Forex Trading Mini Account

Mini forex trading - Forex Trading Mini Account Properly Explained



In forex, for the retail investor, things are quite different from banks and institutions who trade with each other 24 hours a day on a daily basis and the actual in millions of transactions occurring (usually 2-3 days later also known as the spot value) .

Investment banks will take out a credit check on each other, a bit like when a person applies for a mortgage. While the currency trades are made and completed in real time or a computerized system or telephone transfer of funds occurs several days later.

However, retail Forex trader, usually only trade brokers placed in books and no real transfer of funds occurs, although the retail investor is in effect trading banks almost the same quotes and spreads very similar these days.

So who is the Forex broker and what is their importance in forex answer to this issue? The retail investor places their trades through the middle of the margin broker. Trades are placed in real time via a merchant who receives the order from the investor, or to buy (long), sell (short) or near position.

Broker not only allows retail investors to trade forex live with banks, but also provides a system of power. This means that the broker only requires a deposit amount of currency one wishes to control, so long as the deposit is sufficient to cover any losses that might be incurred by the trade.

Take for example a 100:1 margin leverage given to you by the broker. This means that control $ 100,000 of real currency (1 lot), to provide security to the broker from just $ 1000. Each "pip" movement will cause the price of your equity to increase or decrease of $ 10. For example, if the currency pair you are trading the GBP / USD (also known as cable) and the price you are quoted is 1.8484, it means a UK British pound equals 1.8484 U.S. dollars.

So if you are controlling 100,000 units of currency (or will need to buy / sell forex trade with 1 lot ') In the above case, each time changing the price of 1 PIP - ie. 1.8484 1.8485 changes - to gain or lose $ 10 U.S.. This is because 0,0001 x 100.000 = 10 and opted to control 100,000 units of currency.

The amazing thing though is that as a small trader is only used measure of security deposited $ 1,000 in broker broker account and only the cost of setting up a small trade spread (no commission in many cases) of say 2-3 pips in which the broker makes his profit, regardless of whether your trade is successful or not. The chances of you losing the whole $ 1,000 in trade are very slim, especially if you use to manage risk and protect your capital losses by placing a "stop loss" - the theme from the scope of this article.

So what about mini-forex trading. It is a subject that many people seem to want to know. What is a mini-forex trading account? What is a mini forex trading? Mini forex trading is quite simple to explain in view of the above information. In the light of information told to you above all retail forex trading, using a mini account is just that!

Instead of trading a whole lot every time (ie, controlling 100,000 units of currency only 1000 units of the security deposit or trade for a profit of about $ 10 depending on the PIP forex currency pair you trading) you can use a mini account (sometimes it is quite different from the standard report) to trade part of the lot. This technically could be as little as 0.1 lot (ie $ 1 profit PIP) or half lot - $ 5 profit on PIP etc. This is the authors understanding of mini-forex-trading.

In conclusion, then, mini forex trading can be explained away by understanding what "a lot" is located in forex. Once you understand the forex trading in the "many" and that means a lot of "investment banker / exchange trader at the bank and the retail investor using margin leverage provided by the broker, you can understand that the mini-forex trading is forex trading mini-level. Instead of trading in multiples or very many (more than one) the retail investor uses a smaller deposit with the broker and trades for less profit, but with less risk, and do not need so much profit to begin with, for example, 0,1 or 0.5 very much. Some forex brokers these days would allow trading in currency deposit of as little as $ 500 in customer accounts.