Are you new to forex trading business? Are you puzzled with the technical terms in the market? Is there nobody to help you out from this crisis? If you consider that all the answers are positive, then you must not worry as you are in the right spot where you can get detailed info about forex minimum lot.
Initially, I would like to mention that traders might get confused between minimum and mini lots. But it is important to mention that both are same. Now let’s start with its definition.
Forex minimum lot
Minimum or mini lot in forex suggest that mini lot is a lot of 10,000 units of the base currency. The reason behind why it is called mini lot is because it is only 1/10th of the size of 100,000 units’ standard lot.
- In order to make in simple, if a trader is trading with an account which is based on US dollars then the value of mini lot or minimum lot would be around $10,000 of US dollars.
- In forex minimum lot the value of one pip of any given currency pair in US dollars is equivalent to $1 as compared to $10 value for a standard
- Mini lots are considered as the most popular choice for the traders who are not yet well established in the forex trading market.
Pros of mini lots in forex
Advantages of minimum lots are discussed below:
- Best things about mini lots is that the person trading with mini forex account entail subsequently less amount of upfront capital in order to start trading.
- Another significant advantage of minimum lot is that it is very useful for the traders who is not having a clear idea related to trading and cannot risk maximum capital at a time.
- Traders can also initiate their mini account just with the investment of $250 which is very less.
- Because of minimum lots in forex, a trader can also customize the trade, and the person can also control the fear of risk in a greater
- With the help of mini account, the traders can also get a noteworthy amount of leverage on their trade.
Why a trader will use forex minimum lot?
There are a number of professional traders who prefer to use mini lots because these lots might not be so exciting for price change on a trade. In addition, these lots also have certain practical purposes.
What are the uses of forex minimum lot?
- The first and the foremost use of mini lots is that it is useful in order to learn and limit the risk while trading in forex market.
- These mini lots also help the trader to be comfortable with how equity in the account swings based on the movement of the market.
- Another important use of forex minimum lot is that it helps to test the market, and it can also be used as a new swimmer who likes to exploit narrow end of the pool before diving into the deep sea end.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.