Mini Forex trading means that one is trading in the foreign market exchange, however it means that you, the trader, will be able to enter positions that are only one-tenth the size of a standard lot of 100,000 units. Thus, it is the one-pip change in a particular currency pair, in U.S. dollars.
I can hear the references to Gladys Knight and the Pips now as well as the snickers. Instead, keep in mind that a standard lot trade is $10 in U.S. currency. Thus it is the smallest price change that any given exchange rate will ever make.
Ordinarily currency pairs will be priced to four decimal places, so the smallest change that is possible to make is equal to 1/100th of one percent, which in money is equal to $0.0001. That is referred to as one basis point.
So, a mini Forex trading account is obviously used by traders who are training and yet still wish to deal in “real-time” money, and thus gain experience in the Forex market. By the way, you should understand that a standard lot comprises of 10 mini lots. For more information and tips about Mini Forex: Click here
Traders like dealing in mini lots, as this affords them tremendous control of their risk, as well as being able to actually customize the trade. One other piece of information you may need to understand all of this is that Canadian money is also traded in pips, and all that has been said about U.S. funds is applicable to Canadian funds as well.
Because mini Forex accounts are going to deal with so little money, and thus very little loss, if there’s to be any, mini Forex accounts are considered a teaching tool for someone who wishes to get their feet wet, but only wishes to risk $100 or so. A mini Forex trading account is a real account though, and you may even make a little bit of money with it!
A good part of dealing in a mini Forex account is the psychological part of it. For example when people start to lose big money in something, whether it’s a casino gamble or a stock account, it’s human nature to stick it out, to try to recapture that loss.
By investing in mini Forex trading you have so little to lose that if that “deal” goes South, you will not try to recapture that loss by sticking it out. You’ll write off that loss as a lesson learned and go ahead with your life, just as you should when you are dealing with more money in Forex investments.
Another reason why some people trade in mini Forex trading, is that it at least lets you participate in the exciting world of Forex trading, and some people definitely get a kick out of their participation, without risking their life’s savings with it.