It is often recommended to try trading on a demo account before starting the actual trade as this clears off a lot of doubts of the novice traders. However, there are a few traders who start with the mini forex accounts. Is it wise to use a mini forex account? Does it offer any added advantage in comparison to the demo account? Let’s find out.

To start with it is important to understand what a Mini Forex account is.

A mini forex account offers the opportunity to trade with small amount of money.  This helps the individuals new in this trade as less amount invested means lower risk. The amount invested here is almost one-tenth of the amount in a standard account. Hence, the risk involved is far less.

Three options for Novice Forex traders are mentioned below:

Standard Brokerage accounts: One option for the new traders is to start directly with the standard accounts. It is to be understood that these accounts demand a huge investment and investing huge amount in the very beginning is not advisable as it involves high risk. This option is not recommended for the beginners.

Mini Forex accounts: One can start trading with the Forex Mini accounts. These accounts involve comparatively very low investment amount. Therefore, the beginners are suggested to use these accounts rather than the standard ones as the risk involved in these is quite less.

Demo accounts: These accounts offer trial versions of trading without investing any real money. Once a trader starts making consistent profit in the demo accounts and is confident about his skills, he can start with the live trade. He can then switch to the mini or standard forex accounts to begin with the real trade. This account is recommended for the beginners.

A majority of beginners opt for option 3 that is the forex demo accounts. This is because it allows them to get familiar with various tools and strategies in order to gain confidence before diving into the actual Forex market. However it is to be seen that since the money involved in the Forex demo accounts is not real, it tends to give a fake sense of security. Since these are demo accounts hence one tends to take high risk which he would not take while trading in a real market scenario. Therefore, the knowledge that one gets in a forex demo account is not very helpful when one switches over to a real account. Dealing in a demo account involves no stress at all even if one uses high risk strategies but in real accounts using such strategies can cause high level of stress. And such stress can lead to taking wrong decisions at times resulting in heavy losses.

Keeping the above points in mind, it is recommended to start the trade with a Forex mini account as it allows dealing with real money involving small investments. Demo account can be used for a few trades just to have hands on experience. Starting the trade with Forex mini account would mean starting with the real money. The strategies that you make and learn while using the mini account will be helpful in the long run.

It should always be kept in mind that Forex trading is a risky business. Therefore the money that one invests in trading should always be some extra money, which even if lost will not impact you much financially.