Mini Forex Trading Account
Now days a mini Forex trading account is the most popular of the Forex Trading accounts. It is designed for traders who are new to the currency market or those who can't afford to open a standard account. It is the most popular type because it allows you to trade smaller contract sizes, 1/10 th the size of the normal standard account and leverage can go up to 200:1. You no longer need a lot of money to trade Forex and most brokers offer you a mini account starting at $250-$300.
Who should trade a Mini?
- If you are new to the currency market
- Account balance is below $10,000 - $15,000
- Want to try out "new" strategies under real time market conditions
Standard Forex Trading Account
A standard trading account is designed for the more experienced currency trader, these types of trades have contract sizes of 100,000 units, 10 times more than the size of the mini Forex Trading account. If you want to make a living Forex Trading, this should be the type of account you trade! Lots of money can be made BUT without good risk management, lots can be lost.
An example: A trader opens 1 standard lot EUR/USD($10/pip).
Q1 How much does the trader gain when the price moves 100 pips in his favor?
Q2 How much money does the trader lose when the price moves 100 pips against him?
Answer1
1 standard lot = $10/Pip
100 pips = $1000
Trader gains $1000
Answer2
1 standard lot = $10/Pip
100 pips = $1000
Trader losses $1000
Please Note: Most brokers allow you to trade up to 100 standard lots if your account size is big enough to handle that kind of trade.
Who should trade a Standard Account?
- Someone with an account balance above $10,000 - $15,000
- Experienced Forex Trader
- Someone who wants to trade for a Living
Non Dealing Desk "trade against banks" Account
Warning... this is for the professionals ONLY! This type of account allows you to trade against banks, trade inside the Bid and Ask and move in and out positions VERY quickly (scalping). At a later time I will get into what scalping is and how it is used. But for now just understand that unless you are a professional and really know what you are doing, you should look at one of the other types of Forex Trading accounts.
Who should trade a Non Dealing Desk "trade against banks" Account ?
- Professional traders ONLY
- Experienced Scalpers
