Forex Mini Account Vs Forex Demo Account

The other aspect is the amount of money you can risk per trade, or per point. With a regular account you trade in lots of 100,000. A mini account reduces this size to 10,000. This sounds rather technical, and it is, but in plain English it means that with a regular account your minimum trade (the amount you win or lose per point) is $1.00. If you have your account in pounds or euros then it will be one unit of that currency. But with a forex mini account your minimum trade is 10 cents (or 10 pence if you're trading in pounds).A demo account is simply a regular account but with make-believe money instead of real money. This is ideal for getting a taste of what forex trading is really like and testing yourself to see how you cope, but without the risk of losing any real money.The whole of the forex market is fraught with dangers, especially for the newcomer, and those dangers actually extend to the mini and demo account holders as well. How could this be? Let's take the mini account first. Obviously the risk is less here, but the same factors that affect regular account holders, and cause the vast majority of them to lose all, or nearly all, their money, also affect mini account holders. Unless you realise what is happening in time then you will watch the amount of money in your account shrink until either there is nothing left or you realise in time what is happening.There's no space here to go into the reasons for this. It's just the way the forex market is, and if anyone tells you otherwise then be very careful.The demo account is also dangerous, though in a different way. But at the same time it is extremely useful for newcomers to learn the truth about forex. The danger here is that there's a great temptation to trade recklessly, betting $10, $20 or more per point simply because if it goes wrong it doesn't really matter because it's not real money.Now there's no harm on the face of it in having a little fun using the demo account in this way, as long as it doesn't lead the newcomer into believing he can do the same thing with real money. It's one thing to risk 10 per cent or more of make-believe money on one trade. It's quite another to risk your own hard-earned money in this way. If the newcomer trades a demo account with large amounts and is lucky, he may look at his "winnings" of hundreds or even thousands of dollars and think that if it's that easy then he's ready to start trading with real money.It's like being lucky at the races without betting real money, and then deciding to bet with real money and relying on your luck holding out.Nevertheless, if you can avoid this danger, then opening a demo account is a good way of accessing the forex market. After a while, you may be lucky enough to come across the alternative ways there are of making money in the financial markets without such massive risks. You just need to find a successful trader who will show you the way.
By: pegweb
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