currency trading faq

Forex Trading: Start Your Live Trading With A Forex Mini Account
By Michael Buffett
For traders just starting out in the complicated, fast-paced world of foreign exchange, the whole thing can be very daunting, not to mention expensive, if the investor's rookie mistakes lead to some bad trades. To help you get your feet wet without losing your shirt, many brokers offer what's known as a mini Forex account.


The term ‘mini' is sometimes referred to as a ‘micro' account. What were talking about in this article is an account that lets you trade 0.01 lot sizes.

Mini Forex works exactly the same as regular Forex trading. The only difference is that the investor can trade with 0.01 lot size trades and only has to put a small amount of money into it to begin with -- as low as $200 or in some cases $500 (Regular Forex accounts usually require many times that amount.)

The advantage of a mini Forex account is that it lets you learn the ropes of the Forex market through hands-on experience -- books, lectures and demos can only teach you so much -- without risking more than a couple hundred dollars of your own money. All trading is risky in that it carries with it the possibility of failure. But with mini Forex trading, the most you can lose is the amount you initially put into it.

There are psychological benefits with mini Forex trading, too. One of the reasons people lose money in the market is that they hang on to losing trades longer than they should, hoping the trend will reverse by itself and they'll win everything back -- and then the trend doesn't reverse itself until after the investor has lost everything. The all too human emotions of fear and greed get in the way of making sensible trades.

Mini Forex carries the same risk, of course -- but since the amounts are so much smaller, the mini Forex trader isn't losing as much if he does hang on to a loser longer than he should. It's a sort of practice area to let the investor train himself to make good trading decisions. Once you've mastered the art of trading, you can begin trading larger lot sizes.

Another benefit of mini Forex trading is that it can be utilized by people who don't want to make Forex trading their bread and butter but simply enjoy the thrill and competition of it. Forex trading can be fun, after all, but the fact that you're playing with large sums of money can make it more nerve-racking than enjoyable. Mini Forex accounts bring it back down to the level of enjoyment, like playing penny-ante poker with your friends. The game is the same, but the stakes are much lower, and thus the experience is less risky.

Now that you know about mini Forex accounts, go ahead and select a reputable Forex broker who offers mini (0.01 lot size) accounts and get started. Always start with a demo (non-live) account and only start trading with real money when you're comfortable that you have enough trading skill to handle a variety of market conditions.
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