When you open a Forex account, if you choose to go the route most investors do and start with a standard account, the capital required is much higher. Whether you have the capital needed to invest or not, if you’re a novice in the world of currency trading, it’s best to gain some experience with a smaller account first.
You can open a smaller account-known as a Forex mini account and you won’t be required to invest as much capital as you would in a standard account. There are two main reasons most new investors choose to open a mini account rather than a standard.
The first reason is because with a smaller investment, there is of course, a smaller amount of capital at risk. The second reason is because even with a Forex mini account, investors still get the same available tools as with a Forex standard account.
The Forex mini account will still let the new investor use the necessary charts as well as the benefit of the trading platform. Plus, another perk with the Forex mini is that along with the Forex standard account, the investor will also get the support he or she needs.
Even though the risk is smaller with a Forex min account, having that support is a way for the new investor to learn while he earns. When you trade in Forex, you trade by lots. A lot is the minimum that can be traded.
An investor cannot go any lower. In a Forex mini account, unlike a standard Forex account, the trading lots are smaller. With a standard Forex account, the lot is 100,000 units.
With a Forex mini account the lot is one-tenth of that 100.000 unit. Basically that means that for every $10 in a Forex standard account, it equals $1 in a Forex mini account. While the range from $10 to $1 might not seem that large, you have to understand you’re talking about units. These units are sometimes referred to as pips. Remember that a pip is a unit in Forex.
One great thing about trading using a Forex mini account is that the investor is not tied to sticking to only one lot at a time. By opening a Forex mini account, he can trade in multiple lots at a time. This multiple lot trading means that the investor is actually keeping his risk lower because his lots are smaller than they would be in any other type of Forex account.
