FOREX Mini Trading: Why Should I Trade Mini FOREX Lots?

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FOREX Mini Trading: Why Should I Trade Mini FOREX Lots?

Forex mini trading is just what it sounds like. The trading is done the same way as regular Forex trading, only you’re trading mini-lots, as little as a couple of hundred dollars at a time, instead of the thousands or tens of thousands normally traded on Forex. The chance for profit might not be as great, but there’s also a lot less at stake if you lose your deposit. It’s a good way to get your feet wet in the Forex market.

What is Forex trading?

Forex, or foreign exchange, trading is the buying and selling of currencies. Every day trillions of dollars worth of various currencies are traded back and forth all over the world, whether by huge banks and corporations, professional Forex traders, or individuals looking to make money or simply to convert their money to a foreign currency in order to take a vacation. It’s many, many times larger than all of the stock markets of the world combined.
What are the dangers of trading on Forex?
The foreign exchange market is extremely volatile. Prices change millisecond-to-millisecond, based on everything from the movement of huge amounts of money by the largest financial institutions in the world, to news events and natural disasters, to manipulation by companies and governments. Many fortunes have been lost trying to predict and trade on Forex.

So why trade on Forex at all?

Because many fortunes have been made on Forex as well. The volatility of the market means that if you can successfully predict what a currency is going to do, and you know the pitfalls that can befall you, whether by inherent unpredictability or artificial manipulation by large players, you can make a hell of a lot of money on Forex.

Where does Forex mini trading come in?

A regular Forex lot size is US$1000. And you can lose a lot in one trade. So unless you want to invest at least $10,000, it’s going to be very hard for you to maintain a regular Forex account. Forex mini trading solves this problem. It allows you to buy in for significantly less money, and still get a taste of the foreign exchange market.

Learn the ropes:

One advantage to this is that it’s a great way to start learning how the Forex market behaves. If you take your entire life savings and dump it into a Forex account without having any idea what you’re doing, you can become destitute in a matter of minutes. With Forex mini trading, you’re not risking your net worth on your first go-round. Instead of taking risks with thousand-dollar lots, you can be taking risks with $50 mini-lots. You can study your charts and analyze your results and get an idea of how the Forex market works.

Build confidence:

Another benefit to Forex mini trading is the ability to build confidence in your trading strategy. A good trading strategy is the absolute, unquestioned key to being successful on Forex. But sticking to a strategy can be a very high-pressure endeavour. You can have the best strategy in the world, but every now and then you’re going to go on a losing run. This can induce panic, and that can lead you to abandon your strategy when the best course of action can be to ride it out and wait until things turn around. Trading in mini-lots allows you to ride out those losing streaks without actually losing a whole ton of money, so you can see when things start to break the other way for you. Once you can see this happening and build confidence in your trading strategy, you’ll be way more comfortable applying that same strategy when you’re ready to start trading in full Forex lots.

How to get started:

Find yourself a good broker that allows Forex mini trading. Not all of them will, but most do. Keep a wary eye out for Dealing Desk brokers – that is brokers who will compete directly against you. There are hundreds of forums all over the internet that are specific to Forex trading. You’ll be able to get a good idea of which brokers are good and which ones you should avoid by reading what Forex traders have to say on them. Once you’ve found that, be sure to do a lot of research on how to trade on Forex, and what kind of strategies to use. There is no shortage of information out there – some good, some bad – that you can sift through. Just don’t go in blind, the Forex market can be very confusing if you don’t know a thing. Then all you have to do is get your money together and jump in!

Good luck, make lots of money!

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