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Like anything in life, forex trading involves risk, but can be extremely lucrative. The key is to learn how to manage the risk, and one of the best ways is by starting small with a "mini" forex account The great thing about mini forex accounts is that they can be opened with as little as $250 and you can gain the experience and skills with very little risk. Here's the main difference between a mini and regular forex account. A regular forex account trades in 100,000 units, while a mini account trades only a tenth of that size, or 10,000 units per lot. In other words the mini account deals in one tenth the size of the regular account. This allows you to risk a tenth of what you would be risking in the regular account. Mini account trading does involve engaging in marginal trading. That means that you are making use of leverage, or in other words, borrowing money to be able to perform a trade without having to invest the full amount required for a single lot. The investment that you pay for out of your own pocket is called a marginal lot. For a mini account, the marginal lot for every $10,000 lot is $50, which is a 200 to 1 leverage. On starting a mini account with a minimum of $250, you are trading five mini lots with your investment. This level of of leverage appears quite high compared to other forms of trading, like stock day trading that only applies leverage of 4 to 1, But don't let the numbers scare you. Because forex move in very small increments, known as pips, a 1 pip move in a mini contract is only worth (on average) about $1. This is why I recommend that traders get their feet wet with mini accounts, it allows you to gain experience and develop discipline without the fear of losing sizable amounts of money. A mini forex account is the recommended investment choice for traders who want to invest $10,000 or less in currency trading.
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Ray Chong is a trader and author of 2 successful trading courses. Visit his website to learn how to trade for a living identifying and trading major market moves - www.tradinggap.com
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