Using a Forex Mini Account

Using a Forex Mini Account

When many new forex traders enter the market, it can be very easy to get overly excited about the prospects for new wealth and riches.  There is good reason for this mindset, as the forex markets make new millionaires every day.  But when we are first starting in our forex careers, it makes much more sense to start small and adapt a conservative mindset for these fast-changing markets.  This generally involves taking out a forex demo account in the earliest stages.  But once you understand the basic mechanics of the forex markets, it is time to jump right in and start using live money.

Live Trade vs. Demo Trading

When demo trading, no real money is at risk.  This gives traders the opportunity to learn the trading platform and to implemented trading strategies at certain price levels under live market conditions.  Trading brokerages like Swiss forex broker CornerTrader offer these types of accounts free for its clients.  But it is also important to trade using real money because this gives traders a new way of dealing with the market when there is real risk involved.  

How do you plan to react if the market turns volatile and prices work against you?  Using a demo account, you might not care very much and you might just let the market do whatever it wants.  But if you are using a real money account, you might take a more proactive stance and start to change your underlying positions.

Limiting Risk

So once you have developed yourself in using a forex demo account, it is generally a good idea to start consider using a forex mini account.  This will allow you to navigate the market under live conditions where real money is at risk.  The key here is that there is not all that much money being put at risk because you are using mini trade sizes.  These trade sizes are generally 10% of the size you would see in a standard account and in this way mini account will enable you to significantly reduce loss when you are actively trading.

Of course, limiting loss in the proper way is what will keep any trading account alive and healthy.  When we are looking to dominate in the forex markets, this is critical as it can be the difference between an account that has a long and successful history — and one that doesn’t.  All of these factors need to be kept in mind when newer traders are still starting their careers in the financial markets.