Mini Forex Trading Example
Let's say that you are trading currencies with a regular 100,000-lot account. If you set a 25-pip stop loss, this would be equivalent a potential loss of $250 (if you don't understand this example, read through our free forex education section for more information).
Now, if the example above was done in a forex mini account, the potential loss would only be $25 (if you read the forex mini contract section, you will see that the value of a mini lot is 1/10th the value of a standard contract, so all gains and losses are a tenth of their regular amount). Consequently, trading in lots of 10,000 gives the smaller trader greater flexibility in customizing the size of his trades and managing his risk (Please do not misunderstand this concept. This does not mean that a mini account is better than a standard account. It just means that for traders with very limited funds, a mini account is the better option. To understand this better, you can read "Who should open a mini account?" and also "What should I open my mini account with?")