Mini forex accounts or forex minis are typical accounts which are used by day traders who do not want to trade high volume of capital using contract sizes of 100,000 or more. A forex mini account typically offers contract sizes of 10,000 instead of 100,000 and margin requirements per contract of usually $50 or more instead of the $1,000 to $2,000 per contract required in a regular account.
High leverage and low margin in these mini forex accounts play a very important role in magnifying trading gains as well as losses. Mini forex trading accounts come with lower account minimums than of regular accounts, which enables small investors to day trade in foreign currencies.
Many currency brokers offer a wider spread for mini accounts and most of them do not charge any transaction fee for the trading. If the mini contract is 10,000 units of the base currency, then all of the extents are one tenth of a regular account with a lot size of 100,000 lot sizes. For example, the value of 1 pip for the EUR/USD on a mini contract is $1 dollar instead of $10 as in regular accounts.
Mini forex accounts are designed for new investors. The smaller trade size gives the traders the opportunity to trade live but with less risk or exposure to the market. If you are planning to open an automated or managed forex account with some brokerage firm it is advisable to open a mini account instead of a regular one as you can check the quality, reliability and functioning of the trading platform without incurring losses.
As the pip value on the mini forex account is just $1 per pip, you can focus on developing a disciplined trading strategy. For example, in a mini forex account a 50 pip floating loss is approximately $50 instead of $500 for a standard forex account. So the mini forex account makes it easier to develop a disciplined trading strategy.
In most of the mini forex trading accounts there is no limit in maximum trade volume and standard default trade size can be of 100,000 units that is equivalent to one standard lot.
This ensures that you become more experienced and build up confidence before you can increase the size of your positions to maximize profits. In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade.
The mini forex account offers all the benefits of a full-size forex account. You will receive the same real-time, streaming quotes as the regular accounts with same order execution and fill reports facilities. The account information will always be real-time and in most of the cases without any commission charged by the broker.
Since the pip values vary between the different currency pairs, a $10K account with a 25 pip profit on a mini forex account, the Euro trade is $25. A mini forex account, therefore, allows you to focus on technical analysis instead of the profit and exit at the right point.
It is ideal for new traders or investors with an account balances less than $10,000 to trade with a mini forex account. It provides more staying power in the market without over-leveraging your account.
For an initial deposit of $250, you can open and fund a live forex mini account with the facilities of bank wire transfer or fund transfer by credit card. Mini forex accounts are a great way to experience the excitement of currency trading while minimizing your risk.