In trading, while there are those who can comfortably come up with a $10,000 or more trading capital, there are those who can only allocate small amounts for trading.
Forex trading was once only for banks, big companies, and wealthy investors. But the deregulation of the Forex market has opened doors for individual and small time investors to participate, creating a fair atmosphere in the market. Because of this, the daily Forex market turnover has ballooned to over $5 trillion over the years.
To accommodate everyone, no matter the size of their pockets, brokers offer different types of Forex accounts. These accounts are varied in terms of funding requirements, usage, and specifications.
We have previously discussed the different trading accounts offered by brokers (see Forex Trading Accounts: Which One Is For You?), but in this article, our discussion will focus on a Forex account that is widely used by beginner traders – Forex micro account.
Understanding Micro Account
A Forex micro account serves traders who don’t want to risk a lot of money. Forex micro lots are equivalent to 1,000 units of the base currency. Although beginners mostly use this type of account, more skilled traders also use a micro account to try new brokers or test out trading strategies in a real market settings.
The most obvious advantage of trading with a micro account is that it allows you to practice and gain live trading experience without the risk of losing large sums of money, while also learning the basics of risk management. This will be a good training ground before moving on to larger trades.
Most brokers provide micro accounts with a minimum deposit requirement as low as $50. You can expand this trading capital with the use of leverage to amplify your potential gains. But keep in mind that your potential losses can also be amplified.
