The forex market has come a long way from where it started from. It is now considered to be one of the most established yet free markets in the world, not to mention that it is extremely popular as well. Every individual interested in foreign exchange trading quickly finds out the various benefits of trading in this market.
However, one thing that is inescapable about forex trading is that nobody can succeed in it without experience. The catch with the forex market, however, is that by the time a trader gains the experience that he needs his account has already been blown because of the high stakes in the market.
Fortunately, there is now a way through which traders can prevent this from happening to them. This is the use of forex trading mini accounts.
What Are Mini Accounts?
Mini accounts are similar to standard accounts with the difference that their minimum lot size is much smaller than the minimum lot size of standard accounts. While the smallest lot size of a standard account is 100, 000 units, the smallest lot size of a mini account is 10, 000 units.
This means that a trader needs to spend less money in the mini account as each pip is worth one American dollar as opposed to 10 American dollars. Here are some benefits of foreign exchange trading with mini accounts.
They Make The Market More Accessible
First of all, the fact that a trader can trade in the forex market with less money because of mini accounts makes the entire profession of foreign exchange trading much more accessible to the masses.
Mini accounts, in other words, have taken an elitist investment market and turned it into a market where the common man can play on equal footing with the high flyers.
They Help Gain Experience
As described earlier, experience is vital when it comes to foreign exchange trading. Gaining experience can be extremely difficult for a forex trader without a mini account.
For instance, if there were no mini accounts then new traders would have to go straight from demo accounts to standard accounts, which is a huge leap because of the kind of sums of money involved.
They Help Build Trading Confidence
Mini accounts are also useful because they help new traders gain confidence in their foreign exchange trading abilities because they further their learning process. As traders use various forex techniques and methods, their confidence in their own abilities grows. This is important because forex trading is an extremely confidence based profession which means that success comes from being confident.
They Can Be Used For Strategy Development
Mini accounts are also useful for testing foreign exchange trading strategies on a smaller level before actually placing them in a full-fledged live account. The reason why these accounts are ideal for developing strategies is that with each pip only being worth one American dollar, a trader can focus more on the performance of his strategies as against worrying about his financial situation.