First, we all know how challenging and profitable Forex trading is. The market where currency exchange takes place is the Forex market, which has a daily turnover of approximately 6.6 trillion, which makes it extremely volatile.
To achieve any significant success, it is crucial to understand the essence, follow the geopolitical events in the world that affect price fluctuations on the market and educate each trader sufficiently.
In addition to all the profitable strategies, techniques, and tools, it is important to know what accounts exist. This article will introduce you to the mini Forex trading account and explain what makes it so special and useful. So let’s start!
What is a mini Forex trading account exactly?
A mini Forex trading account represents a Forex account that enables newbie traders to get on the market via mini lot positions. These mini lots refer to smaller size positions. That way, your money risk is significantly lower and potential losses on the market are limited.
With mini Forex accounts, beginner traders could easily engage in the Forex market with mini lots representing 10,000 currency units, i.e., the 01/10 size of a usual lot. Trading these mini lots is beneficial for bigger diversification in the Forex market because the same amount of capital could be laid out over a larger number of Forex currency pairs.
What are the three sizes of Forex accounts?
There are three sizes of Forex accounts in general:
- Macro accounts
- Standard accounts
- ● Mini accounts
With a Forex trading mini account, traders in the Forex market get into contract dimensions that are one-tenth of standard units. Similarly, the pip cost reward is $1 rather than $10, which is a standard amount per tick. Generally speaking, in Foreign exchange business, many platforms offer micro-lots, which is even smaller than all: 1,000 lot sizes with only 100 units.
Why is a Forex mini account great for beginners?
For numerous reasons, a mini Forex trading account is always the best solution for beginner traders who have just stepped into the world of foreign currency trading. First of all, this type of account proposes smaller contract sizes.
It means that the potential losses in the volatile and huge Foreign exchange market are limited. It’s beneficial for these beginner Forex traders to start trading with mini accounts so that they can gain experience in Forex without fear of losing huge amounts of money.
Most traders who choose to trade with mini accounts will eventually get the same trading tools and be allowed to the same markets as conventional account holders. They’ll have access to the same trading platforms, charts, and customer service.
What is a mini lot in forex trading?
As mentioned above, a Mini Forex trading account type is standardized at 10,000 lot traders, which differs from a Standard Forex account that requests orders of 100,000 base units. In other words, standard accounts need to take up orders in 100,000 multiples, while traders with mini accounts need to sets orders in 10,000 multiples.
Traders will have much better control of their risk with the smaller unit size. Besides that, they’ll enable experienced Forex traders to make various types of bets by expanding the same amounts of funds atop a greater variety of Forex currency pairs.
What does Pip represent in Forex mini trading accounts?
In the Foreign exchange market, traders trade their preferred currency pairs that include a particular spread amount (quoted amount). The amount could be 1.3000 EUR/USD, for example. In this situation, every trade wagers that either EUR or USD will change their relationship with the other.
This change is well-known in the Forex market as the Pip movement or the percentage in point movement. Regarding the example above, where EUR/USD is 1.3000, the trader believes that EUR, a base currency’s value will increase on the contrary to the USD, the quoted currency.
In this case, the EUR is long for the trader, while the USD is the opposite to it. The quote’s rate represents the 4 decimal places, excluding the Yen rate, which includes 2 decimal places.
Pip measures price changes.
By Pip, i.e., the percentage in point Forex markets measure fluctuations in price to the 4th place, the slightest eventual price change for a particular currency. Remember that currency pairs’ changes are in pieces of one single cent.
It means that the lost or gained amount of money on average is extremely small, such as 100,000, 10,000, or 1,000 amount demands. Brokers aggregate currency units into lots. This way, they provide Forex traders with safe access to trading platforms. They’re also providing them with leverage.
How does the value of a pip fluctuate?
Pip’s value fluctuates with a base currency funding of a trader’s account and the currency pairs that he’s trading. In the example where the base funding includes an American dollar while the quote currency is USD, one Pip will be:
- $1 for a Mini Forex trading account
- $10 for a standard account
- $0.10 for a Micro account.
Remember that regarding pairs, if the quote currency represents a foreign one, i.e., from another country, the percentage in point will differ from time to time, with that particular rate.
The main advantages of a Mini Forex Trading Account
There are several advantages of using a Mini Forex trading account. We’ll cover the essential advantages that attract numerous beginner and even experienced traders to start using mini Forex trading accounts, occasionally or permanently:
● They require a small amount of deposit, i.e., the upfront capital needed to get started in the market. The required initial deposit is around $100 and $500.
● Traders can trade one lot at a time. Instead, they are able to trade ten mini lots and have the possibility to customize their trade, with a much bigger control of risk.
● Retail Forex brokers allow extremely more leverage with the mini lots of traders. It’s crucial to understand that it minimizes risk on their end due to trade amounts lowering. Very frequently, Forex traders are able to utilize foreign exchange trading to get extra leverage available. However, they’ll still trade in 10 mini lots (units of 100,000).
Mini Forex Trading Account is useful for experimentation.
Did you know that a Mini Forex trading account is known to be useful for experimentation? For instance, if you are an experienced trader in the foreign exchange market, you can use one to test a new system or strategy.
To make it functional, a trader must treat the mini Forex trading account as a standard one. If not, the result would be skewed and inaccurate. Remember that larger amounts of leverage available are with greater customization of risk. That’s why a Mini Forex Trading account benefits numerous retail Forex traders more.
How much can you make mini forex trading?
Enthusiastic traders interested in mini Forex trading would want to know how much they can profit from it. As you’ve learned so far, Mini Forex trading includes using a foreign exchange account that allows beginner traders to enter currency markets with the mini lot (positions) and trading quantities.
The amount of money that mini Forex traders can earn depends solely on their abilities, techniques, experience, and effort. There is no universal answer to it. However, the best thing a beginner trader can get as advice regarding investing in Forex is that they invest only the amount of money they are OK with losing.
Change the narrative. Do not think about the possible amounts of money you’re able to earn with any accounts you wish to go for. Instead, focus on small steps, amounts of money you’re willing to invest, Forex trading strategies and tools you’ll potentially use, etc. If you’re trading wisely, educating, and informing yourself on a daily basis, you can expect great results!
Suppose you’re a motivated Forex trader interested in exploring new ways, techniques, strategies, and even accounts available that could help you achieve profits. In that case, it’s crucial to remember that a Mini Forex trading account helps you minimize losses.
It’s the biggest advantage of using mini accounts in the foreign exchange market. While gaining experience, you’re free to trade with this type of account without fearing losing large amounts of the invested money. Even experienced traders in Forex tend to use Mini Forex trading accounts since they’re a great test for new strategies and techniques, with a low risk of losing money.
There are numerous advantages to using these types of trading accounts if they’re used wisely. Be smart, gain relevant experience in Forex risk-free, and find the perfect trading strategy using these mini accounts in the first place!
Mini accounts in Forex are the best starting point after demo accounts. You can use them for some time to gain relevant experience and knowledge before proceeding to standard or macro accounts and much larger sums of money!
Whatever you wish to go for, good luck with achieving your Forex trading goals in the long run!