With a Mini Forex account, you will have less money at risk. This will make it easier for you to develop a disciplined way to trade forex, since you won't have to deal with the stress and distractions that come with big swings in profit and loss.
There is something called a "Mini Account" in Forex trading, and it has a different way of figuring out leverage than a "regular" (100k) account. This means that instead of trading full-size currency lots (100,000 units), you'll trade lots that are only 1/10 as big (10,000 units), which greatly lowers your risk. In a Mini Account, each pip is worth about $1, instead of $8 to $10 in a regular account. The Mini Forex account gives you up to 200:1 leverage. This means that with just a $50 margin deposit, you can trade lots worth about $10,000. However, because the lot sizes are smaller and the pip values are smaller, you'll be taking on less total risk. For example, a 20-pip loss on a 100,000 USD/JPY position would be $200, but the same loss on a 10,000 USD/JPY position in a Mini account would be $20.
Here is a summary of the leverage (Margin and Account Size) on each of the two accounts we talked about above:
100K (Regular Full-sized Account)
- Minimum required account deposit = $2,000
- The recommended minimum deposit for an account is between $5,000 and $10,000
- Traded in lots of 100,000 units of currency
- Default Margin: set at 1 percent ($1,000 per lot)
- Leverage = 100:1 or 50:1 (if margin is set at 2 percent )
Account Mini
- Minimum required account deposit = $300
- The recommended minimum deposit for an account is $2,000.
- Traded in lots of 10,000 units of currency
- Default Margin: set at 0.5 percent ($50 per mini-lot)
- Leverage = 200:1
There is no downside to trading with a mini account. You will still have access to the same state-of-the-art trading software, charts, resources, and tools as those with a full-size FX account. This is the best way for a new Forex trader to learn how to trade in a disciplined, logical way without focusing too much on profits and losses.
Also, when you use a mini account, you can trade as much as you want. Even though the normal size of a trade is 10,000 units, you don't have to trade just one lot. For instance, you can trade 10,000 units, 50,000 units or 200,000 units. This means that as you gain experience and confidence, you can slowly increase the size of your positions to make the most money possible. In fact, the fact that the trade size is 10,000 units gives you more freedom to change the size of your trade. By being able to change the size of the trade, you can better manage your risk.
With less capital at risk in a Mini FX account, it is easier to develop a disciplined trading method and the confidence you need to be a successful currency trader, without the stress and distractions that come with big swings in profit and loss.
