Forex trading is one of the most viable options for someone who’s looking at bigger possibilities, bigger profit and greater ease in trading and business. Because of it’s high liquidity and speedy transactions, forex trading is becoming increasingly popular. While it’s traditionally for companies and corporations with big capital and experience in the field, it has also proven itself to be a good venture for an individual in the past few years. With as much as $300, one can open up a mini forex trading and can control a $10,000 currency position.
The key here is leverage. Because of leverage, a trader can trade in a commodity more than the money available in his account. Say with a $300 deposit, one could trade $10,000 or 1 mini lot. This kind of leverage is greater than stocks or day trading. Of course, it is recommended to start with a manageable leverage that allows greater flexibility in transactions.
Mini forex trading allows for lesser losses as the contract size is only 1/10th the size of a standard forex account which trades in 1 standard lot which is in $100,000 currency positions. There is also greater flexibility with regards to customizing trades and minimizing risks. Ideal for those with smaller capital, the trader has a chance of investing in more areas of the market with lesser risk as there is lesser capital to be lost. He need not be hesitant with his transactions as there is lesser capital involved.
With the same freedom enjoyed by regular forex traders, a mini forex trader can trade as many lots as he prefers. Although the standard trading size is 10,000 units, you are free to trade as much as upto 50,000 units or more. In this way, the trader also builds up his confidence in his trading skills at the same time slowly increase his profit and trading position in the market. He gets to manage his money before going for the higher stakes in regular forex trading with standard lots.
The trader likewise gets to develop a sound trading strategy without getting too emotionally attached in possible losses and profit. For practice, a newbie in forex trading can practice through paper trading. But in the real market, he can start small with mini forex trading. There is lesser capital involved and the practice builds up the trader’s trading gameplan for future explorations in regular, higher stakes forex trading.
An Example – On a regular account, a 20-pip stop loss is equal to a loss of $200. Since a mini forex account is just 1/10th of the standard forex account, this is amounting to $20 only. If you trade in units of 10,000, the trader is given more flexibility in terms of customizing his trades and lessening the risks of loss. Thus it is a great start for a beginner trader to test the forex market with less capital and build trading confidence with the knowledge that you are not risking a lot of money.
Mini forex accounts provide the wisest and best option especially for a beginner. It requires lesser capital, lesser emotional investment, and it slowly builds up your skills and confidence as a trader. In a way, it’s a way to prepare the trader for the higher stakes in the more advanced world of foreign exchange trading.
Remember using good Forex software will also help you save time. At XForex, they have developed a robust and unique web trading platform for foreign currency trading. XForex.com trading platform was developed by traders who understand the needs of a successful trader. www.XForex.com also assists your trading research by publishing world class daily, weekly and monthly currency market research amongst many other tools to help you become a better trader.