Mini Forex Trading is great for beginners or novices in forex, and also to those who only have a little amount of capital in their pockets. It allows trading with real money, and it also minimizes the trader’s risks in the process. If the trader’s using a mini-account, the lot size of the trades is just a tenth of the actual lot size of a standard account, with the same broker too.
Now, beginners has three options:
(1) they can start out immediately with live trading in a standard broker account, wherein they can invest ranging from $1,000 to $5,000 (gives a great deal of risk for a novice and therefore not recommended);
(2) they can start with live/actual trading in a mini-account (In general, they’ll need around $250 for this, but there are always brokers who’ll let them start with a lower cost); and
(3) begin with a demo account as they pick up their trading skills without investing any real kind of money, then as they go on and continue in making good profits, they have the option to switch between a mini-account or a full brokerage account (depending on the capital that they have and their strategies, of course).
The advantage of the mini-account is that the user can choose the third option, which is the demo account. Why? It’s because it’s much safer to use fake money rather than real ones online for days, weeks or months! With a demo account, traders get to try out different kinds of strategies for trading. On the other hand, running a demo account for a long time can impose a false sense of security, as the user may be practicing with the strategies that may not be really effective when it comes to real trading.
So what this account does is that it teaches the trader to make profits out of medium to high risk strategies, but when the time comes that they get to face a real money situation, the probability is that they may lose confidence, resulting to poor decision-making and strategy-hopping, wherein they continually go from one plan to another. Loss of profits can’t be avoided in this scenario. For this, the expert’s advice is to start using a mini-account and use real money almost from the very start (use the demo account when dealing with a few trades to get familiar with the technical stuff of operating their own account and making trades). Through this, traders will learn the skills and techniques that will work for them in the long run.
Mini-accounts have disadvantages too. As the novices trade in small amounts, they are to pay more percentage terms to their respective brokers. Now, this will truly affect their profits negatively, which can have a great impact on their side. With this, those who use this kind of account will switch over to higher value trades whenever they have the necessary capital.
By nature, forex trading is a risky business: it gives the traders the possibility of having large amount of gains in a short-term basis only. For this, traders should invest the amount of money that they’re prepared to lose if things go wrong. For novices, using a Mini Forex Trading account is a great start, as it is the best way to know whether forex trading truly is for them or not.
Published by Forex Trading Skill
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