Forex Trading Mini Account
Forex trading mini account is a type of foreign exchange trading account that uses smaller lots than those which are used normally. The account is usually used by people who want to start trying out their hand in the foreign exchange market, but want to reduce the cost of their failures in order to enhance their chances. The Forex Trading mini account can thus be looked at as an introduction to a more general Forex trading, more or less a sandbox that traders can experiment in first.
The relative value of trading currencies shifts fairly rapidly and at times fairly drastically meaning that gains can be huge over a very short period of time but also losses can be huge as well. Since Forex trading generally revolves around the ability to control the initial investment to rather large ratios, the gains and losses can be even larger. A Forex trading Mini account helps traders rein in this likelihood somewhat, since the share sizes are smaller.
The trading platform of a mini Forex trading account is the same as that of a normal Forex account which construes to mean that any skill set gained when dealing with a Mini Forex account can easily be transferred to larger trades. A Forex trading mini account generally handles 1/10th of quantities of the value of the normal Forex account. The leverage in such a case scenario can be around 200:1, with a ½ of 1% of the total value of positions held being on hand for any given transaction. For example, a lot size of 10,000 base currencies means that only $50 end up buying a given lot.
A Forex trading mini account has safeguards in place so that you the trader can never stretch beyond your position. This is to say for instance that if the value of the currency goes down drastically, as it sometimes will, bringing you to only being able to protect your lots on margin, the account will automatically be closed but at a complete loss. This protects you as a buyer but at the same time it means that you can lose your whole initial investment on a single position if something went wrong. Note however that if the currency values shift severely in favor of the other direction, as it sometimes also will, the small initial investment on your mini Forex trading account can have a very large output in terms of profit.
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