Friday, May 29, 2009

Who Should Trade a Mini Forex Trading Account?

A mini forex trading account is designed for those who are new to forex trading or when the trading account balance is less then $10.000.

Mini forex account key points

- Only $250-$300 to open

- Up to 200:1 trade leverage

- 1 pip = $1 for EUR/USD and GBP/USD

- Smaller trade size

Mini forex account advantages

Build up confidence starting small

A trader can trade a mini forex account using 1 mini lot and building up lot size slowly when he makes profits in his account. A general rule is to trade ONLY 1 mini lot for every $1000 a trader has in account. For example, if an account is worth $5000, trader can take up to 5 mini lots.

Develop a forex trading strategy

Because on a mini forex account, pip value is $1 = 1 pip, trader can pay more attention on building a solid trading strategy without focusing on floating profit & Loss (P/L).
Most traders with a small account balance trading on a standard account will tend to base trading decisions on profit &Loss and not on their trading strategy, they are emotionally too involved.

Their account balance fluctuations are so important that they even can’t think developing a proper trading strategy.
Their account size is too small for the lot size they take and every small pip loss can lead to a painful loss in their trading account.

Such traders will tend to take profits (too) soon and cut losses too late because they always hope the trade will make a reverse and come back.

Consider the following example:

A trader has a $2000 trading Account.

When trading a forex standard account, a 37 pip loss will result in a $370 loss in his trading account or 18.5% of his account balance. When taking the same trade on a forex mini account, a 37 pip loss will result in a $37 loss in his trading account or 1.85 % of his account balance.


By starting with a Mini account- a trader loses only a small amount on every losing transaction making it easier to stick to a disciplined trading strategy, in the long rum, this will lead to much better trading results.

Toby Smitz - Daily Operations Mini Forex Trading

1 comment:

  1. Nice blog, great work, so informative for the investor. Please also check out my blog its also a blog with lots of information and advice for the investor. Drop me a comment too, lets work together. Thanks.