In a mini forex trading account, it will use a trading lot that is one-tenth of the size of the average lot of 100,000 units. For the mini lot, a single pip of a currency pair based in U.S. dollars is equal to $1, equating to $10 for a standard-lot trade. Also, mini lots are available to trade if a trader opens a mini account with a forex dealer and is an excellent choice for people who are beginning to learn in trading.
The Advantages
Mini forex accounts need a relatively small amount of upfront capital to start, frequently a deposit of between $100 and $500. And the minimum will depend upon the forex broker a trader chose to use. This is ideal for people seeking to learn about trading currencies but does not wish to risk too much money.
While it is an advantage to open an account even with a small amount of upfront capital, it is also vital to think that using leverage might make things much riskier if the currency pair creates a tiny diverse move. Still, this problem can be diminished by establishing with more than one account minimum to make the amount of leverage more manageable.
Traders who open a mini forex account are not limited to trading one lot at a time. In making an equal trade to that of a standard lot, the trader can trade ten mini lots. And with the use of mini lots instead of standard lots, a trader can customize the trade and have greater control of risk.
For instance, if a trader wishes to trade over 100,000 units – one regular lot, but 200,000 units – two regular lots – is too risky, the trader with a regular account would not have the chance to trade. But, with a mini account, a trader could make the trade by trading within 11 and 19 mini lots.
Moreover, retail forex brokers typically let a significant amount of leverage when using mini lots. This reduces the risk on their end by lowering trade amounts. Most of the time, forex traders will use mini forex trading to get the extra leverage available. But still, they will trade in units of 100,000 – 10 mini lots. The more significant customization of risk and the more massive amounts of leverage available, it will make mini forex accounts advantageous for a lot of retail forex traders.
