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Forex Mini Account

The forex mini account is considered a starter account for those new forex traders who are looking to trade foreign currencies. This account provides a way for beginner or smaller traders to take smaller positions in a currency than if they were to trade using a regular forex account requiring the trading of standard lots. What this means is that the trader using the forex mini account can trade contract sizes of 10,000 units rather than the standard 100,000. As you can see this mini account significantly reduces risk while allowing traders access to the same resources as standard forex account holders such as trading platforms, support and charts.

The only differences between mini accounts and the standard-sized forex account are explained below.

Minimum dollar amount – the minimum dollar amount required to open mini trading accounts in the forex market is typically about $300 which is lower than then that of the standard forex trading account. It is recommended however that investors deposit at least $2,000.

Trade size – the mini trading platform requires trades to be executed in standard sizes of 10,000 base currencies per one lot (as explained above). There is no maximum trading volume on the mini trading platforms however.

Margin requirements – trader must have about ½% of the value of the positions they hold in their account for each lot currency being traded. This ends up being about 200:1 leverage. This ends up being $50 per lot or per 10,000 units.

Limited risk – there is a guaranteed limited risk with this type of mini account as well. If the total floating value of the account (otherwise known as the account equity) falls below the margin requirement stated above then the desk may close some or all FX positions. This feature is a part of this account and is a great way for traders to ensure that they don’t lose more money than they actually have in their mini account.

Forex trading requires that the investor understands the importance of technical analysis and research. Additionally, he or she must develop a system for charting the trends and also for analyzing the movements for each currency traded. Many investors consider Japanese Candlesticks as the best system for seeing movement is the market.

FX trading is not for all traders as it can be unpredictable and you can potentially lose more money than you invested, however trading with a mini account is a great way to get started.



Market Direction:  A trend channel is a very visible, high probability technical analysis tool. Will most investors buy at the support level of a trend channel and sell at the top end of a trend channel? Most of the time they will not! Why? Emotions! What has occurred to bring prices down to the bottom of a trend channel? Bearish sentiment! This bearish sentiment permeates the investor thought process even though they see there is a possibility of a support at the bottom support area. Logic says to buy, but emotions usually prevail. Many investors want to see definite confirmation, thet  there has been a reversal at support levels or resistance levels. The reason for that is fear, the fear that prevailing news could push prices down through the recent support level. The fear that good news could push prices up through the top of a trend channel. They want to wait for confirmation, which could take two or three more days of trading.

The candlestick investor has a distinct advantage. Each individual formation reveals what is occurring in investor sentiment. Indecisive trading occurring at a support level, the bottom of a trend channel, creates early indications that investor sentiment is changing at that level. The candlestick investor, upon seeing bullish signals at important potentially support areas, will be buying based upon what the signals have indicated at that technical level. Other investors make their decisions based upon what the price movement has done at that technical level. This gives the candlestick investor a few days headstart, getting into a position at a lower price and improving profitability from other investors buying later as they see their confirmation.

DOW

Note how the candlestick signals allowed for buying at the very early stages of this current uptrend. A Bullish Harami on the 50 day moving average indicated the selling had stopped. A little Hammer signal the next day produced more evidence. The positive trading after the Hammer signal would have instigated adding long positions to the portfolio. There may have been sweating by the end of the day but at least the decision to hold long positions the next day was relatively easy. The Inverted Hammer signal required a bullish open to confirm the uptrend was in progress. The bullish futures on Thursday would have instigated another round of buying long positions immediately Thursday morning.

This was done with confidence because of the confirmation of individual candlestick signals. Additional confidence would have been created by seeing that the 50 day moving average/bottom of a trend channel was acting as support. This may sound like easy-analysis after the fact but each individual signal being confirmed when stochastics were in the oversold area was credible evidence that the Bulls were stepping in. This allows for buying at the optimal time.

For both stock purchases as well as option trades, the candlestick signals provide a visual look at changes of investor sentiment. It allows for buying positions into a portfolio at the earliest stages of a new uptrend. This is not sophisticated analysis. This is merely taking the information we already know about each individual candlestick signal and analyzing what the expected results should be for a reversal.

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Good investing,

The Candlestick Forum Team


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