency units of a currency pair. A standard lot in the EUR/USD pair, for instance, is 100,000 euros. On the contrary, a mini account has a lot of 10,000 units of the base currency. Thus, a mini account holder can trade in the forex market with much smaller amounts of money than a standard account.
Forex mini trading is conducted in a manner similar to regular forex trading. The only difference is that one can start trading with as little as $25. The size of a contract in forex mini is one-tenth the size of contracts in regular trading. However, they can be traded and leveraged in the same way. Actually, a mini forex account enables traders to have more leverage. Those who have learned trading on a forex demo account and now wish to trade with real cash, should have a mini account opened for themselves.
What is the Pip Size in a Mini Account?
A mini account has smaller pip values than a regular forex account. A standard account in the EUR/USD pair has a value of $10, due to which even a small fluctuation in the market may lead to an increase or decrease of hundreds of dollars. On the other hand, the value of a pip in a mini account is $1, which reduces vulnerability to market movements.
What are the Benefits of Forex Mini Accounts
A mini account is quite beneficial for small-time traders who cannot afford to put huge amounts of money into their broker account. Moreover, it enables them to trade with the same tools that they would in a standard account. This not only exposes them to lower risk but also increases their confidence to trade. They can participate in the market as easily as veteran traders.
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