Micro accounts and their importance in forex rates trading
A look at the use of micro accounts in forex rates trading
One of the most common misconceptions about forex rates trading is that it is only meant for the super wealthy. The beauty of the forex market as it is today is that almost anyone can open an account and start trading. Traders who do not have large sums of money to risk on trading can now easily open mini and micro accounts.
With the micro accounts you can either get to know the workings of your trading platform or even grow it gradually into bigger funds. As a beginner, you cannot expect to have the same amount of knowledge as an experienced trader would have. So a micro account will go a long way to ensuring that you build your knowledge base without putting too much on the line.
Anyone can afford a micro account. The college teacher, the student and even the retiree at home can all afford to raise the $100 required to open a micro account on most platforms, and the market conditions are exactly the same as seen on a million dollar account.
Benefits of the micro account in fx rates trading
- It can be regarded as a transitional phase in trading. This would allow any trader to practice what he learnt on a demo account with real money
- A micro account gives traders the perfect environment to test trading strategies. As you trade forex, a time would come when you may need to adapt to certain conditions in the market. If you do try the adaptation on a big live account, you will end up losing bigger amount sof money compared to what you could have lost if you tried it out on a micro account. Some traders may feel that a demo account is supposed to be used in trying out strategies, but not all demo accounts offer a real life trading environment.
- Do not forget that emotions and discipline contributes 90% when it comes to why traders lose their trading accounts. This is where the micro accounts have an upper hand against demo accounts. Even though the money is not huge you will always feel a level of pain when trades do not go to plan. So whatever you would have done on a 100k account, you will still do the same on a micro account. The same cannot be said of the demo account where most traders forget the log-in details after just a few days of trading.
- You can also use the micro account as a place to fall back when you need to take time out from serious trading. This time is normally when the trader has to sit back and rethink his trading strategy. Instead of going round in circles and wasting more money in the process, you can go on a $10 account to rebuild your self-esteem. A forex rates trader with wounded self-esteem is only inches away from blowing another trading account.
- A micro account is a good way to make money from the markets after investing very little. Look through the web and you will see different examples of traders who started off their forex trading experience with just $100 and they were able to turn it to tens of thousands. It doesn’t take much to achieve this. You only need to build the $100 to $1000 and if you continue replicating what you did, in a few years you will also become a success story.
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