Forex Mini Trading & Margin Requirements

What is Forex Mini Trading?

A forex mini account is a trading account approved to buy and sell a currency pair in trading lots of one tenth the normal size.  The standard forex contract sizes are 100,000 units.  A forex mini account allows a trader to trade in 10,000 units.  Each pip is valued at $10 U.S., so with a forex mini account you can trade as small as $1.   

Why Trade Forex Mini

Many new traders to forex will want to trade a forex mini account as it does not require a large deposit to open an account.  In addition, the forex mini account allows traders to trade in smaller sizes, which is critical since the leverage in the forex market is 100:1.  The key to trading is to keep your losses small and let your profits run.  Let's take an example.  If you are trading with a forex mini account and take a 50 pip loss, it will only cost you $50 bucks.  However, if you are trading with the standard 1 lot size, this 50 pip loss would represent a $500 dollar beating.  Like most new forex traders the average account size is less than $10,000.  So, this 50 pip drop would represent a 5% loss of the trader's equity in one trade.

Margin Requirements

Forex mini accounts allow for up to 200 to 1 leverage.  Many brokerage firms require that the account maintains 1/2% the value of the positions in order to maintain the position. 

Tim Ord
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