Remember when you learned riding a bicycle when you were a kid? You started with a mini bike with training wheels, right? You enjoyed riding it while minimising the risk of getting out of balance.
Learning to ride a bike doesn’t mean that you should take all the risks at first try. Forex trading offers a similar story. It’s exciting, and with all the wealth it promises, you’ll surely want to ‘ride’ right away. But for the inexperienced ones, it’s the most dangerous way to start trading currencies.
Then what should one do if he wants to try trading firsthand?
A Forex mini account offers a solution to this problem by letting newbies trade Forex and shield them from the big risk that comes with it.
Mini Forex Account
A mini Forex trading account allows traders to have a bite-size of a standard lot of 100,000, by giving them the one-tenth of its size. When a trader uses a mini lot, one pip of a currency pair based on US dollars is equivalent to $1, compared to a standard $10.
What’s in it for Traders?
It offers a significantly less risk by allowing traders to start with an upfront capital between $50 to $500. With a relatively small cash to deposit, it will have minimal impact on traders if they ever experience setbacks.
Indeed, this is an opportunity to learn Forex trading – without risking too much money in the process.
The minimum deposit in a mini Forex trading is not fixed and depends on a Forex broker. But even if the required deposit varies, one thing remains certain: it will only require ‘mini’ cash compared to a full-fledged Forex trading.
The Mini Caution
Even an account like mini comes with risks. Risks may arise when traders decide to use leverage and their currency pair makes a small adverse move. But a trader can lessen its impact by starting outside the bracket of minimum deposits. Starting this way will enable traders to manage the amount of leverage more efficiently.
The Mini’s BIG Advantage
By using a mini account, a trader can make an equivalent trade to that of a standard lot. Instead of trading a full-sized lot, a trader can trade ten mini-slots instead. But does that make any sense? Yes, because by trading bite-sized lots, a trader can customise his trade. Aside from that, a trader will have an increased control over the risks that may come.
Good for Testing the Waters
If you think that mini accounts are just for newbies, you’re wrong. In fact, they are used even by the most seasoned Forex traders. This is because they prefer to try a new system or strategy without losing too much money. A mini account is a perfect way to do this as they can experiment without too much risk.
Conclusion
In trying out new things, you don’t necessarily have to jump right away and embrace all the risks. Whether you want to learn to ride a bike or try Forex trading, there are ways to experience it with minimum risks.
Also read: MAM and PAMM Accounts in Forex
