This is something I've been wanting to write and share about for a long time but it's only now that I've brought myself to share and I wonder why. Oh well ...A lot of newbie traders are told each day on the web via advertising that forex is the fastest track to wealth (and I'm not denying that to be true ... but that's only for the elite few). And the people that are responsible for getting this message out are the scammers and some of the forex brokers out there unfortunately. Here's the thing though, forex is extremely lucrative for these fx brokers.
Wanna know why?
Because ... they strive to get lots of new people hooked up and get started with forex trading via mini accounts. Mini fx accounts offer crazy leverage and allow one to get started with live forex trading for either $250 or $300 (which is a measly sum for most).
With such a low amount, it is much more easy for someone who wants to get started to actually get started doing so.
With mini accounts, each pip you make or lose results in a dollar gained or a dollar lost. Now think about for a sec, with just $250 or $300 in your mini account, just how many pips can you afford to lose before you wipe your account dry?
Yep, it's either 250 or 300 which isn't a lot actually when you think about it. If you lose 25 pips for each bad trade, it takes you just 10 trades to clean up your account. Bad odds for you, great profits for the broker.
Bottom line ... Mini account = Fast Track To Failure
Article source http://www.articlesbase.com/authors/kelvin-chan/56976.htm
Thursday, December 11, 2008
Wednesday, December 10, 2008
Forex Mini Trading - Learn How to Profit Now!
Oftentimes false impressions and misapprehensions could lead you to unfavorable outcome. Just because you have dealt so much with what others tell you or with what you hear about, you provided a quick judgment until such time you found out that all these are just delusions and misinterpretations. This is how the forex market is perceived until the advent of forex mini trading surfaces.From the name itself, you will most likely generate a single inkling that this is something that requires not so much from you and from your investment. A lot of people thought that forex trading comes with hefty and bigger assets, well if you think this is really true, you definitely are leading a wrong path. Big capitals and outlays is not the requisite of the forex market and the forex mini trading is the idyllic case in point.
Forex mini trading only requires lower capital, it never go beyond thousands of dollars since you only need to have cash at hand amounting to $300 dollars. Yes, this is the amount that you need to start of with your trade and most traders have come out of the market bearing greater profits with a small investment given a shorter duration of time. The next factor that provides advantages in getting into the mini trading is the concept that you can have greater leverage given a small fund as capital. This means to say that when you own a stock amounting to $2000 then your leverage can be in between $1500 to $1750 leverage. Therefore, if you give just a small scope or margin to your mini account then there are greater tendencies that your forex mini trading account can acquire a money-spinning and profitable one.
Pips are also another facet of the mini trading and a lot of traders choose to trade in pips. As the denomination they provided is small there will be greater probabilities where traders can open up opportunities and discover other lucrative facets in the world of trade. The trade of pips also provides assurance for traders that if the dealings become tougher, their losses will not be that big. Since 1 pip is equivalent to $1 dollar the possibilities of a floating loss will not be that difficult to bear.
Another advantage of going by forex mini trading is the concept of trading for small units. When you venture in a mini trading, the only required units are 10,000 weigh against the standard ones which will provide you with almost hundreds of thousands of units. This small trading size gives you lesser risk particularly for those beginner traders. Once you become accustomed with all the dealings it wouldn't be hard for you to move towards 20,000 to 30,000 units and so on.
Forex mini trading is absolutely a good way for novice traders and others who have little investment and capital. There is also software available in creating your mini account that is comparable with the regular one. Mini trading only proves that no matter how small your assets are, when it comes to forex trading all these are profitable and productive.
Article source http://www.articlesbase.com/authors/john-callingham/74537.htm
Forex mini trading only requires lower capital, it never go beyond thousands of dollars since you only need to have cash at hand amounting to $300 dollars. Yes, this is the amount that you need to start of with your trade and most traders have come out of the market bearing greater profits with a small investment given a shorter duration of time. The next factor that provides advantages in getting into the mini trading is the concept that you can have greater leverage given a small fund as capital. This means to say that when you own a stock amounting to $2000 then your leverage can be in between $1500 to $1750 leverage. Therefore, if you give just a small scope or margin to your mini account then there are greater tendencies that your forex mini trading account can acquire a money-spinning and profitable one.
Pips are also another facet of the mini trading and a lot of traders choose to trade in pips. As the denomination they provided is small there will be greater probabilities where traders can open up opportunities and discover other lucrative facets in the world of trade. The trade of pips also provides assurance for traders that if the dealings become tougher, their losses will not be that big. Since 1 pip is equivalent to $1 dollar the possibilities of a floating loss will not be that difficult to bear.
Another advantage of going by forex mini trading is the concept of trading for small units. When you venture in a mini trading, the only required units are 10,000 weigh against the standard ones which will provide you with almost hundreds of thousands of units. This small trading size gives you lesser risk particularly for those beginner traders. Once you become accustomed with all the dealings it wouldn't be hard for you to move towards 20,000 to 30,000 units and so on.
Forex mini trading is absolutely a good way for novice traders and others who have little investment and capital. There is also software available in creating your mini account that is comparable with the regular one. Mini trading only proves that no matter how small your assets are, when it comes to forex trading all these are profitable and productive.
Article source http://www.articlesbase.com/authors/john-callingham/74537.htm
Tuesday, December 9, 2008
Forex - Understanding The Difference Between Mini-account & Standard Account Forex Trading
In forex, for the retail investor, things are totally different than the banks and institutions who trade with each other 24 hours per day on a daily basis and in the millions with actual transactions occuring (usually 2-3 days later also known as the Spot Value).Investment banks will take out a credit check on each other, a bit like when a person applies for a mortgage. Whilst currency trades are placed and completed real-time either by computerised system or telephone, the actual transfer of funds happens a couple of days later.
However, with the retail forex trader, usually, the trade is only placed in the brokers books and no real transfer of funds occurs, although the retail investor is in effect trading with the banks at almost the same quotes and with a very similar spread these days.
So who is the forex broker and what is their relevence in the answer to this forex topic? The retail investor places their trades through the environment of the margin broker. Trades are placed in real time and via a trader who receives the order from the investor, either buy (long), sell (short) or close position.
The broker not only allows retail investors to trade forex live with the banks, but also provides a system of leverage. This means that the broker only requires a deposit to represent the amount of currency a person wants to control, so long as the deposit is enough to cover any losses that might be incurred by the trade.
Take for example a margin leverage of 100:1 given to you by the broker. This means to control $100,000 of real currency (1 lot), you need to provide security to the broker of only $1000. Each 'pip' movement in price will cause your equity to increase or decrease by $10. For example if the currency pair you are trading is GBP/USD (also known as cable) and the price you are quoted is 1.8484, this means 1 UK pound sterling is equal to 1.8484 US dollars.
So, if you are controlling 100,000 units of currency (or you have placed a buy/sell forex trade of '1 lot')in the above case, each time the price changed by 1 pip - ie. 1.8484 changes to 1.8485 - you gain or lose $10 US. This is because 0.0001 x 100,000 = 10 and you have opted to control 100,000 units of currency.
The amazing thing though is that you as a retail trader have only used a security measure of $1000 deposited with the broker in your brokering account and the only cost for placing the trade is a small spread (no comission in many cases) of say 2-3 pips in which the broker makes his profit regardless of whether your trade is successful or not. And the chances of you losing that entire $1000 in the trade are extremely slim, especially if you use risk management and safeguard your capital from losses by setting a "stop loss" - a topic out of the scope of this article.
So what about mini-forex trading. It's a subject which many people seem to want to know about. What is a mini-forex trading account? What is mini forex trading? Mini Forex trading is quite simple to explain given the above information. In light of the information that is told to you above about retail forex trading in general, the use of a mini-account is exactly that!
Rather than trading 1 whole lot each time (ie controlling 100,000 units of currency using only 1000 units of security or deposit to trade for a profit of about $10 per pip depending on the forex currency pair you and trading) you can use a mini-account (sometimes this is entirely indistinguishable from a standard account) to trade a fraction of a lot. This could technically be as little as 0.1 lot (ie $1 profit per pip) or half a lot - $5 profit per pip etc. This is the authors understanding of mini-forex-trading.
In conclusion then, mini forex trading is explained away by understanding what a 'lot' is in forex. Once you understand that forex is traded in 'lots' and what '1 lot' means to the investment banker/forex trader in the bank and to the retail investor using margin leverage provided by a broker, you can understand that mini-forex trading is forex trading on a mini-scale. Instead of trading in lots or multiples of lots (more than one) the retail investor uses a smaller deposit with the broker and trades for less profit, but less risk as well and not needing so much profit to start out with, eg 0.1 lots or 0.5 lots. Some forex brokers these days will allow currency trading with a deposit of as little as $500 into a customers account.
Article source http://www.articlesbase.com/authors/sam-beatson/5818.htm
However, with the retail forex trader, usually, the trade is only placed in the brokers books and no real transfer of funds occurs, although the retail investor is in effect trading with the banks at almost the same quotes and with a very similar spread these days.
So who is the forex broker and what is their relevence in the answer to this forex topic? The retail investor places their trades through the environment of the margin broker. Trades are placed in real time and via a trader who receives the order from the investor, either buy (long), sell (short) or close position.
The broker not only allows retail investors to trade forex live with the banks, but also provides a system of leverage. This means that the broker only requires a deposit to represent the amount of currency a person wants to control, so long as the deposit is enough to cover any losses that might be incurred by the trade.
Take for example a margin leverage of 100:1 given to you by the broker. This means to control $100,000 of real currency (1 lot), you need to provide security to the broker of only $1000. Each 'pip' movement in price will cause your equity to increase or decrease by $10. For example if the currency pair you are trading is GBP/USD (also known as cable) and the price you are quoted is 1.8484, this means 1 UK pound sterling is equal to 1.8484 US dollars.
So, if you are controlling 100,000 units of currency (or you have placed a buy/sell forex trade of '1 lot')in the above case, each time the price changed by 1 pip - ie. 1.8484 changes to 1.8485 - you gain or lose $10 US. This is because 0.0001 x 100,000 = 10 and you have opted to control 100,000 units of currency.
The amazing thing though is that you as a retail trader have only used a security measure of $1000 deposited with the broker in your brokering account and the only cost for placing the trade is a small spread (no comission in many cases) of say 2-3 pips in which the broker makes his profit regardless of whether your trade is successful or not. And the chances of you losing that entire $1000 in the trade are extremely slim, especially if you use risk management and safeguard your capital from losses by setting a "stop loss" - a topic out of the scope of this article.
So what about mini-forex trading. It's a subject which many people seem to want to know about. What is a mini-forex trading account? What is mini forex trading? Mini Forex trading is quite simple to explain given the above information. In light of the information that is told to you above about retail forex trading in general, the use of a mini-account is exactly that!
Rather than trading 1 whole lot each time (ie controlling 100,000 units of currency using only 1000 units of security or deposit to trade for a profit of about $10 per pip depending on the forex currency pair you and trading) you can use a mini-account (sometimes this is entirely indistinguishable from a standard account) to trade a fraction of a lot. This could technically be as little as 0.1 lot (ie $1 profit per pip) or half a lot - $5 profit per pip etc. This is the authors understanding of mini-forex-trading.
In conclusion then, mini forex trading is explained away by understanding what a 'lot' is in forex. Once you understand that forex is traded in 'lots' and what '1 lot' means to the investment banker/forex trader in the bank and to the retail investor using margin leverage provided by a broker, you can understand that mini-forex trading is forex trading on a mini-scale. Instead of trading in lots or multiples of lots (more than one) the retail investor uses a smaller deposit with the broker and trades for less profit, but less risk as well and not needing so much profit to start out with, eg 0.1 lots or 0.5 lots. Some forex brokers these days will allow currency trading with a deposit of as little as $500 into a customers account.
Article source http://www.articlesbase.com/authors/sam-beatson/5818.htm
Monday, December 8, 2008
Learn By Hands On Forex Trading: Demo Accounts vs Mini Accounts
If you are new to Forex, you are likely overwhelmed by the sheer amount of information you are finding about currency trading. Although the concept of trading the currency markets is simple to understand, the actual trading methodologies and understanding of how, why and when trades are executed can be hard concepts to grasp and fully understand. If you aren't aware by now, forex trading is not without substanial risks.There are several schools of thought on how a new trader should progress from learning to actual live trading. In this article we will discuss the best ways for a new trader to learn how to trade the forex and make their first live trades.
To start out, I can not stress enough the need for hands on trading. This is why you will often hear it recommended that new traders start trading with a demo account. What is a demo account? Many online forex brokers offer something known as a "demo account" which is a fake account that you can trade until you feel comfortable trading your own funds. Demo accounts behave just like real accounts, the only difference is that the money you are trading is not real and no actual trades are ever executed.
The purpose of using a demo account if you are new to Forex trading is to get you comfortable making trades and to help you become familiar with the brokers trading platform. You can cut your proverbial teeth so to speak without risking any of your own funds. This makes demo accounts good for a brand new trader who just wants to see how trading works. There are some drawbacks however to using demo accounts to learn Forex trading.
The biggest downside to using a demo account is that you will likely only be able to trade standard size accounts with a demo account. If you intend to trade mini accounts, as many beginning forex traders do, a standard size demo account is going to behave differently than a mini account. Your margins are very different for a standard account versus a mini account. If you become accustomed to trading a standard size account, your trading methodologies will show it. This is because the larger margins offered on standard size accounts allow you to take greater profits from smaller movements in currency prices.
The other major downside to trading with a demo account for learning forex is that as a trader, you need to carefully manage the emotional aspects of trading real money. Since a demo account is fake money, detachment is easy to come by. Once you start trading your actual funds, you might just find that your tolerance for risk is much more conservative. Ideally, as you are learning to trade you are also learning how to manage your risks most effectively.
So what is a beginning trader to do? What is the best way to learn to trade the Forex, hands on?
Once you have read, studied, and completed any courses on Forex trading that you may be taking, you are ready for probationary live trading. The single best way to trade the Forex is to just Do it. Now, this does not mean to jump in and trade a full size account with real money, this would be an enormous risk for a new trader and not a very smart move indeed. What you can do is to find a broker that offers mini accounts. Mini accounts typically start at $200 and typically give you 100:1 leverage. That said, as of this writing, there is one broker (Easy-Forex) that allows you to trade a live mini account for as little as $25.
For less than you paid for any of your books, courses or training materials, you can actually try live trading. You will be amazed at how after just a few trades, the stubborn concepts seem to start making sense and you begin to understand Forex trading.
Now, if you do decide to begin your trading with one of these tiny mini accounts, you should start by making several very small trades. You should also be trading with the same system or methodology that you are trying to perfect. Your profits will likely only be a few dollars since you are trading on a small margin. This is good, however because the reverse is true as well, you are only ever risking a few real dollars. If you happen to have a series of loosing trades and wipe out the funds in your demo account, you can consider it the least expensive education you could possibly get in actual forex trading. Much better than loosing large sums of funds, and more realistic than trading a demo account. Just learn from the experience, and consider it a good deal on a valuable lesson.
Once you are comfortable trading your mini account, you can always have it converted to a regular account (with an additional deposit) if you choose. Overall, it cant be stressed enough, the best way to learn the Forex is to have experience with live hands on trading. This article showed you ways that you can do this at a minimal cost and with the smallest amount of risk.
Article source http://www.articlesbase.com/authors/amber-lowery/2365.htm
To start out, I can not stress enough the need for hands on trading. This is why you will often hear it recommended that new traders start trading with a demo account. What is a demo account? Many online forex brokers offer something known as a "demo account" which is a fake account that you can trade until you feel comfortable trading your own funds. Demo accounts behave just like real accounts, the only difference is that the money you are trading is not real and no actual trades are ever executed.
The purpose of using a demo account if you are new to Forex trading is to get you comfortable making trades and to help you become familiar with the brokers trading platform. You can cut your proverbial teeth so to speak without risking any of your own funds. This makes demo accounts good for a brand new trader who just wants to see how trading works. There are some drawbacks however to using demo accounts to learn Forex trading.
The biggest downside to using a demo account is that you will likely only be able to trade standard size accounts with a demo account. If you intend to trade mini accounts, as many beginning forex traders do, a standard size demo account is going to behave differently than a mini account. Your margins are very different for a standard account versus a mini account. If you become accustomed to trading a standard size account, your trading methodologies will show it. This is because the larger margins offered on standard size accounts allow you to take greater profits from smaller movements in currency prices.
The other major downside to trading with a demo account for learning forex is that as a trader, you need to carefully manage the emotional aspects of trading real money. Since a demo account is fake money, detachment is easy to come by. Once you start trading your actual funds, you might just find that your tolerance for risk is much more conservative. Ideally, as you are learning to trade you are also learning how to manage your risks most effectively.
So what is a beginning trader to do? What is the best way to learn to trade the Forex, hands on?
Once you have read, studied, and completed any courses on Forex trading that you may be taking, you are ready for probationary live trading. The single best way to trade the Forex is to just Do it. Now, this does not mean to jump in and trade a full size account with real money, this would be an enormous risk for a new trader and not a very smart move indeed. What you can do is to find a broker that offers mini accounts. Mini accounts typically start at $200 and typically give you 100:1 leverage. That said, as of this writing, there is one broker (Easy-Forex) that allows you to trade a live mini account for as little as $25.
For less than you paid for any of your books, courses or training materials, you can actually try live trading. You will be amazed at how after just a few trades, the stubborn concepts seem to start making sense and you begin to understand Forex trading.
Now, if you do decide to begin your trading with one of these tiny mini accounts, you should start by making several very small trades. You should also be trading with the same system or methodology that you are trying to perfect. Your profits will likely only be a few dollars since you are trading on a small margin. This is good, however because the reverse is true as well, you are only ever risking a few real dollars. If you happen to have a series of loosing trades and wipe out the funds in your demo account, you can consider it the least expensive education you could possibly get in actual forex trading. Much better than loosing large sums of funds, and more realistic than trading a demo account. Just learn from the experience, and consider it a good deal on a valuable lesson.
Once you are comfortable trading your mini account, you can always have it converted to a regular account (with an additional deposit) if you choose. Overall, it cant be stressed enough, the best way to learn the Forex is to have experience with live hands on trading. This article showed you ways that you can do this at a minimal cost and with the smallest amount of risk.
Article source http://www.articlesbase.com/authors/amber-lowery/2365.htm
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