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Disadvantages of a forex mini account

By plrprousers | April 10, 2009

A new forex trader might be tempted to use a mini account with their automated forex software. This functions the same way as a standard account but the lot sizes are about one teneth the size. Most brokers offer forex mini accounts.

A new trader has a number of options:

1. From the outset use a standard account and trade live, using between $1000 and $5000. This would be very risky for a beginner and is not recommended.

2. Start live with a forex mini. Generally you need $250 for these accounts but you may be able to find brokers who will let you start with even less.

3. Start out with a demo account where you are picking up trading skills without investing any real money at all, then change to a live account when you are confident you are consistently making a profit.

Disadvantages Of A Mini Trading Account and online forex software.

When you are trading small amounts, you must expect to pay more in percentage terms to the broker. This eats into your gains. This will affect things in the long run and could mean the difference between realising a profit or a loss. So, most traders change to a standard account as soon as the have enough funds to do so.

However you choose to start, you will need to accept that forex trading is high risk by its very nature, like all investments that promise high gains in a short time. You should only invest money that you are prepared to lose if things go against you.

Also, you must choose the best forex software. This is essential if you are to become a trader. A good forex robot will mean you are aware constantly. You won’t have to be in front of your PC day in day out. The robot will take care of the technical analysis for you and enter and exit trades. If you do not the task will be too difficult. All other traders use software so if you decide not to you are at a real disadvantage.

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