If you are in a job with not much scope for advancing your career any further, you should be looking at forex trading as a viable option to increase your source of income. High liquidity and the possibility of making speedy transactions make forex trading attractive for people who have an inclination towards business. Earlier forex trading was the preserve of big companies and corporations with enormous capital and experience in forex trading. But now the situation is different. Individuals with capital as small as $300 could open a mini forex account and do forex trading.
Trading with a Mini Forex trading account is ideally suited for people who have just started in forex markets assuming they don’t wish to invest bigger amounts in a standard forex account. All that is required is a minimum of $300 to open a mini forex account. And when you open a mini forex trading account with a forex broker you could in effect be controlling a $10,000 forex currency position.
What is certainly appealing in a mini forex trading account is the leverage it offers. What this means is that with lesser capital you could open more forex trades. In other words, you are leveraging your position to open a bigger trading position with the limited money you have in your account. So with lesser capital and greater practice in a mini forex trading account, you could prepare the game plan for putting in larger amounts of money in a standard forex trading account.
Let us now take an example.
Imagine you made a loss of 20 pips trading in a regular account. That would translate to a loss of $200. However in a mini forex account the same loss would only amount to $20.
In any business there is an element of risk. That is not to say you shouldn’t be taking any risk. On the contrary as you go along you will discover that forex trading will turn out profitable to the trader who takes optimal risks. But don’t throw caution to the winds and take unreasonable risks.
A mini forex trading account requires lesser capital, lesser emotional attachment, and at the same time affords you the opportunity to build up your skills in forex trading and gain overall confidence as a trader. In short, a mini forex trading account prepares you to face the more advanced world of forex trading in a standard account.
For example, with a $300 deposit in a mini account you could trade a maximum of 6 mini lots. Obviously this is a kind of leverage you don’t get to see in the stock market. This is not to say that you use your leverage in one go. In a mini account you must start with a leverage that is easily manageable so that it offers you greater flexibility in transactions as you go along. Using your leverage wisely in a mini forex account is important or else you could just as well loose your money quickly.
First of all you are able to start trading with a small stake and at the same time you get to enjoy the regular benefits that a forex trader in a standard account gets. In other words you get the same software, the same charts and access to the same trading resources. As you get a leverage of 200:1 you could very well learn the nuances of forex trading in a mini forex account.
Since the contract size in a mini forex account is 1/10 th of the size of a standard forex account you end up making less losses if that should happen to you. In other words, you have greater flexibility in minimizing your risks. A mini forex trading account gives you a real chance in covering more areas of the forex market with lesser risks. It can help you shed your phobias of the forex market and trade unhesitatingly as there is lesser capital to be lost unlike in a standard forex account.
Although the standard trade size is 10,000 units in a mini forex account you could even trade 50,000 units or more. That way you can build up your confidence and your trading skills in the forex market slowly but surely. Most importantly you would learn how to manage your money before employing a higher capital in a standard forex trading account.
A mini forex trading account helps you develop a sound trading strategy without getting emotionally involved in the losses that might occur. As beginner traders you obviously do not want to stomach the risk that is associated with a standard lot in the bigger trading account. Therefore when you are trading in mini lots, you are dealing with 10,000 units of the currency rather than 100,000 and so these mini lots are an effective tool for learning to trade forex, without taking bigger risks.
By trading 10 minis you could trade the equivalent of one standard lot. Or if you want to trade a half of a standard lot, you can do so by buying five mini lots. This kind of flexibility you cannot have in a standard account. That is the biggest advantage trading in a mini forex account.