Forex Mini Account - Place to Start Your Trading Experience
Everyone who starts trading currencies in Forex market first considers to try himself on a mini account. The days when only rich people were trading currencies are long gone. Now almost anyone can start trading on a mini Forex account. There are many brokers that offer mini accounts to trade with a small deposit.
A regular lot is 100,000 of units of currency. That’s a large amount of money you need to trade. However some brokers have an option of mini lots that consist of 10,000 units of currency.
Brokers give opportunity to trade with leverage. It’s common to see them to give leverage as high as 100. With leverage you don’t even need to have that much money in your account to trade. For mini lot of the size $10,000 you need only $100. To control a regular lot you need $1000.
That’s the basic reason why Forex trading is so popular. Most people can commit $100 or so to open a mini account and start trading currencies.
Profit and loss in trading usually is measured in pips. Pip is a smallest fraction of price. The pip value for a regular lot with USD base currency is $10. Therefore the pip value for the same currency with mini lot will be $1. For other currencies pip value is close to that numbers however they fluctuate with the currency prices.
Trading a mini lot of 10,000 and with leverage 100 you need to commit $100. Depending on a currency pair you are trading a price change by one pip will cost you or bring you around $1 or 1% of what you invested in one min lot.
Therefore you always need to use a stop loss. Otherwise a move of 100 pips against your position will wipe out your investment of $100. So allowing price to move 20 or 30 pips against your account will mean setting your stop loss at that level.
Once you learn to trade with consistent profit you may want to move to trade trade regular lot size. However depending on your broker you can do the same on a mini account trading 10 mini lots. The profit potential will be as if you were trading using a regular account. However this option can give you much more flexibility in terms of taking profit and placing stop losses since you can take partial profit and reduce your risk.
Not so long ago regular accounts with the standard lot sizes were available to wealthy people who could risk large amounts of money. Mini account is a development in Forex market that allows a regular people to try themselves in trading currencies.
There are also micro accounts offered by some brokers. You can trade with a micro lot of 1000 units that makes your risk very low. However before starting to trade currencies even on micro account you need to thoroughly understand the process on a demo account.
Tags: 
