A mini forex trading account involves using a trading lot that is one-tenth the size of the standard lot of 100,000 units. In a mini lot, one pip of a currency pair based in U.S. dollars is equal to $1, compared to $10 for a standard-lot trade. Mini lots are available to trade if you open a mini account with a forex dealer and are a popular choice for those who are just learning how to trade.

Advantages of a Forex Mini Account
Mini forex accounts require a relatively small amount of upfront capital to get started. This can be ideal for those looking to learn about trading currencies but who do not want to put much money at risk. In many cases, a mini account can be opened with as little as $250 in starting capital. Even though it is an advantage to open an account with a small amount of upfront capital, it is also important to realize that using leverage could make things much riskier if the currency pair makes a small adverse move. This problem can be reduced by starting with more than the account minimum to make the amount of leverage more manageable. (For related reading, see Forex Leverage: A Double-Edged Sword.)

Traders with a forex mini account are not limited to only trading one lot at a time. To make an equivalent trade to that of a standard lot, the trader can trade 10 mini lots. By using mini lots instead of standard lots, a trader customize the trade and have greater control of risk. For example, if a trader wants to trade more than 100,000 units (one regular lot), but 200,000 units (two regular lots) is too risky, the trader using the regular account would not be able to trade. However, by using a mini account, a trader could make the trade by trading between 11 and 19 mini lots.

Retail forex brokers often allow a significant amount of leverage when using mini lots. This minimizes risk on their end by lowering trade amounts. Often forex traders will use mini forex trading to gain the extra leverage available, but still trade in units of 100,000 (10 mini lots.) The greater customization of risk and the larger amounts of leverage available make forex mini accounts advantageous for many retail forex traders. (For more, see Forex Minis Shrink Risk Exposure.)

  1. What types of accounts are available for forex trading?

    There are many different types of forex accounts available to the retail forex trader. Demo accounts are offered by forex ... Read Answer >>
  2. What methods can be used to fund a forex account?

    The forex market is where currencies from around the world are traded. In the past, currency trading was limited to certain ... Read Answer >>
  3. How is the value of a pip determined?

    Learn how the pip is used in the pricing of a currency pair in forex trading, and see how the foreign exchange market is ... Read Answer >>
  4. How does leverage affect pip value?

    A standard forex account has specific lots and pip units. A lot is the minimum quantity of a security that may be traded, ... Read Answer >>
  5. Where did the term 'pip' in currency exchange come from?

    Learn the definition of a pip, what it means in the scope of currency exchanges and how to determine its value. Find out ... Read Answer >>
  6. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ... Read Answer >>
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