Sunday, 1 July 2012

Forex Micro Account

Choosing between a forex micro account will depend on the amount of money you want to invest in your trading upfront. These days you can open a micro account with just $25, while a mini account usually requires ten times that amount, at least.

The micro lot size:

The size of a micro lot is 1000, so with a $25 account we are talking about 400 to 1 leverage. This equates to high risk and makes it likely that your account balance won't last very long.

The only way to trade under these conditions is to use a proven system where large losses are few if any. There are systems with a 90 percent win rate, but it's the 10% in losses that can wipe you out quickly with such high leverage.

Why bother with a mini or micro account?

Still there are some practical uses for these smaller accounts outside of necessity. Some traders have more money and could open a larger account but choose to start small. You can also use a micro account to turn to when you really want to enter a trade that's outside your system but you can't resist for some reason. You could fund it with money that you can afford to lose, keeping mind you probably will, and fast when you decide to forgo your system and play hunches!

A micro or mini account can also be useful if you want to learn a new system using real funds instead of a demo account. This can be a good idea because it eliminates the over-confidence you can get caught up in when trading with play money.

Just keep in mind that it can go both ways, and losing is losing, no matter what account. So when you lose some or all of your small account, do your best to keep it in perspective so your confidence isn't lost as well.

When you start seriously trading the forex, your confidence in yourself is the most important factor. You need the right account size, and the right system for you, combined with a belief in your ability to trade successfully. And the understanding that every trader experiences losses. It's part of the package and to think otherwise makes forex trading nothing more than a fool's game.

If you ultimately want to trade the currency markets full-time, keep in mind that every choice you make as you begin is laying the foundation for your future results. If you take things seriously and form good habits from the start, your chances of winning more and losing less are more likely. As you know if you have ever tried to break an unwanted habit, it can be nearly impossible, so make your early trading decisions with care and they will serve you well.

Take enough time to build your trading foundation on a solid understanding of the basics, and choosing whether to open a forex mini or micro account will be obvious to you.

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