Micro Forex Trading Accounts: Can You Take Them Seriously?

It is possible to open a micro forex trading account with only a tiny sum of money these days. In fact at the time of writing, you can start with FXCM with just $25. But are you likely to make money (any money) with such a minute balance?

Micro lot size is 1000 so FXCM are offering 400 to 1 leverage to allow you to trade from a $25 account. This kind of leverage means very large risk and makes it very likely on most trading systems that you will wipe out your balance pretty soon.

So if you do want to start trading in this situation you must ensure that the system you are using is one that does not tend to involve large losses. Some systems have a win rate of around 90% but when you do lose, you lose big. That would be a problem with such high leverage.

These very small accounts can be useful for certain purposes even for those who have more money available but want to start small. For example you could have a micro account for all those trades where you know it does not really meet your system but you have a hunch or you are just bored and you cannot resist opening anyway. Put some play money into a micro account for those moments if you want. You will probably lose it pretty fast and perhaps that will cure you of the habit!

Another situation where you might want to open a micro account is if you want to test out or learn a new system on the real money market instead of using a demo account. There is certainly something to be said for that. At least you have some risk which diminishes the dangerous overconfidence that using a demo account can bring.

But you must watch out for losing your confidence too. This often happens to traders who have been successful for a while and then suddenly hit a bad patch. They may wipe out a large percentage of their funds with one big mistake and never get back into it. Why? Because their confidence is gone.

So when you are ready to start trading seriously, it is vital to begin with the right level of funds and the right amount of confidence. You need to believe in yourself and that you can do this, but at the same time expect some losses and never be seduced into thinking that you will never make a mistake. You will, and the treacherous market will catch you out.

If you are starting trading with a view to becoming a full time online forex trader, you need to keep a very serious attitude to your trading from the start. Understand that everything you do from the very beginning will be forming habits that will become harder and harder to break. Get into bad habits and you could ruin your chances of ever making good. But set up good habits from the start with your micro forex trading account and you have every chance of success.