If you are beginner and want to start trading in the foreign exchange market, it is best to opt for a micro trading account so that you are able to minimise the risks and safeguard your investments. You do not need a lot of money to open a micro account and this is an ideal choice for small brokers. Most brokers allow you to open this account with a minimum deposit of AUD 100 – 500.
When you open a micro account, you are able to trade in lots of 1,000 compared to 10,000 lots of a mini account and 100,000 lots of a standard account. When you start trading with less initial capital, you may be able to manage the inherent risks associated with the forex market in an effective manner.
Advantages of a foreign exchange micro trading account
The foreign exchange market is quite volatile and if you are not careful, you may lose big amounts of money within a few trades. When you trade huge lot sizes, you are increasing your risk of trading substantially. When you choose a micro trading account to trade, you place a trade in smaller lots. This ensures that you do not suffer big losses.
If you are a beginner then the micro account may serve as a transition before you gain knowledge and experience and start trading with a standard account. After you have practised your skills with a demo account, it is best to opt for a micro trading account as you do not lose big even if the forex market moves in the opposite direction of your trade. When you start trading live, you may be able to keep the risk at a minimum when you choose this account.
You will be able to test different trading strategies as the amount with which you are trading is small and you do not lose much even in a bad trade. As the risks are lower you may be able to trade more frequently and this can help you understand the different market conditions better.
If you are on a budget and want to invest in the forex market then choosing a micro account can help you start the process of trading easily. It is also an ideal choice for traders who are risk averse and do not want to invest much in this volatile market.
Tips to choosing a good foreign exchange micro trading account broker
The broker with whom you open a foreign exchange micro trading account needs to be regulated and licensed so that you are assured of their reputation and reliability. All brokers who offer such accounts to traders in Australia need to be licensed and regulated by the Australian Securities and Investments Commission (ASIC).
The next thing that you need to focus on when choosing a micro account for trading is to check the platforms on which these accounts are opened. Apart from this, you also need to ascertain the minimum balance and leverage offered by the broker. When you become aware of all these aspects you may be able to make an informed choice.