Mini Forex Account


If you are new to online trading, having limited capital then MINI forex account is for you! Many people prefer mini forex accounts if their investment potential is $5000 or lesser, although they can avail regular accounts with a minimum of $2000 to $5000. This is amount is subjective of the broker.

Having $300-$500 with you would mean you can open a mini forex account.

And the advantage is that you get introduced to forex trading, and its ways with minimum risk.

• A mini forex account can be opened anytime, but practice with a demo account is what is done first by traders to become familiar with their strategies and techniques.
• Size of trading is normally one-tenth of the regular account's size. But to reduce the risk involved, some traders have smaller sizes as well.
• Though NFA (National Futures Association) requires the margin to be no lesser than 1% of the traded base currency, this is very rarely followed by the brokers.
• Some manually calculate the margin and vary it too in accordance to the size of the trade, while some others seek the help of soft wares.

The CFTC (Commodity Futures Trading Commission) is enforcing a 1% margin for registered FCMs (Futures Commission Merchant) and their affiliates which offer trading in forex markets.

Now the new rule on the 1% margin is that that's the minimum for maintaining trade at all times. (This margin is time variant and could vary in future and this is just the present case, however the method for calculation should remain the same and this enables you find the new margin in a similar way.) Margin requirements are continually varying and some stations calculate this using the formula automatically.

Based on a 1% margin requirement

Example 1:

GBP/USD rate: 1.7442/1.7447

Account type: $10 000/lot

1% leverage: 10 000x0.01 (1%) =100units

With the GBP/USD, the margin required is:

1.7447 (GBP/USD) x100 (units of base currency GBP) = USD174 for each lot.

Example 2:

EUR/USD rate: 1.2326/1.2331

Account type: $10 000/lot

With the EUR/USD, the margin required is:

1.2331 (EUR/USD) x100 (units of base currency EUR) = US$123 for each lot.

• While using a mini forex account the margin is usually US$50 for each lot. But a trader can sustain a larger swing with $500 over his counterpart with a regular account with bigger margins. But on having a margin call, he will lose more capital. Now what’s margin call is the question. a margin call is said to occur when balance falls below a minimum requirement. This induces the broker to close all opened trades.
• The reason for the popularity of mini forex trade is, many stock investors are positioning themselves in the forex trade arena to spread the risk.
• It is alwyas better to compare mini accounts at different brokers and to find the best rates on overnight positions and their spreads as well!
• Pip always varies with different currency pairs. On a US$ 10,000 account, a 25 pip profit on a mini account, the euro trade is $25. But this being a small account, the traders can focus on the technical aspects rather the profits and exits. But on a regular scale, the same pip as stated above would yield a $250 profit.