Scrutinizing Currency Accounts: Mini vs Demo
Friday, October 30th, 2009The standard Forex account has a tiny version labeled as a Mini account. A typical Forex account requires approximately $2000 as the minimum opening provision. A mini account can be opened with as small as $400.
Mini accounts involves what are called as “mini lots”. Standard FX accounts have a pip value of $10 and so a market movement of 100 pips in a movement favoring you would effect a $1000 bonanza. In mini accounts, $1 is the pip value so progressive movement of 100 pips would accumulate $100 for you.
If you want a smaller account, there is even a “micro account”. For only $25, you can commence such an account. Here you profit $10 if the market moves favorably by 100 pips.
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The mini and micro accounts are used by beginner traders for their preference. Although there are demo accounts available which demand no real money to trade, a mini account can serve a unique purpose.
That objective is that you will be trading with real money. Using real money for trading tends to bring a closer match with your ensuing trading behavior with standard Forex accounts.
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At last, you risk nothing with a demo account. Frankly, people are sure to “play” with “play money”. Thus a phenomemon originates where newbie traders are pros at trading with demo accounts but lose weightily when they commence using standard accounts with real money.
Your task when trading your Forex mini account is to approximately imitate what you will do when you move up to a standard account. You will have an opportunity to put your trading skills to the test while at the same time having a smaller amount of money on the table.
Ensure that you handle your mini account with the same level of respect and risk control that you will use with your standard Forex account. This will give you the self restraint essential to succeed in forex trading.
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When you are successfully able to trade your Forex mini account you can then step into a standard account with poise.
Note: Foreign Exchange trading is not risk free, may result in significant losses, and is not suited for everybody.