Micro accounts are an excellent gateway into the forex market and are especially useful for people with little capital. They provide most traders with a chance to participate in the forex market without risking too much of their money. That makes them perfect for beginners and those who trade on a smaller scale. Here is a list of forex brokers with micro accounts.
Broker | Features | Review | Visit |
 | * 1:500 leverage * 1000+ instruments * Crypto CFD trading | ||
 | * 1:1000 leverage * 1200+ instruments * Tight spreads | ||
 | * 1:1000 leverage * 210+ instruments * Free education | ||
 | * 1:500 leverage | ||
 | * 1:500 leverage * 800+ instruments * African Broker | ||
 | * 1:500 leverage * 80+ instruments * Excellent support | ||
 | *1:500 leverage | ||
 | * 1:500 leverage * 300+ instruments * Low minimum deposit | ||
 | * 1:1000 leverage * 130+ instruments * Raw spreads | ||
 | * 1:1000 leverage * 200+ instruments * Copy trading |
Contents
Understanding Micro Trading Accounts
A micro trading account is suitable for someone who wants to start forex trading without making significant financial commitments. It allows you to trade in micro lots which is equal to 1,000 units of the base currency. This contrasts heavily with a standard lot which is made up of 100,000 units. For example, when trading EUR/USD pair, one would require $120,000 as investment for a standard lot compared with just $1,200 for a micro lot.
Micro accounts can also be used by experienced traders willing to test new strategies in low risk environment. With seasoned traders opting to work with such small amounts, they have an opportunity of trying different approaches. They can improve their strategies according to real market conditions rather than investing significant sums of money.
Who Should Consider a Micro Trading Account?
There is something for everyone among traders including those on tight budgets or newbies in forex trading. Smaller transaction sizes allow novices to enter markets without concerns about huge losses taking place. Moreover, minimal deposit requirements widen the scope of these accounts among many retail clients.
For experienced traders considering testing out new strategies or diversifying their portfolios; using micro accounts would be ideal. Micro accounts allow investors to trade smaller positions, minimizing risk while exploring other markets.
Setting Up a Micro Trading Account
- Registration Process: Opening a micro-account is easy like pie! Most brokers provide online registration where you key-in basic personal details and financial information. Still some brokers accept registration through your Facebook or Google plus accounts if you have them.
- Financial Information: Fill out a questionnaire about your employment status, annual earnings and source of funds. Choose an account type along with trading platform, leverage, base currency.
- Identity Verification: After registration, you must verify your identity by sending copies of documents such as passport or national ID card, utility bill and bank statement. This process is aimed at securing your account while complying with the stipulations of the law.
- Funding the Account: Once you’ve verified your identity, it’s time to fund your micro trading account. Most firms offer various deposit options such as credit/debit cards, bank wire transfers and e-wallets like PayPal.
- Connecting to a Trading Platform: You will receive unique identifiers in an email after funding, which are needed to connect your micro account to a selected trading platform.
Typical Forex Trading Lots
Forex brokers also offer mini lots, nano lots and other lot sizes apart from micro lots. Different trading requirements and risk levels are met by each lot size.
- Standard Lot: This is an investment in the base currency made up of 100,000 units which can bring more profits.
- Mini Lot: These are micro lots that contain 10,000 units of the base currency and less risky than standard ones but bigger than nano lots.
- Nano Lot: A 100 base currency unit such that it is suitable for persons that want to do minimal risk trading.
However, larger trades with these types of lots may have a higher return on investment but also pose greater risks. For instance, one pip change in case of a standard lot equals $10 while in a micro lot it is just $0.10. The difference in pip value shows the varying levels of risk and reward associated with different lot sizes.
Advantages of Micro Trading Accounts
- Reduced Financial Risk: Micro accounts enable traders to participate in forex trading with little capital committed on their part. A single-pip change results to a loss equivalent to only ten cents for a micro-lot trade, thus making it possible to control losses.
- Real-world Trading Experience: Real market conditions characterize live trade experiences and this forms part of beginners’ experience.
- Little or No Minimum Deposit Requirements: Many people with small amounts of money opt for micro accounts as they charge low minimum deposits or none at all.
Disadvantages of Micro Trading Accounts
- Lower Potential Returns: It might be undesirable for experienced traders looking for significant returns since profit margins in micro-lots are lower.
- Increased Transaction Costs: Incurring frequent spreads and commissions associated with transactions carried out using these contracts could erode gains. This increases transaction charges related thereto. Frequently engaging in such operations would not enhance profitability but will multiply costs instead.
- No Good for Large Traders: Micro lots are too small in position size to offer the market exposure that larger traders need.