Mini Forex Currency Trading
The introduction of mini accounts has lowered the entry requirements for both potential forex traders as well as new forex brokerages. For traders, mini forex accounts are a great way to diversify even a smaller trading portfolio away from a basic stocks/bonds mix. Some diversify their portfolio even to forex futures or options, but generally, if you're considering opening a mini forex account and you're not a trading professional, you should discuss the potential risks with an account representative at the brokerage, generate a profitable trading system, and generate a full money/risk management toolset, before starting to trade FX derivatives markets with real money. Some of the lowest mini forex account size requirements are in the hundreds of dollars, not thousands or tens of thousands as they were before mini forex accounts. Because of the possibilities to leverage your trading capital greatly even with small trading account, the risks are proportionally higher as well (to lose all your capital). Therefore, money/risk management plays a very important role with mini forex accounts. Mini Forex Currency Trading - BrokeragesBecause even a smaller brokerage can effectively hedge the small accounts FX exposure in the actual inter-bank dealing market (with possibly tighter spreads and faster execution of trades), and because the brokerage actually makes the market for mini account holders, providing mini forex accounts has become a very profitable business for many brokerages. The downside of providing mini forex brokerage services to the masses is that the number of clients may become very large very quickly, and the trading profits may not cover the required investments to trading and back office infrastructure. Thus, providing mini forex accounts has potential rewards for brokerages, but definite risks as well. |