Mini Forex and Trading Platforms

By : Ryan Lee Daniels
View : 0 Times

Before we can even talk about Mini Forex Trading Platforms, we first have to understand what a mini forex contract is.

So what exactly is a mini forex contract?

A Mini Forex Contract

To understand what a Mini Forex contract is, let’s take a look at what a standard contract in the forex market is. Once you understand what a standard forex trading contract is, you’ll have a clearer grasp of what a mini forex contract is.

The Forex markets are traded using contracts or lots, where one contract is also understood to be one lot. You can buy or sell contracts, depending on whether you expect the currency pair to move up or down. Of course, if you expect the pair to move up, you’d BUY the contract. And if you expect the pair to move down, you’d SELL the contract.

How is ONE Standard Contract/Lot Valued?

One STANDARD contract in the forex market is valued at USD$100,000. When you buy or sell 1 contract, you are in effect buying or selling USD$100,000.

With the leverage available at most brokers, you don’t actually require USD$100,000 to buy or sell ONE contract. With a leverage of 100:1, you can buy or sell ONE Standard Contract worth USD$100,000 with only $1,000 in your account.

However this is highly inadvisable because if you only have USD$1,000 in your account, you should not be trading ONE Standard contract as that could potentially wipe out your account in one single bad trade.

So if ONE Standard Lot is worth USD$100,000, how much is ONE Mini Forex contract worth?

How ONE mini forex contract relates to ONE standard contract

A mini forex contract is 1/10th the value of a standard contract. So since a standard contract is worth USD$100,000, a mini forex contract is worth USD$10,000.

In other words:

One Standard Contract: USD$100,000 One Mini Contract: USD$10,000

When you trade ONE Mini Forex Lot, you are controlling USD$10,000.

Now, some forex brokerages have broken the value of the Standard Lot even further into Micro-Mini Forex contracts, where one Micro-Mini is 1/10th of a Mini Forex Lot.

Summary of Contract Sizes

In summary, there are 3 different contract values:

One Standard Contract: USD$100,000

One Mini Contract: USD$10,000

One Micro-Mini Contract: USD$1,000

So when you trade, you can always use the appropriate contract size for your account equity. To choose the appropriate contract size, it helps when you know the value of 1 pip of each contract size.

The value of 1 pip per:

Standard Contract (1.00 lots): $10

Mini Contract (0.10 lots): $1

Micro-Mini Contract (0.01 lots): $0.10

Even with a small trading account, you can still trade 1 micro-mini contract (0.01 lots), where 1 pip is worth $0.10. From there, you can slowly scale up your trading size from 0.01 lots to 0.02 lots or more, depending on the equity level at that time.

And depending on the trading platform and the broker that you are using, you may or may not have access to one micro-mini forex lot, so you have to check out which brokers offer contract sizes all the way down to micro-minis.

Selecting A Trading Platform or Broker

While there are several trading platforms or brokers, you are advised to do some background checks on them, not only in terms of their trading platform capabilities, but also in the financial solvency of the brokerage itself.

A very useful place online to find out the financial solvency of the broker you are researching is using the US Commodity Futures and Trading Commission website.

Be A Smarter Trader

About the author:
Ryan Lee Daniels runs a website dedicated to Forex Trading Education.