How to open a cent account at Forex and what is it for?
Many refer to Forex with apprehension because of high rates or the size of the deposit. Besides demo account, where you can try your hand, many brokers offer one more service - opening of cent account. This is a great option for those, who are just starting their acquaintance with Forex (The whole truth about forex).
Top sites where you can try to open such an account:
- Alpari (go online): is one of the top forex brokers in the world.
- Finam Forex (online): there is an official license, (brokers with a license from the Central Bank of Russia).
- Evotrade (go online): a modern broker with favorable conditions for trading.
- RoboForex (online): pluses include round-the-clock technical support and free training.
Right away we want to draw your attention to the fact that not all brokers allow you to open cent accounts, it is not very profitable for them because of the small rates. Cent Forex is a Forex trading account where, as you can understand from the name, the balance and all transactions are displayed in a smaller currency. Thanks to this the work will not be so risky. A great option for beginners or those traders who want to try new strategies. In terms of technology and conditions, the deposit opens like the main one, only with a larger balance.
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Price accounts Forex brokers began launching for the first time in 2006 to support traders with small starting capital. Deposits are opened in dollars, one dollar = 100 cents, if the minimum required lot in trading is 0.01 of a lot, it would be equal to 1000 units ($10). Taking advantage of the low risk, traders who have already tried out demo accounts work with cent accounts, gaining new experience or honing their skills. A minimum deposit of $1 to $5 is required to get started. Not only currency pairs can be chosen as assets, but also oil or other energy resources (Forex trading training).
Pros and cons of cent accounts
Advantages of Cent Forex for traders:
- minimum deposit requirements;
- favorable conditions for the work of newcomers;
- small lot size (transaction volume);
- Checking indicators or Forex Expert Advisors with minimal effort.
- there is a risk of losing your deposit because of seemingly minimal losses;
- a small profit;
- not all brokers open such accounts.
But why do brokers open Cent Forex, if it is obvious that such deposits and deals are not financially profitable for them? Most often they do it in order to attract new clients and to retain them. Those who first opened a demo account and then switched to cent accounts, sooner or later will start playing more profitable transactions, after opening a couple of successful trades and getting involved.
Tips for Beginners
Beginning traders should know some important tips:
- If possible, deposit a little more than the required minimum. Prices change unpredictably on the exchange, and it's always a good idea to have a margin.
- Choose a broker looking at deposit limits, some platforms do not allow you to open trades of less than 0.01 lot, this also means that each order must have at least 1000 units of money.
- Don't be afraid to take risks. Cent Forex is a great chance to try your hand at many strategies. They are often used by those who have decided to use trading robot. First, having found the algorithm on the Internet or bought a program, the robot is tried on a demo account, and then on a cent account.
Calculation of margin on Forex when working with orders will be a bit more complicated due to psychological aspect (the same for trading and losses), since the balance is displayed in cents (for example, $10 = 1000 cents) it may seem that the deposit is large. There are also peculiarities in the order execution, as the broker, depending on the transaction amount, takes the trader to the liquidity provider, then the profit from the cent account can overlap itself. The broker's opening procedure is standard. Find a company with appropriate conditions, choose the type of account, pass the verification, replenish the balance and you are ready to work.
Feature of Forex
One of the peculiarities of Forex is that currency pairs, as a rule, reach an average price level some time after ups and downs. Knowing this, it is possible to use the technique of trading with a grid of orders. When a trader realizes that a loss is incurred, instead of closing one order he opens the next one, and eventually the price will rise and the profit on the orders will be equal to the loss. Cent accounts are often used to practice this strategy. If you use a trading robot, the count of open orders can go into dozens. Trying trading on cent account is a great way not only to try new strategies, scalper robots, to test your abilities as a trader, but also to understand: is Forex trading suitable for you or would you rather try your forces in other types of trading?