Forex currency trading is a large and complex investment market that takes time and effort to understand, apart from other existing trading markets. So why is it so popular, and with so many people wanting to get in? The answer: simply because if and when a trader makes successful transaction, it offers the chance of making a substantial amount of money at the shortest time possible, and with just minimal costs.
Mini-Forex trading market is very profitable way of trading since the lot size of a mini account is just one-tenth of a standard accounts lot size, so it gives the trader the chance to trade with lesser amounts with just a small initial capital fund, while controlling a larger currency position. An example would be if a $100,000 position is held in a 100:1 margin, the trader has only to put up $1,000, or 1% to control the position. In futures trading its about 5% of the total value of the holding, and about 25% for equities.
Every trading has its risks ” mini-Forex included. Even with its high profitability rate, chances of success are slim if a trader doesnt take time to learn the ropes of the business. Its important that you – the trader, have a clear understanding how a margin account works, especially with your account. So, if in any way there are some points or issues that are unclear to you, you should refer to the account specialist handling your account right away.
A trader can lose all the money in his account if he runs out of margin (the remaining balance not tied to a position), which may happen even before a margin call is made. Others have a stop-loss order to close out positions when this happens. But it’s always best to keep a regular tab on your account just to be sure to avoid risking losing one’s investment.
One of the glaring advantages of Forex trading over other trading markets is that its commission free, so you don’t have to pay exchange and brokerage fees. Forex currency trading is done on a world-wide scale through interbank marketing where buyers and sellers abound, and in constant touch. Without payments for matching up with any buyer and seller, and with larger spreads, its a much better investment market to get into.
Mini Forex trading is the better alternative compared to futures and commodities trading. With its risks involved, understanding the market and having a trading system that suits your trading psyche would be most helpful to having a successful and profitable career in the highly vibrant and volatile world of Forex trading – mini or not.