In Forex trading, a standard contract size is regarded as a lot i.e. 100, 000 currency units. Several brokers are now allowing the traders to trade in smaller contracts which comes in mini (10, 000 units) or micro lots (1, 000 units). Apart from these standard lots, some brokers go as far as offering a nano lot trading. All Forex brokers who offer micro lot trading are regarded as micro lot brokers. These micro lot brokers allows the traders to be a lot more flexible in trading and also assist them in diversifying their trading portfolios by allocating smaller amount of money to more currency pairs.
Micro lot brokers usually come in handy for beginners who are interested in trying out the services of a broker without having to risk a lot of money. These micro lot brokers come with a higher leverage which requires the traders to make a small initial deposit in order to test their skills or the broker with a limited risk.
CHARACTERISTICS OF MICRO LOT BROKERS
1. MINIMUM INITIAL DEPOSIT
Micro lot brokers require the trader to invest a token of just $5 which is a symbolically low minimum initial deposit.
2. SPREADS AND COMMISSION
The micro lot accounts provided by some micro lot brokers are commission-free. The spreads offered by the micro lot brokers tend to vary from one account type to the other.
3. MAXIMUM LEVERAGE
Some of the brokers provide the traders with a high leverage up to 1:500. In order to be able to adequately control the risks that are associated with the leveraging system, some of the micro lot brokers have been able to utilize a floating leverage system.
4. SECURITY OF FUNDS
The micro lot brokers suit the needs of the traders of all skills and categories. They offer more than 240 tradable instruments which comprises of a number of currency pairs, several CFDs, and crypto currencies. The client also has the ability to make a choice between market and instant execution.
5. EDUCATION OF CLIENTS
Since most traders using the Micro lot accounts are either novices or those trying to try out the market for the first time, micro lot brokers also provide educational advice to the traders in the aspect of making decisions in the market.
6. TRADING PLATFORMS
Micro lot brokers offer the trader with good trading platforms such as the MT4 and MT5. These trading platforms comes in desktop, web and mobile versions (available for iOS and Android devices), to make easier for all customers to access. The micro lot brokers also provide automated trading strategies for those who are interested.
7. PAYMENT METHODS
Micro lot brokers offer payment methods in the form of credit/debit card payments, interbank transfers and other E-wallet platforms (e.g. Western Union, Alsa-Ckick, and Neteller).
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.