As the recession continues, small investors are shifting their attention and dollars toward what had previously been sometimes reserved for those wealthier - the Currency Market. A look at the internet site of any investment firm will show that they have replied to this trend with accounts that fall in reach of the smallest investor. These products, called micro lots and mini lots, permit common people to speculate in tiny percentages while retaining the facility to purchase and sell just like their more experienced and wealthier trading counterparts.
Forex accounts involve the purchase of one kind of currency for another at a certain price interest point (pip) which represents a movement in the price being offered for one currency to another. Speculators hope to profit from a change in the pip leading to a rise in their value. When a speculator purchases a traditional pip, he buys it in a certain lot size. Traditional accounts offered on an investment firm's homepage are geared for the rich investor and finance establishments, with standard sizes of 100,000 units. To paraphrase, investors who want to buy 1 pip of their selected currency must pay 100,000 bucks in the currency they're trading so they can purchase 100,000 units of another currency.
For those not keen to pay the $100,000, the required amount can be borrowed through leverage on margin. With leverage, investors put aside a share of their investment dollars in a margin account (generally around 1% of the account or $1,000) and borrow the remaining amount.
Micro and mini lots work on the same principle; however on a smaller scale. The accounts work by investing minute pc.s of the 100,000 units in a standard lot. Mini lots invest 1/10th ($10,000) of the standard lot; while micro lots invest 1/10th ($1,000) of a mini lot. Like standard ones, micro and mini lots work on margin, so backers are able to borrow additional lots up to the margin. Micro's and mini's, in fact , usually have higher margins due to their little amounts, so investors can frequently borrow more than their standard lot counterparts.
The Forex market is a global market that trades quicker and needs a steeper learning curve than trading the US Stock exchange, so financiers should trade with caution. It is important, thus to use lower risk opportunities to practice and learn. Micro and mini lots accounts present a smart way to get started with this market with lower risk than standard FX accounts.
They also offer the chance to potentially grow a pleasant investment with a touch of money, provided one has experience or education accurately trading on the Forex market. With deposits that begin as low as $50, these kinds of accounts are within the reach of nearly any financier.
Forex accounts involve the purchase of one kind of currency for another at a certain price interest point (pip) which represents a movement in the price being offered for one currency to another. Speculators hope to profit from a change in the pip leading to a rise in their value. When a speculator purchases a traditional pip, he buys it in a certain lot size. Traditional accounts offered on an investment firm's homepage are geared for the rich investor and finance establishments, with standard sizes of 100,000 units. To paraphrase, investors who want to buy 1 pip of their selected currency must pay 100,000 bucks in the currency they're trading so they can purchase 100,000 units of another currency.
For those not keen to pay the $100,000, the required amount can be borrowed through leverage on margin. With leverage, investors put aside a share of their investment dollars in a margin account (generally around 1% of the account or $1,000) and borrow the remaining amount.
Micro and mini lots work on the same principle; however on a smaller scale. The accounts work by investing minute pc.s of the 100,000 units in a standard lot. Mini lots invest 1/10th ($10,000) of the standard lot; while micro lots invest 1/10th ($1,000) of a mini lot. Like standard ones, micro and mini lots work on margin, so backers are able to borrow additional lots up to the margin. Micro's and mini's, in fact , usually have higher margins due to their little amounts, so investors can frequently borrow more than their standard lot counterparts.
The Forex market is a global market that trades quicker and needs a steeper learning curve than trading the US Stock exchange, so financiers should trade with caution. It is important, thus to use lower risk opportunities to practice and learn. Micro and mini lots accounts present a smart way to get started with this market with lower risk than standard FX accounts.
They also offer the chance to potentially grow a pleasant investment with a touch of money, provided one has experience or education accurately trading on the Forex market. With deposits that begin as low as $50, these kinds of accounts are within the reach of nearly any financier.
About the Author:
Rich Smith has had years of expertise pro working with the small investor who can't afford to ditch thousands to open a Forex account. Under his steering, try out the mini or micro lot accounts offered here on the LiteForex site with just $50 and begin trading like Forex market pros! Visit the following site for more in-depth info
The Forex market for the small investor
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