For new forex traders, there is always the dilemma of when to enter the market, and committing a large sum of money for trading. Forex micro accounts enable new traders to enter the market, and trade the same way as professionals.
Who are they for?
Forex mini accounts carry more risks than micro accounts; therefore micro accounts provide the ideal platform for beginners. Micro accounts can be opened with very little money. Micro accounts can be opened with as little as 1000 units of the forex currency. Compare this with mini accounts which can be opened with a minimum of 10,000 units and standard accounts with 100,000 units.
However, even experienced traders use forex micro accounts when they want to experiment with a new strategy. They can then decide whether to employ the strategy or not at a larger scale, depending on success or failure. The quantities traded in micro accounts can be increased and decreased as required. Some experienced forex traders use all types of forex accounts to spread their risks and to get increased profits.
Micro Accounts vs. Demo Accounts
It may be argued by some that the benefits of a demo account offered by many forex websites are far greater than opening a micro account. However, since a demo account does not deal in real currency, the aspiring trader will not be exposed to real risk of loss. The exposure to risk is a feature of a micro account, and since the amount traded is small, the amount of lost money will never be too high. Of course, there is also the chance of making a real profit and refining one’s trading technique.
In fact, most successful foreign exchange traders have started out with micro accounts and have subsequently become giants in their field.
Learning How to Analyze Graphs and Charts through Micro Accounts
Micro accounts also provide a great opportunity for you to start interpreting graphs and charts in a real trading scenario. The micro account provides daily practice for traders, and by the time they decide to trade in higher volumes, they are already experts of analyzing graphs and charts.
Transitioning from a Micro Account to Standard Account
The transition to a standard forex account is also much easier once you have “burnt your fingers” in a micro account. That makes the individual appreciate the importance of making the right moves to mitigate losses and increase profits. It also gives traders the experience of the wild swings that are possible in the forex market, without actually making too much of a loss.
Even the forex trading community has greater respect for an individual who has practiced his trade in a live setting. You can expect to get tips from experienced forex traders once you have started trading in a micro account. These tips can be incorporated while trading on the micro account, and the benefits can be ascertained. In this way, the aspiring trader becomes fully ready to graduate to a standard account, and then trade with larger sums of money in the currency market.