If you are new to the world of Forex then you are probably considering opening a Mini Forex to get started. This article will tell you exactly how a mini account differs from a regular forex account.
The details may vary slightly from one broker to another, but basically the main differences reflect the fact that a mini account is the same as a normal account, except on a smaller scale.
Normally, the minimum amount needed to open a regular account is about $ 2,000 to $ 2,500. A mini account usually can be opened with just $ 250. Some brokers will accept less, and recently looked at a site requires only $ 25. This makes the Forex market accessible to people with only a small amount of money at risk.
A Mini account trades in lots of 10,000. This means that in the example above, only $ 0.50 have been changed to a point, so it made only $ 5. The minimum amount to trade in a regular account is $ 1 a point, and a mini account is about $ 0.10.
If the trade had gone differently, and the pound had fallen to $ 1.5090, then it was 5 points, which at $ 5 a point in a regular account would have been $ 25 and $ 0.50 a point a mini account would have been only $ 2.50.
The utility of a mini account, as opposed to a regular account of currency is that it protects you from losing much money, so you can start with a small amount. Of course, their profits are also smaller, but the idea is that once you become more proficient you can go to a regular account and trade with larger amounts.
Spreads are not included in these example but they illustrate the essential differences.
Another difference in these two types of account is the amount of leverage, although this can vary depending on the broker. Usually you will find that the influence allowed on a mini account is up to twice the amount allowed in a regular account, which defeats the objective of the mini account, ie to keep the losses. This means you can run the risk, in some cases up to 400 times the amount of money in your account.
If you have succeeded in your demo account, which must be opened first to practice trading without risking real money, you may want to start trading with real money in a mini account. Moreover, if you have not succeeded, then you may consider trading in other financial markets, though lacking the excitement and adrenaline of the currency, can be much more profitable in the long run.
Finally, you need to remember that forex is a serious job but not a get rich overnight scheme.
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