By: Charley Warady
One of the many nice things about trading Forex is that it is tailor made for all types of traders as well as all types financial commitments. With Forex micro accounts, new Forex traders can gain experience, build up their accounts and then trade on a larger scale.
The main purpose of having Forex micro accounts is to afford even small-scale traders the ability to trade like the high rollers. With only a couple hundred dollars, a prospective trader will be buying and selling Forex pairs the exact same way as anyone that is using a standard account. So, when a mini account is too much risk, the Forex micro accounts present the perfect solution.
Not Just Small
Forex micro accounts are not just for under-financed Forex traders. They also present opportunities for more experienced Forex traders to experiment. If an experienced trader doesn't have a demo account or wants to use a new strategy without maximizing risk, the Forex micro accounts are there for him. When the trader is comfortable with the new tactics, he can switch to his regular account at any time.
When Forex micro accounts are used in this way, there are a couple important things to note. Most importantly, micro accounts must be treated like real money. Although the amount of money comes out to around a dollar a pip, this amount should not be trivialized. You cannot realistically practice a new strategy when you treat the trading unrealistically. As a trader, your mindset must be that the micro account is representative of a regular trade. This is the only way for a fair judgment to be made.
Once a new trading strategy becomes more comfortable for the trader, the quantities can be increased until you're ready to move up. Perhaps the next move would be to move to a mini trading account without having to jump right into the regular Forex trading quantities. This knowledge is extremely comforting for many new traders.
Sometimes in a trader's career, it will be is necessary to step back every once in a while. Instead of trying to play catch-up after experiencing a losing streak, a strategy which is seldom successful, it is best to lower quantities and to slowly rebuild your funds. This will serve not only to build up your confidence, but also it will wind up building up your margin.
Forex micro accounts are great for those looking to make a habit out of making money. The quantities traded within Forex micro accounts can always be increased and decreased accordingly. The luxury is the ability to taper off substantially when needed so your margin doesn't suffer when you hit a rough patch. In other words, micro accounts may limit your profits, but they will also protect you against damaging losses.
Establish a profit rhythm by using all types of accounts, and you'll find the flexibility moving in between the types of accounts will become commonplace. There is no stigma associated with using Forex micro accounts. After all, profiting feels good, no matter where it comes from.
Think a Forex micro account might be right for you? Get started with an FXCM micro account now!