Best Forex Brokers for Trading Micro
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Advantages and Disadvantages of Trading with Micro Account via a Broker
What is a Micro Account?
It is a forex trading account that is one of three accounts that all forex brokers offer. Micro account is the smallest real trading account you can possibly trade with while the other two Mini Forex Account and Standard Forex Account require larger deposits. Micro account is made up of contracts for 1,000 units of currency. Although you can trade Lots on all three types of Accounts, their contract sizes differ. Below are the definitions are the three main types of forex accounts:
- ” Mini Account: This account allows investors to participate in trading with only 10,000 lots and with a small amount of money but with high leverage. “
- ” Micro Account: The lot size of a micro account is 1,000 units and this allows the investors to trade with an even smaller deposit. This gives new investors some basic experience of trading before they move to make bigger investments. “
- ” Standard Account: With a standard account, an investor can trade with a unit size of 100,000 lots. This account provides more benefits than micro and mini accounts. “
If we were to analyse the forex micro vs standard account, a standard lot size on a standard account is 100,000 units of currency which equate to roughly $10 a PIP (percentage in pip). As mentioned before Micro Account Lot trading size is 1,000 units which equates to one hundredth compared to the standard home lot size. A forex micro account pip value is roughly 10 cents a pip. This is why this account in particular is very popular for any beginner trader who has set foot in the trading market for the first time.
A highly leveraged micro account ensures that the trader is capable of handling any potential loss and managing risk. Depending upon the type of risk that the trader wants to take, a highly leveraged account ensures that immense gains are accounted for.
There is no minimum deposit limit for the micro account and helps beginner traders in trading safely. Long-term positions can be held by the micro account to handle short-term price fluctuations taking place in the market.
Why choose one?
There are many forex trading platforms that offer Micro Accounts. It is best to choose one that offers the lowest spreads and offers better service so when you are planning to upgrade to a standard account it has all the bonus features & services you want (‘XTB Broker’ has been voted the Best Overall FX & CFD Broker for 2019). A demo or practice trading account would not give the same experience to a trader that can be given by a live micro account. Depositing money in small amounts, and trading in small contact (lot) sizes is possible with the help of micro-accounts. The ‘emotion’ factor of winning and losing is not present when trading a Demo account however demo trading may be a better choice if you’re looking to apply and perfect your trading strategy and risk management. Many times you see traders who perfect their strategy and risk management on a demo account and when it comes to trading a live account they get emotionally unstable. The best recipe to culminate all three factors is to start trading with a Forex Micro Account.
What is the average deposit amount?
There is no minimum deposit amount as such, but even then it varies from $1 to $500 depending upon various brokerage firms that provide services based on their own terms and conditions. In a similar way, there is no average deposit amount that a trader is bound to maintain in the account. Risk Management is advised when you trading all different account types.
Demo v/s Micro- Analysed
Demo accounts are primarily developed for the purpose of individual traders who want to step into the market on their own and try their hands at dealing with the risk. This enables the trader to look at the market forces in various situations, analyse the ways in which the market behaves, observe and record the experiences and then take cautious or bold steps to earn a return on the market. However, Micro and Mini forex accounts allow individuals to enter the real market. Small investments done in real currencies then help the trader have a reality check done. Being in the demo means playing with a heart of a chicken, whereas the real world is shown only through the Mini, Micro or Standard accounts dealing.
Trading the Forex Market could be one of the most interesting ways to earn money. Trading forex is very much correlated to your personality and it personifies one’s perception to risk and reward. Micro Accounts were devised and created to allow new traders to get a taste of the financial markets and one’s appetite for taking calculated risks. It’s designed for a trader to create discipline and good trading habits and most importantly to gain continuity in profit taking. Only then it will offer a confidence builder and a stepping stone to go onto depositing & trading with larger capital (i.e. VIP & Standard Accounts).
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