Micro Forex Trading Account

Benefits of trading with a  Micro Forex Trading Account

When it comes to forex trading, we often come across demo accounts that usually start with $50,000 or more. In most cases, it is often said that in order to make a stable profit trading forex, a minimum starting equity of at least $10,000 is required, despite the fact that most forex brokers allow lower starting capital to trade.

For first time traders access to such large trading capital might not be possible. And even if you were an experienced trader with access to such large trading capital, you might want to check out the spreads and trading conditions offered by the broker before you deposit your funds.

A great way to test drive the forex broker’s trading environment is by investing a small amount in what is known as a ‘Micro Trading Account’. The micro trading account is also referred to a ‘Cent Account’. This gives traders a great way to test drive the broker in a real trading environment while at the same time not risking too much of money.

Typically a ‘Cent Account’ can be opened for as little as $1. When converted in cents, this $1 amounts to 100 cents in which the trading account is denominated in. Likewise, if you invested $10 in a ‘Forex Cent Account’ it would amount to 1000cents. With a decent leverage, this trading account set up can offer an almost same real trading environment but only in cents.

Demo or Real Micro?

The micro forex trading account allows traders to invest a very small amount converted in cents to trade in a real trading environment without risking too much. The micro forex trading account can be used by beginners or experienced traders for many reasons. For example you might want to test your new trading strategy but without wanting to risk a huge trading capital. A cent account can help in such cases as the risked amount is far less, while offering traders the benefit of trading in a live trading environment.

While a demo account is still usually preferred, traders know that the demo trading environment is very different to a real data feed. Commonly, factors such as slippage or price spikes as well as stop hunting and so on are not found in demo trading environment, which is one of the reasons that make a forex micro trading account more preferable.  (  ?  Read  our article Forex Demo vs Live account)

Besides the data feed, traders can also experience the overall service being offered by the forex broker which include

• general customer support
• trading conditions such as overnight rollover swaps or fees
• trading commissions or spreads
• slippage
• any restrictions on hedging

The leverage that one can set with a forex micro trading account is also flexible, meaning that depending on the amount invested in the ‘Forex Cent account’, traders can choose from a 1:10 leverage to as high as 1:1000.

The profits (or losses) that derived from trading the Forex Cent accounts are of course priced in cents. So for example, if you were to trade 0.1 lots in a micro forex trading account and you booked a 40 pip profit, this would translate to 400 cents, or $4 in profit.

Why should you consider a Forex Micro Account?

The reasons may vary but here are some of the most important reasons for a trader to consider trading the forex micro account.

• Ability to test the trading conditions including the different forex and commodities available for trading
• How much of spread or commissions are being charged by the broker
• How well are the orders being executed
• Is there any slippage that occurs with the broker
• General reliability and terms of service offered by the forex broker

Once a trader has gained enough familiarity with the forex broker, trading the micro trading environment, traders can then move on to depositing their trading capital being fully aware of the way the forex broker conducts their business.

Most traders tend to opt for a micro trading account after they have spent a considerable amount of time trading in the demo environment with the forex broker, which is a gradual step up in the process of opening a regular forex trading account.

Conclusion

Whether you are new to trading forex or have enough experience and looking for a good forex broker to trade with, consider trading with a forex micro account first in order to be familiar not just with the broker’s trading conditions but also to become familiar with the forex broker before you consider investing your trading capital.

Forex Brokers with Micro Accounts:

Here some Brokers that offers Micro Account type: Alpari. RoboForex, HotForex, Forex4you, InstaForex