Comparing Trading Full Sized Lots And Mini Lots And It’s Effect In Forex Trading
As compared to a regular (100k) account, a different leverage calculation is used in a Mini Account in Forex Trading. This means that your great is greatly reduced because trading in lots is done which are 1/10 the size (10,000 currency units rather than full sized currency lots (100,000 units).
Choose between what account is effective for you while trading in the foreign exchange market.
In a regular account, pips are worth $8 to $10 value while in a Mini Account they are worth $1 on average. Up to 200: 1 leverage is offered in a Mini Forex Account which means that you can trade lots of worth around $10,000 with only a $50 margin deposit but you’ll be assuming less total risk with smaller lot sizes that have correspondingly smaller pip values. For instance, a 20-pip loss on a 10,000 USD/JPY position in a Mini Account would be around $20, but on a 100,000 USD/JPY position, the same loss would amount to $200.
On each of the two accounts discussed above, here is an overview of leverage (Account size, Margin):
100k Regular Full Sized Account
- $2000 is the minimum required account deposit.
- $5000 to $10,000 is the recommended required account deposit.
- 100,000 unit currency lots are traded.
- 1% Default Margin per lot ($1000).
- If margin is 2%, leverage if 50: 1 or 100:1 at 1%.
Mini Account
- $300 is the minimum required account deposit
- $2000 is the recommended required account deposit.
- 10,000unit currency lots are traded.
- 0.5% Default margin per mini lot ($50)
- 200:1 is leverage.
The benefits enjoyed by full sized FX account holders such as the same state of the art charts, trading software, resources, tool etc can be enjoyed by mini account holders. Without excessively stressing on profits and losses, a forex trader can develop a rational and disciplined forex trading strategy with a mini account.
Discover the benefits you can avail on the account you choose for your trading in the forex market.
Furthermore, when a mini account is used, there is no limit to trade volume. You are not restricted to trading one lot although the standard trade size is 10,000 units. This means 50,000 units, 10,000units and 200,000units can be traded. Hence, people can increase the size of their positions to build up profit as they become seasoned and develop confidence. Also, in terms of customizing the size of your trade, more flexibility is possible with the trade size of 10,000 units. You can have better risk management with the ability to customize the size of the trade.
For eliminating the anxiety and distractions associated with large profits and lose swings, people can develop confidence to be successful currency trader as in a Mini FX account there is less capital at risk through which a disciplined trading methodology can be developed.
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