Forex Brokers Offering Micro and Cent Accounts

What is a micro/cent account? These terms are used interchangeably and refer to an account type with a deposit account requirement of a few dollars. The "cent" account only requires the trader to deposit cents, just as the name implies. Most micro/cent accounts allow traders to deposit up to $10 or slightly more. Many forex brokers offering micro or cent accounts fix a single-digit deposit cap on these accounts.

What is the essence of these accounts, seeing that forex trading is a game of numbers where the size of any profits or losses is equivalent to the size of the investment amount? We all know that newbie traders get excited at the prospect of making a lot of money from the forex market and quickly rush to deposit colossal amounts of money into their accounts. Many of these traders transit from demo accounts into real forex accounts immediately. Many do not even spend the required time in the demo trading environment before taking on the real money trading environment. One central reason newbies have a rough deal when they start their forex trading journey is a lack of proper transition from virtual trading to the real money environment.

What Common Newbie Mistakes Can Be Remedied with Micro/Cent Accounts?

Newbie traders tend to make inevitable mistakes that come from adopting trading habits that cannot stand the test of time in a real money account environment. These mistakes can be remedied when the trader trades with live trading conditions. Some of these mistakes are:

Over trading
Poor execution of news trades
Inability to handle conditions of volatility
Poor risk management
Poor order setups

Overtrading is a common beginner mistake. Overtrading means putting on too many positions than the account capital can handle if adverse conditions appear. Apart from competing for the trader's attention, putting on many trades stretches the trader's ability to keep to acceptable risk management limits and jeopardizes the capital required to recover from losing positions if needed.

Beginner traders also have problems trading the news. You can never learn to trade the news on a demo platform. News trading is a skill that can only come from practice on an account with little money that puts the trader in a position of reduced financial risk. The micro account is where you can learn to trade the news while keeping to acceptable risk management standards.

The economic news brings about conditions of immense volatility in the market. The trader must know how to handle the news and how to maintain acceptable risk management standards even when the market's pace of price changes steps to another gear. The inability to handle volatility is common error traders make, especially when transitioning from controlled demo conditions to the real-money environment.

Poor risk management ranks among the top common mistakes that newbies make. This can be fixed using a micro/cent account. This account, by its nature, forces the trader to use proper risk management techniques such as proper position sizing, proper evaluation and setting of protection stops and seeking reasonable profit targets.

Why are Micro and Cent Accounts Needed in Forex?

Demo trading is insufficient to prepare the trader for the real money market environment. Pilots, doctors and other professionals who are put in situations where the lives of others are in their hands are never taken from the training schools straight to those situations. They have to pass through various simulations under mentorship, which exposes them to real-life scenarios before they confront those situations. Even soldiers have to undergo live fire training sessions after training with blanks before being sent off to combat situations. Why should it be different with beginner forex traders?

This is why forex brokers offering micro and cent accounts have evolved from an avenue to enable undercapitalized traders to enter the market to actual training centres where traders can transition from demo accounts to real-money trading scenarios. Every trader must undergo practical simulations to learn to deal with real money trading conditions. Using forex brokers offering micro and cent accounts helps train the newbie trader on the following:

A) Trading Psychology

A forex micro/cent account is an excellent place to learn trading psychology and control of emotions in trading. Knowing you are not flush with cash, you learn to trade only when optimal conditions for such trades are reached. With a micro/cent account, there is little room for remedying a mistake. So you are conditioned only to set up positions when the trade conditions appear, knowing you cannot set a lot of trades to attempt to recover from losses incurred by careless trades.

B) Money Management

Money management involves choosing position sizes and protection stops that ensure your account capital is not irretrievably damaged if the account suffers a string of losses. The best place to learn money management is when you have restricted capital allowances, as occurs in a micro/cent account.

C) Strategy

Strategy here refers not just to the trading systems that the trader must develop to succeed. It also encompasses other aspects of successful trading. Trading psychology, the trading system(s), money management, position sizing and trade management are components of a healthy strategy.

Forex Brokers Offering Micro and Cent Accounts: What Forex Traders Stand to Gain

These are the benefits forex brokers offering micro and cent accounts provide to their clients.

The forex brokers offering micro and cent accounts are a suitable training ground that offers newbie traders a perfect transition from the demo account environment to the real money trading environment. You get to know how trading real money feels before you delve in with much of your hard-earned cash.
Demo trading conditions are controlled environments. Real money trading conditions expose you to field environments where anything can happen and where surprises lurk at every turn. Being able to trade in real-money, field-style environments with minimal risk is just what forex brokers offering micro and cent accounts provide.
By being exposed to real market conditions using micro/cent accounts, traders can learn how to trade the news or at least handle the volatility of high-impact news releases.
Some forex brokers offering micro and cent accounts even provide their clients with a no-deposit bonus that mimics the micro/cent account conditions. This allows the newbie trader to try out the live account environment with no personal financial risk.
The US forex brokers offering micro and cent accounts are also, by design, providing traders with a place to hone skills and try out new strategies, all in real market conditions and with minimal personal financial risk. Any experienced trader will tell you that the only way to stay sharp and focused as a trader is to keep trading. Just as athletes experience match rustiness and engines start to get degraded if not used for some time, staying off the forex market for weeks and months makes a trader lose some of that edge in trading. If you are not ready to risk a lot of money in forex trading, you can use a micro or cent account to keep your skills honed and sharpened.

Conclusion

Micro and cent accounts are not just there for show. They are an invaluable tool for properly transitioning from the controlled demo trading environment into the actual market environment. Their nature means that financial risk to the trader is controlled. Micro/cent accounts are to be seen as tools of the trade and not a means to scoring huge profits or home runs in the FX market. Scroll through the list of forex brokers offering micro and cent accounts to make an informed choice that puts you through a proper transition process in the FX market.