A mini forex account is designed for those new to online trading and those with limited investment capital. Those with less than US$5,000 often favour mini accounts although regular accounts may be opened with a minimum of $2000-$5,000. The amount varies from broker to broker.
A mini forex account can be opened with a minimum of US$300-500 and this figure varies between brokers.
A mini forex account is intended to introduce traders to the excitement of forex trading while minimising risk.
- A mini forex account can be opened at anytime but many traders practice on a demo account first to test their trading strategies and techniques.
- Trading size is normally 1/10th the size of a regular account. Some brokers have smaller lot sizes. This reduces the risk associated with forex trading.
- Margin requirements differ depending on the broker. The NFA states the margin should be no less than 1% of the base currency traded. However not all brokers follow these guidelines. Some brokers offer margins as low as US$50 per lot on their minis.
- Some brokers have software in their Trade Stations that automatically calculates the required margin while others manually set the margin and vary it accordingly.
The CFTC is enforcing a 1% margin requirement for registered FCMs and their affiliates that only offer trading in the Forex Market.
The new NFA rule requires a minimum 1% margin at all time to maintain an open trade. (Note this may change from time to time so although we use 1% as the example at some stage in the future the margin maybe different. However using similar calculations one can easily calculate the new margins)Some deal stations automatically calculate this according to the formula and hence the margin requirements are continually varying.
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