There was a time, when, in order to open an account and start trading in the market, one should have had $500. Therefore, many of those who wanted to try their hand in the financial markets, just could not afford it.
The bigger competition has radically changed the situation. In addition to the recognized market leaders there emerge new brokerage companies, yet unknown but willing to develop, which offer account opening with much lesser sums. The sums have been decreasing, and there appeared forex brokers with cent accounts.
What is a cent account?
The main difference of such an account in the terminal would be that all the values are multiplied by one hundred. If you open a cent account and deposit $10 to it, when entering the terminal you will see the value of 1,000 cents. Now a trading lot is worth 100,000 cents, and not $100,000.
Different dealing centers may have different minimum trading lots. 0.1 is 10,000 cents, and each point of EUR/USD is worth one cent. In one 0.01 lot each cent is equal to the EUR/USD passage rate of 10 points.
Forex brokers with cent accounts: what’s the benefit and advantage for a trader?
Why not make all the accounts cent accounts? The fact is that many traders work with brokers, because their standard account funds are in any case to be withdrawn somewhere; as for the cent accounts, a dealing center may confirm it actually is the counterparty of the deals. Just think, if we’re considering the one-dollar deposit with a 0.0001 lot, what interchange and withdrawal can we speak of at all?
Cent accounts are especially beneficial for novice traders; their rapid emergence has caused the increase of registrations of those who are willing to master trading. Everybody knows that before you start full-scale trading on the currency market it is necessary to open a demo account to start with, for training and gaining experience. However, switching from a demo account to a real money account is quite stressful psychologically, what prevents many novices from successful trading when they start. Training without any risk is one thing, but substantial financial losses possible on a real money account are definitely something else.
The advantage of a cent account is that is lets you trade ‘for real’, thus getting used to actual trading and at that not risking to lose a large sum of money. It can be used not only by traders; if you decide to test trading conditions offered by a certain broker or a new strategy and don’t want to put your money at risk, forex cent accounts should be your choice.
Brokers are different, some of them let you start trading with a few dollars only, other do not want to mess with a trader for penny profits. When choosing a broker take a notice of a forex rating, and consider advice of the professional traders. Choose a company that allows the client to decide which sum to deposit and does not limit the deposit size. A good broker should provide an opportunity of trading to clients with any size of funds. If you wish to check the quality of brokerage services and try your hand in forex, read forex reviews, check the ratings and choose a company that is interested in every client, even the smallest one.