Forex mini account is ideal for small traders
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The forex mini account is meant for traders who are either new to the forex market or want to start off with a low investment. They can open a mini account with as little as $250, as against a regular forex account which requires a minimum investment of $2,500.
The good thing is that owners of mini accounts don't suffer from any trading disadvantages. A mini account gives them the same benefits that the regular forex account gives to large traders, like free trading platform, small spreads, etc.
What's more a mini account also comes with the added benefit of leverage. A trader who has a mini account needs to deposit only $50 as the margin deposit for a $10,000 lot trade. This gives the trader a leverage of 200 to 1. Nothing can be more convenient than this because it allows a trader to trade more in a commodity than he has money in his account.
Another advantage is that a mini forex contract size is usually 1/10th the size of the standard contracts where lot sizes are usually 100,000. This reduces the potential loss of a trader. For instance, a forex trader holding a regular account will loose $250 if he sets a 25-pip stop loss. The loss for a mini account trader for a similar strategy will be $25 because the value of a mini lot is 1/10th of the standard lot.
Consequently, the smaller trader has more flexibility in customizing the size of the trades and managing the risk. Thus the traders who want to trade with less than $1,000 will do better business by opening a mini account. This will give them more flexibility in implementing different strategies and more staying power in the forex market since they will be able to take advantage of multiple trades without suffering debilitating losses.
Written by: Forex Expert
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