It is evident that most of the newbies to forex trading business are the ones available with little amount of money to risk in the different trading spheres. In addition, it is also true that they lack basic knowledge of trading and they also don’t have a systematic and planned system of trading. In this content, it is important to note that the new traders must contact the brokers offering low or forex micro lot and then start trading in live account.
What is a micro lot in forex?
Forex micro lots are usually the lowest position size in which the traders can trade upon and thus minimize the risk of huge losses. It is evident that most of the new traders coming into the forex trading lacks starting capital, thus dealing with micro lots is indeed a great way to keep least overall exposure of their live trading accounts.
In trading forex, micro lot is equivalent to 1/100th of a specific lot or it is the 1,000 units of the base currency.
In order to make it simpler, if one forex micro lot of US dollars or Euros is being traded then each pip will worth around $0.1 in context to $10 for a standard lot.
Forex micro lot and accounts
Micro lot trading can be considered as an account type in which higher leverage is been practiced. Talking about an example, there is one popular forex online broker which provides a micro lot quotient of 400:1. It is always necessary to go through the advantages and disadvantages of micro lots in forex in order to have a clear and concise idea regarding what you will be trading with.
Advantages of Forex micro lots and accounts in forex trading market
Before discussing the benefits and advantages of micro lots, it is important to note that in the initial phase of trading, it was believed that mini forex accounts would be the best choice for the beginners to start trading.
But now the thought has been changed and it is considered that forex micro lot and micro trading accounts are the best way to start off trading for the beginners.
Micro accounts make it convenient to obey to professional money management rules that too without over-leveraging the account into oblivion.
Micro lots in micro accounts offer hone trading with low risk.
Micro accounts are also helpful in testing the effectiveness of the forex brokers and to check how good the platform is.
With micro lots, the traders are also allowed to use concurrent strategies and can also seek expert advice in order to take benefit from diversification that too without incurring an extreme loss.
Cons of forex micro lots
It is evident that there are some drawbacks or disadvantages associated with each good thing, so do micro lots in forex have. Below mentioned points suggest the disadvantages of micro lots.
Traders trading with micro lots are not allowed to get any back end support.
Traders having joint or business accounts cannot access them as these accounts are only applicable for self-trading business.