What Is A Forex Mini Account And How It Can Help Your Forex Trading?

A Forex mini account is a smaller version of the standard Forex account. A standard Forex account requires approximately $2000 as the minimum opening requirement.  A mini account can be opened with as little as $400.

Mini accounts trade what are known as “mini lots”.  The pip value for a standard Forex account is $10, so if the market moves 100 pips in your favor your profit would be $1000.  Your pip value for a mini account, however, is $1  and if the market moves 100 pips in your favor your profit would be $100.

If you’d like to open up an account with even less money than a mini account there is also a “micro account”. A micro account can be opened for as little as $25. if the market moves 100 pips in your favor in this type of account your profit would be $10.

The smaller Forex accounts such as the Forex mini account are extremely handy for those getting started in Forex trading.  Although there are demo accounts available which require no real money to trade, a mini account can serve a unique purpose.  That purpose is that you will be trading with real money.  Trading with real money will help your trading more closely match what it will be like when you move up to trading a standard account.

You see, with a Forex demo account you really have nothing at risk. Truthfully, people will tend to “play” with “play money”. This is the reason so many beginning Forex traders do amazing things in there Forex demo account, but often do terribly when they start trading with real money in a standard account.

Your objective while trading your Forex mini account is to closely simulate what you will do when you step up to a standard account. You will have an opportunity to put your trading systems to the test while at the same time having a smaller amount of money on the table.

Make certain that you treat your mini account with the same level of respect and risk control that you will use with your standard Forex account. This will help you develop the necessary level of discipline to trade Forex successfully. When you are successfully able to trade your Forex mini account you can then step into a standard account with confidence.

What You Must Know Before Opening A Forex Account

In order to trade Forex you will need to open a Forex account with a Forex broker. There are wide range of Forex brokers available for you to choose from. Here are a few tips to keep in mind when opening an account with a Forex broker:

Check with the Commodities Futures Trading Commission — Before you consider opening an account with any broker check their status with the commodity futures trading commission to see if there are any complaints against them.  You can also find out about the financial strength of a variety of Forex brokers at the CFTC website.

Forex account types — Most brokers will offer the following account types.

Forex demo account — A practice account with “virtual” money. Forex demo accounts are offered by most all Forex brokers at no cost to the Forex trader. This is the perfect place to practice your trading without any financial risk.

Forex micro account — An account that can be opened with as little as $25 and where the pip size can be as small as $.10

Forex mini account — A mini account can be opened with as little as $400.

Forex standard account — A standard account allows you to trade where each 1 pip move is the equivalent of $10.  Standard accounts can be opened for as little as $2000.

Forex managed account — This account type differs from the previous ones in that you do not trade it yourself.  A Forex money manager is assigned to your account and decides how your account is to be traded and executes these trades on your behalf.

Now that we’ve reviewed some Forex account types let’s take a look at some other features that we might like to have as part of our Forex trading account.

Good Forex trading platform — A fast and reliable trading platform will make a world of difference in the speed and ease of executing your trades.  Check out a couple of different trading platforms then select the one that feels best to you.

Lowest possible Forex spread– Since the Forex spread will basically be our costs in the Forex trade it’s wise for us to choose the lowest possible spread to keep our transaction costs at a minimum.

Customer service — It should go without saying that we want to have a Forex account with the best possible customer service. Check the website of the Forex broker you are interested in to see how easy it is to contact them. Call them on the phone and ask questions. Email them questions and see how long it takes for them to get back with you.  These are just a few things that you can do prior to opening an account to give you an idea of how responsive the company is.

Fees — It may or may not come as a surprise to you, but there may be some fees involved with your Forex account that you aren’t immediately aware of. As an example, there are Forex brokers that charge you a fee for you to withdraw money from your account. Just make certain you know and understand the fee structure prior to opening an account.

We’ve covered some Forex account basics. Your next step is to check out the brokers that you’re interested in and contact them. If you can, open a Forex demo account with several different brokers to get a feeling for how their platform works. Keep good notes on the pros and cons of each Forex broker account you are considering. Once you’ve evaluated your notes you should easily be able to select the Forex account that’s right for you.

How A Forex Demo Account Can Help You Trade Forex

A Forex demo account is also called a Forex practice account.  This is usually a complimentary trading account given to potential clients by Forex brokers.  The account does not contain actual funds but “virtual” funds typically up to $100,000 in “play cash”.

There are many good reasons for opening a Forex demo account.

Use a demo account to test out your trading ideas.  There is no more cost-effective way to test out your trading ideas and methods than doing it for free.  Perhaps you have an idea or theory that you would like to experiment with before you start trading with real money.

Practicing your trading using a Forex demo account is a great way to eliminate potential mistakes.  You don’t want to click the buy button when you intend to sell and you don’t want to click to sell button when you intend to buy.

Your Forex broker provides a free practice account to allow you to experience what real time trading will be like using their Forex trading platform.  Forex demo accounts are an excellent way to compare the trading platforms of several different brokers. For instance, some platforms may allow you to use trailing stops whereas others might not.  If trailing stops are an integral part of your Forex trading system then you want to go with the platform that allows you to use them.

Your journey to profitable online Forex trading begins with a Forex demo account. You absolutely want to use one of these before you trade with real money.  Please keep one important thing in mind before you start using your Forex practice account.  Remember that even though there are not actual funds in this account that you should trade it as if there are.  Far too many beginning traders take much riskier trades in their practice account than they would in a real account. Don’t make that same mistake and you’ll be that much closer to trading Forex successfully.