Broker Forex Mini Account
| July 23, 2011 | Posted by admin under Broker Forex |
There are a lot of Forex brokers that might confuse you when you are starting out as a Forex trader. All of these Forex brokers are categorized into two main groups; the ECN Forex broker and the market maker Forex brokers. In this article, we will focus on market makers Forex brokers but you can choose either one of them.
What is it?
Market Maker Forex brokers refers to a firm that is allowed to create and maintain a market in a particular financial instrument. The market makers are allowed to quote, buy and also sell financial commodity prices. Their profit is made on the small differences between the buy and sell price. They are compensated because they keep liquidity and thus creating efficiency in that particular financial instrument.
Why are forex market makers?
When you are placing an order, the position that you see is not as simple as it looks. You might be through in a blink of an eye but behind everything, the broker does all the work of matching the seller and the buyer, and vice versa. Without the broker, it would be next to impossible for a seller or a buyer to get the same exact shares. Forex brokers buy huge amounts of shares from sellers even when they don't have a buyer so as to quicken the transaction if you happen to place an order with them. The problem is that by doing so, market maker Forex market makers risk a large amount of money ready to be lost if the prices fall while they still hold their positions.
They avoid this from occurring by maintaining the spread which can be a difference of [POST CONTENT].05 between the ask price and the bid. The extra liquidity provided by these brokers allows a better trading experience. When choosing a Forex market maker, you should first be certain that they are regulated by an approved official organization. There are a lot of Forex brokers but you can eliminate scams by doing a little internet research. Note that, market makers do not take fees for their services since they generate their profits from the spread. See more about fx broker on checking your online broker.
Advantages of Forex Market Makers
a¢ When an trader places an order to buy a currency which nobody is queuing to sell, market makers hedge that position to that trader from their own funds.
a¢ The prices of this type of broker are less volatile and smoother than ECN
a¢ You can open an with only few hundred dollars because most of market makers provide micro or mini Forex account. Mini account is an excellent choice to start trading with actual money involved; the only thing left is a working trading system. Check out the details of a full mechanical system that can be mastered quickly at Fast Forex Profits Review.
Disadvantages of Market Makers
a¢ They will most probably trade against you
a¢ There are some that will not allow you to scalp.
a¢ If they cannot match the display price on the ECN, you will not get it.
In conclusion:
You should be taking your time when you are chosing a Forex broker because they affect your trading. Spreads are very important because these are what makes the difference between profits and losses. A market maker might possesses slightly higher spread than STP brokers, however, they maintain the exact same spread at all times. At a STP broker, you may get higher spread on news releases or such event, so choose properly.
Anyone please recommend a broker which provides trading platform on CFD’s, Forex, Comodities and Mini Accounts
I saw GCI Trading Platform (gcitrading.com). It was quite impressive, but I would need at least look at 3 of its competitors to evaluate it. Please recommend them to me.
ForEx leverage losses on a mini account?
How do I calculate it? My broker says $1 per pip. I use 100:1 leverage. The currency moves up 5 pips. I gain $5? The currency loses 5 pips. I lose $5? Please explain.
The Price per pip depends on the currency you are trading and the position size you enter the market with. Here are a few examples that could be helpful:
Trading the GBP/USD with a position size of 0.1 lots(1 mini-lot) you will be trading at $1 per pip. If you take a position size of 0.01 (1 micro lot) you will be trading at 10 cents a pip. And of course if you trade a position size of 1.0 (1 standard lot) you will be trading at $10 per pip. In contrast if you trade the USDJPY you will be trading 95 cents per pip using 1 mini lot. There is a formula to determine the price per pip for each currency but the easiest way is to google “pip calculator”.
As for leverage, the leverage on your account does NOT change the price per pip. The leverage determines the maximum exposure you can have. Meaning, at 100:1 the sum of all your positions currently open would be 10 times the allowable sum of all your positions at 10:1. It also means that at 100:1 you can hold positions in the market at about $100 for every $1 you have in your account (I say about $100 for every $1 because the every currency is different).
FOREX question: What is the advantage of having a ‘standard’ account over a ‘mini’ account?
this broker offers 200:1 for minis, but 100:1 for standards.
I don’t think I’ll actually try more than about 50:1, but w/e, so is lot size of 100,000 considered and advantage because you don’t have to get bas busy to place orders? There must be a more signoficant reason to differentiate between the two accounts.
Maybe the spread gets better?
Maybe insterest rates are better?
4XTrader… Can I work for you?
Even though I trade fx, the leverage part always kind of baffled me. Leverage determines how much margin you need to put up. For example in a std. account, 1 lot = $100,00, so a leverage of 100:1 in a std. account means $1,000 margin per lot. On a mini a lot is $10,000, so leverage of 200:1 is $50 per lot.
Let’s break it down. Let’s say you have a $100,000 std. account with leverage of 100:1. Say as a rule, you only commit 5% of your acct. equity to a trade. So, on a $100k std. acct. you’d commit at most $5000. At 100:1 leverage (or $1000 per lot), that’s 5 lots you can trade. On a std. acct. 1 Pip = $10, so on a 50 Pip move you have 50 Pips x $10/pip x 5 lots = $2500 or a 50% return on the trade.
On a mini account of say $10k, a 5% commitment would be $500. With 200:1 leverage (or $50 per lot), you can margin 10 lots. In a mini account 1 Pip = $1, so a 50 Pip move is 50 Pips x $1 per pip x 10 lots = $500 or a 100% return on the trade. Even though the $$$ profit is smaller ($2500 std. vs. $500 mini), the percentage return is greater (50% std. vs. 100% mini). So in a nutshell, the percentage return is higher. On thing you must remember $10/Pip on a std. or $1/Pip on a mini only applies to a currency pair that the U.S. dollar is in and only in the case where the USD is the quoted currency, such as the GBP/USD, EUR/USD, etc. (The first currency listed in the pair is the base currency and the second is the quoted currency). Where the dollar is the base currency, the dollar value per Pip is based on exchange rates.
Let’s take another example. between 11/17 and 12/1, the GBP/USD moved 928 Pips. So let’s say you bought the Cable (GBP) using the above account sizes and leverage with committing 5% of the account equity to the trade. On the std. account, 5% is $5000 with $1000 per lot margin would give you 5 lots. At 928 Pips, you would make $46,400, or 828% return on margin (46.4% increase in account equity). On a mini account, its’ $500 with $50 per lot margin or 10 lots. A 928 pip move is $9,280, or 1,756% return on margin (92.8% increase in account equity). In other words, the dollar returns were higher on the std. account, but the percentage returns were higher on the mini account.
But beware, the higher leverage works both ways. Hope this helps.
what is the lowest leverage for mini forex account?
i plan to open a mini account with USD 800. i plan to gain 15 pips in a day but i don’t want to use a very high leverage due to its high risk. what is the lowest leverage offered in mini account? from which broker?
The lowest leverage that you can use in any Forex account is 1:1, although I don’t know why anyone would do that. One of the main advantages of participating in the Forex marketplace is the ability to leverage your money.
There are other techniques to address risks associated with the Forex market without compromising the power of leverage. Drop me an email and I will send you some info that you might find useful.
Paul
pupp50@yahoo.com
Best forex brokers and trading platforms ?
What is the best platform to trade real forex? I mean, considering most of the features, like if its trading software is good, if it’s reliable, if the money transfer of deposit and withdrawen is fast, if it’s convenient to do trading with it, if the support is fast and effective, and so on and so on.
Is there any good platform support Paypal or has european bank account?
Thank you for informations. I’m planning to do real trade, but first only with a mini account.
FOREX Brokers. I’d like to get started trading in the FOREX, and I’m searching for thoughts, opinions, etc.
I’ve read up (or have been trying to) on trading in the FOREX, and would like to start trading. I know many brokers offer “mini accounts”, which is the type of account I would like to start with. I tried a couple of the practice accounts, and did pretty well, so I think I’m ready to start using real money. The problem is there are so many brokers, and I don’t know anyone who already trades to get some opinions about them. I’d like an honest broker (if one actually exists), offering “mini accounts”, tight spreads (1-3 pips), and decent leverage. I’ll mostly start out trading EUR/USD, and probably venture out once I get comfortable trading. Thanks for any help.
This site shows information on ‘easy forex’. The resources that it has are also pretty good, especially for novice traders. It also provides important economic news daily. Hope this helps.
Which Forex broker is better, Interbank Forex or Alpari ?
I’ve a demo account on Alpari Uk & other in Interbank Fx. Both forex broker have good features :
Interbank FX : MT4 broker, no dealing desk, tight spreads, good customer service. Mini account for $250
Alpari Uk : MT4 broker, tight spreads (better than Interbank Fx), good customer service but has dealing desk for live trading (5 – 15 seconds to accept an order). Mini account for $200. Withdrawal is more expensive in Alpari than in Interbank.
I’m wondering if it’s better to trade Alpari Uk than Interbank Forex because I live in France, thus I’m closer to Alpari Uk than Interbank Forex (in Utah) .
I’ve read some reviews and Alpari has better ranking than that of Interbank Forex.
What do you suggest me ? which one is better to trade Forex Market ?
Thank you
To The Positronic Pimp : Why dealing desk isn’t an important issue? since non dealing desk brokers means faster orders passed, with a dealing broker there will be slippage for istance or requoting.
I don’t really see what difference the distance makes. It’s all Internet and the forex market is a worldwide market, unless you were losing some money having to do with currency conversions with one and not the other, which doesn’t seem to be the case. As you said, and according to the source below which has forex broker ratings based upon invidudal traders opinions, Alpari (7.64) ranks better than Interbank Fx (4.81).
I think I would agree with the answer above, all other things being equal, go with the lower spreads.
Yes, it is possible to make money trading forex, but… you will need a lot of luck to make some. And believe me or not, but LUCK is the major factor (about 95% in my opinion) deciding whether you will make a profit or loss.
And don’t believe the brokers or other “financial gurus”, including the ones with lots of letters before and after their names, when they try to tell you otherwise, that it is a matter of knowledge and expertise which they only possess (and you have to pay them heavily for their advice). What a lot of rubbish – if they really knew how to multiply money safely on a consistent basis they would never let such secrets out to you, they would be just multiplying their own money over and over again instead ot trying to extract some fees or commissions out of you and even offering you their leverage. They would be leveraging their own money, not yours and making millions and billions for themselves if it was so easy. Just imagine – what are they promising you, how much can you make? 5% overnight, 100% per week, 500% per month etc.? At such rates, even starting with small sum of say 500 or 1000 pounds, they would be billionaires in no time! Check it on a calculator! So why are they attacking you and wasting their time for a few pounds which they can extract from you in commissions?
The answer is very simple – they are scared to try their own LUCK trading their own money and they prefer to find thousands of silly, greedy customers willing to pay them 10 or 20 pounds in commission for every trade they make for their customers. And some brokers make thousands of trades every day for their customers, so say 10,000 trades a day at 10 pounds a trade equals 100,000 pounds a day, times say 261 days a year (excluding weekends) equals a cool 26 million pounds a year! And this is without risking a penny of their own money!
And this is the only safe way to make money in the Forex (and the sharemarket as well), so if you want to make money safely start your own broking company.
Or try your luck trading and risking your own money, but be warned that most people lose money doing that, no matter how many universities they finished. Want another proof? – there it is:
You certainly will have to agree that governments have access to and can pay the best financial advisers in the world, yet even the governments often lose money in the sharemarkets and Forex trading. And while it is not a big problem for most governments, they will simply raise the taxes if they lose money and you will pay for their losses, you will not be able to raise anything yourself except your working hours, say adding another 8 hours shift to your current 12 hours one (and that’s if you can find it!). Is this what you want?
And if it was easy or at all possible to make money in Forex on a consistent basis, the governments (with their top advisers with many letters in front and after their names) would simply invest our tax money for a year or two, make heaps and then get rid of the taxes altogether! Imagine how happy everybody would be – no more taxes so everybody would vote for the same government over and over again and they would stay in power forever! And ordinary people would be extremely happy as well!
Unfortunately this is not the case and there is your answer – it is not easy to make money trading Forex on a consistent basis, even having the best experts in the world.
The choice is of course yours – good LUCK!
Does anyone use MACD for the Dow mini?
I have been experimenting with some tick charts. Has anyone had success with the MACD on the Dow? I’ve recently switched from forex because it’s tough to get a decent broker without having a very large account.
I make my strategy using these rules which i have set it out for my self.
MACD rules on the 15 min chart. Even if MACD is, say, trending up on the 1 hr chart, if it is trending down on the 15 min chart, that’s what you take your cue from. That’s not to say a shift in price direction is not in the works. It just means it’s coming, but not yet. In the meantime, you don’t want to miss what’s happening “in the now,” which is what is reflected in the 15 min chart.
If MACD is trending down on the 15 min chart, and price is wanting to go north, price will sooner than later head south as it perhaps bounces off a pivot point, or gets turned around at a juncture caught by one of the other three “tools” you should be using (“reading bars,” MACD divergence, or trendline analysis). Same thing if MACD is trending up, and price is trying to head south.
Only use MACD for divergence, not for buy or sell signals. It is a lagging indicator, and as such is useless as a trigger. It is too slow for that in the forex world.
Again, MACD divergence on the 15 min chart is more significant than what you see on the 1 hr chart in the near-term. For those of you who don’t understand what divergence means, keep looking at my own personal forex trading examples on this page on a daily basis for examples of divergence. Basically, what it means is where you see MACD waves “waving” in the opposite direction to price action. That’s why I connect the top of the waves (in a downtrend) and the bottom of the waves (in an uptrend) to illustrate that the waves are “waving” higher in an uptrend and lower in a downtrend – in the opposite direction to where price is going.
Always “protect” your money by using 20-30 pip stops. Mental stops are okay, but not if you are dead serious about using a “disciplined” approach to managing your money. You will lose three out of ten trades. The three losses should be kept to 20-30 pips. Your wins will by far surpass your small losses, and that’s what stop-losses are all about. Don’t be afraid to lose. Even professional batters strike out six out of 10 times. Lions are only successful 20% of the time in their chase for the kill. Professional golfers lose 95% of the time. Professional poker players lose 50% of the time. So, your chances are better at trading the forex, using my system of course, than in any other venue. Even businesses have “bad inventory.” And, life in general is not always “100%” for sure.
Hope this helped you too for better understanding of MACD lines. Even i dont hold a large account i started my live trading with just $25 with http://www.finexo.com and right now i am holding $100 capital account.
Regards