Opening a mini Forex account, instead of a standard Forex account means you can trade smaller amounts, where the value of a pip will be $1, and greatly reduce the risk of a large loss. For example, a 10 pip loss on a standard trade of $100,000 would result in a loss of $100, whereas a 10 pip loss a mini Forex trading lot of $10,000 would be $10.
Many online Forex brokers will allow you to open a mini Forex account for as little as $250. Knowing that your losses are not likely to be great, will allow you to concentrate on adhering to a good trading strategy instead of watching your balance and worrying about a margin call.
Every Forex currency trader dreads a margin call. This means your Forex broker believes you do not have sufficient funds in your mini Forex trading account to cover your trading and he may liquidate all your trades.
If you are a beginner, the best way to protect yourself against a margin call is to only trade one pair at a time and use a small percentage of the capital in your mini Forex account. Most important of all, set a stop-loss order, then you are protected if the market moves against you.
Another of the advantages of a Forex mini trading account is that you still have all the benefits of a whole standard account, the trading platform, charts etc. If you are a beginner I personally think that a Forex mini trading account is the most sensible option. Too many people rush in, thinking Forex currency trading is a quick way to make an easy buck, they are the 95% beginners who lose on the Forex market. Protect your capital while you learn the skill.
Once you have developed your skill and hopefully made a profit, you can invest the profit by trading slightly larger lots, $20,000 instead of $10,000. Don't become over-confident, remember that profit comes from sound research.
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