Trading with a micro forex broker account
Forex trading is a very lucrative form of trade as long as the trader has all the information they need to trade. Because forex trading is a very fluctuating trade, caution should be taken before one dives into a live FX trading account.
While most people still make use of demo accounts, some investors believe that the best way to test forex trading is by making use of a micro forex account. Micro FX trading accounts work the same as live accounts where real money is used to trade. The difference is that micro FX trading accounts require a low trading deposit as compared to the normal live trading accounts.
Micro trading accounts offer users a unique opportunity to train in forex trading without putting too much of their money at stake. While most newbies will prefer to use demo accounts where paper money is used, micro accounts stand a better chance of preparing them for the live account scenarios. Also, they get to learn a lot about the trader and their way of doing business since it is real money involved.
As much a demo account teachers newbies about the trade, it lacks the ability to train newbies about trading psychology which is only possible when one is using their money. With real money, one makes conscious decisions because they stand to gain or lose from their trade. This is why micro trading accounts are preferred than demo accounts to some extent.
Here are benefits associated with opening micro FX trading accounts
You get to sample a trade broker
The best way to test the services of an FX trading broker is by entrusting them with your money. You will get to learn about their money management ethics and also how good they are in executing forex deals and orders.
After you have identified the forex broker you would want to open a micro account with, you can go ahead and test out their various services you may be interested in using. Ensure that the broker is legitimate and that the services they offer are not less than what they promised.
You trade with real money
Most forex trading experts claim that demo accounts do not offer potential forex traders what they need to survive in live trading platforms. For this reason, most people lose their money as soon as they start trading in live accounts. With a micro FX trading account, newbies get to trade with real money. This offers them a realistic environment. By taking real-life risks, newbies get to understand the different emotional reactions involved in forex trading which sharpens their instincts when it comes to choosing the right deals for them.
It is important for new traders to get to feel and master the emotional reactions involved in live trading. They also need to incorporate this information in their day to day trading plans to minimize negative impact, if any. A micro FX trading account is a good way for traders to observe how they respond to trading emotions and correct them before they start trading with large amounts of money.
Trading smaller lot sizes
Trading in smaller lots means that the risk involved are also low. Forex trading newbies who opt for micro trading accounts get to only participate in trades involving small lot sizes on 10,000$ order per lot. This gives them the opportunity to adjust their position sizing in relations to money management. Trading in small lots also allows the trader to take in lower risks per trade. This is very beneficial especially in very volatile periods such as when there are important economic data releases and the period shortly after.
Once a trader is sure they are ready for higher risks, they simply upgrade their micro account to standard or VIP version by depositing additional funds. Upgrading means that they get to trade in the normal lot sizes and not the smaller lot sizes they were accustomed to.