What is a Micro Account?
A micro account is one of three account types provided by Forex brokers. It is an excellent way for beginners to get their feet wet or for seasoned traders to try out new strategies, but profits will be average. Micro account brokers offer high leverage, sometimes as much as 1:2000. Keep in mind that this deal is beneficial before making any hasty decisions about signing up for trading services. It is the best way to get some practice under real-world market conditions without putting down much cash. Learning Forex trading with these accounts only requires an initial investment of $100. Expert advisors (EAs) and other forms of automated trading can be tested on a micro account, which makes them useful for advanced and professional traders. The smallest transaction size is 0.10 lots or ten currency units.
Micro vs Standard Account
The advantages of a micro vs standard account will become immediately clear once traders begin managing many accounts. One lot is equal to one hundred thousand of a given currency in the standard account offered by all brokers, while on micro accounts, you must have at least 1,000 units to make a trade or 0.01 lots. A Forex micro account trader’s options expand when they learn that they can trade 0.10 micro-lots. It benefits traders, particularly those with multiple roles in the same asset. If your base currency is USD and your quote currency is USD, then one pip is worth $10 in a standard account. Micro accounts have a minimum transaction size of 0.10, while standard accounts have a minimum of 0.01.
Forex micro accounts are preferable to standard accounts for novice traders since they need less financial investment while still providing access to a real-world trading environment. The smallest transaction size for a micro account is 0.10 micro lots, or 100 currency units, compared to a transaction size of 0.01 lots, or 1,000 currency units, for a standard account. This greater leeway is possible because the minimum pip value has dropped from $0.10 to $0.01. It might not look much on paper, but you’ll notice it when trading.
What Are The Advantages Of Micro Accounts?
- All traders, even those operating on a small or micro scale, can do business like professionals.
- With a micro account, a trader can buy and sell foreign exchange pairs like anyone using a conventional account, but with much less capital.
- Micro accounts allow traders to open as few as 1,000 lots, compared to the usual 100,000 lots. The benefit is that beginning traders can practice with modest sums of money before committing more of their own money.
Final Thoughts
A micro account is the best way to go if you are starting in the trading world. For example, you can trade with smaller minimum deposits and fewer lots, so it is clear that this type of trading account has a lot going for it. A micro account is a great way to test the waters without putting too much of your own money on the line.
