Who Should Trade a Mini Forex Trading Account?
Yes, the word mini forex is still around. Here, Toby gives us some revision into the implications of trading mini accounts. Here's the article:
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
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 canít 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
Article Source: http://EzineArticles.com/?expert=Toby_Smitz
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