Understanding the Forex Mini Account and Micro Account
Forex trading involves buying and selling a wide range of currencies via different types of forex accounts. However, the forex market is one most liquid markets as individual investors can strive via big hedge funds as well as banks. However, without the right account, the forex trading process could be fuzzy. However, there are three types of real trading account, forex mini account, forex micro account, and a standard account.
When you decide to start forex trading, you will have to begin by registering an account. Moreover, a demo trading account is also available, which you can create before starting with a real account.
However, in this article, we will discuss ins and out of the mini and micro account.
What is a Forex Mini Account?
To start forex trading, a good amount of investment with proper strategy is needed. However, initially, you may want to check out a best forex broker with small trading. Additionally, a lack of experience can force you to start with a small amount. If these are the cases, a mini trading account comes in handy, which allows you to trade the forex mini lot.
Forex mini account is a trading account for forex (FX) that allows anyone to trade a currency at a smaller size, which is also called a forex mini lot. It usually reduces the risk while investing a small amount. However, mini accounts are not applicable for large investments as you will not get the expected benefits compared to the standard account, which is mainly for large investors.
For the initial start, the forex mini account is good enough to understand forex and trading basics.
Key Takeaways of Forex Mini Account
We have listed the top key points of a mini account so you can understand the basics of mini forex accounts.
- It is beginners friendly.
- Allows a smaller trading size, which is known as the forex mini lot.
- You can diversify your investment on different currency pairs and distribute your funding to find out the effective currency pair.
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Forex Mini Lot Sizes
Usually, mini lots attract novice traders as smaller contract sizes have the potentiality to reduce any unwanted risk while trading. Mini lots start from 10,000 lot trades, which signifies that the account holder must order in multiples of the base amount of 10,000.
Pros of Forex Mini Account
Mini accounts comprise a low risk. For example, you funded $10,000 in your account. With a mini account, you don’t need to put all your money on a single currency pair. Instead, you may distribute the whole investment or some of it to various currencies as per the base of 10,000 lots. So, this ultimately reduces the risk, and at the same time, you are able to test new strategies without taking a bold move.
The mini account doesn’t require a huge investment to open. It can be opened by depositing as low as $250 or less than that, which depends on the forex trading platforms.
The mini lots provide the flexibility to have a proper risk management plan for the traders.
Cons of Forex Mini Account
The mini account cannot generate a handsome amount of profit for you. For example, $10,000 worth of mini lots can only support $1 per pip movement while it is $10 for the standard account. So, this type of account is not feasible for expert traders.
Forex Mini Account Brokers
Although all the best forex brokers offer mini accounts for their broker as the brokerages need to attract a new customer. Additionally, the brokers also provide educational stuff to educate the newbies. However, most of the time, brokers don’t say anything about a mini trading account. You will understand by looking at their minimum deposit amount. Usually, mini account brokers offer the minimum deposits from $100. Moreover, forex broker reviews on different forums and communities can get you mini account brokers.
What is a Forex Micro Account?
Unlike the mini accounts, the forex micro account offers a smaller lot size as well as the investment. However, the forex micro account provides its service to the retail investors who are just stepping into the forex world. It is less risky than the mini account as you can invest as low as $50 or no minimum amount at all.
Though micro account forex is viable for the beginner level trader, an expert trader can use it too. Micro accounts are helpful for experienced traders, especially if they want to check out a broker they are willing to invest in.
Key Takeaways of Forex Micro Account
Following are the key takeaways you might check out at a glance.
- It is mainly for the retail investors, who are risk-takers, instead, want to stay on the safe side.
- It offers the smallest contract in the trading industry, which is known as a micro lot.
- Traders can initiate a transaction as low as 1,000 units.
Pros of Forex Micro Account
The lowest minimum deposit is what makes the forex micro account attractive. It is a step further than a demo account, where you can trade with real money, but on the smallest scale. Usually, there are no minimum deposit requirements for the micro account; some brokerage may want $50 minimum deposits rarely.
Since you are dealing with a smaller amount of trading lots, you will have more control over your transactions than other forex account types. Additionally, you can diversify in any way you want.
Micro account forex is really helpful for beginners or whoever wants to get an idea about the trading industry.
Cons of Micro Account Forex
Trading with the forex micro account will not get you the extraordinary profit that you can brag about. The profit is low as well as there are risks too, but the risk is minimum.
Forex Micro Account Brokers
To find the best brokers who offer a micro account, you may look at their initial deposit amount. However, the best forex broker in the world for micro trading doesn’t require any minimum deposit, while some brokers may want a $50 minimum deposit. So, if you find a broker that wants a minimum deposit of $50 or allows you to deposit as low as $1, that should be a micro account forex broker.
To provide opportunities for all types of traders, the top 10 forex brokers always offer micro account.
Forex Mini vs. Micro Account
Apart from the risks, the main difference between mini and micro-accounts is the lot size. You will understand the difference clearly below.
1,000 units= 10 cents/ pip = 1 micro lot
10,000 units= $1/ pip= 1 mini lot or 10 micro lots.
However, mini, micro, and standard accounts let the trader trade on $10/pip.
In the mini account, you can trade on multiples of 10,000 units, while the micro account allows trading on multiples of 1,000 units. Although the trade size is different, both MetaTrader 4 forex brokers and MetaTrader 5 forex brokers offer mini and micro accounts for all types of traders.
Conclusion
Usually, forex brokers use trading platforms to offer the forex mini account and forex micro account. But regardless of the account types, brokers offer leverage on all accounts.
However, our suggestion is to open a demo account first, no matter what account you are interested in. Also, it will not be wise to put your money if you are unsure about the forex account types. This piece of an article should give you an extensive idea of a mini and micro account.
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