Every day there are more and more participants in the Forex market. Professionals prefer to open standard accounts, and beginners try a cent account after they have confirmed the effectiveness of their trading system.
One can trade on a demo account till the crack of doom, but the profit on it is still virtual. Over time, almost every novice decides to open a cent account on Forex to earn not virtual, but real money. After all, no one wants to waste time just like that, standing for a long time in the background of real trading. Let’s take a closer look at what a cent account is and what are its advantages.
Cent account on Forex: what is it?
A cent account on Forex is a type of trading account, the balance on which is displayed not in dollars, but in cents. Accordingly, the amount of deposit and profit will be much less than on a standard account.
Let’s see an example. If you deposit a standard account with $1000, then this amount will be displayed on your trading deposit. The cent account will display the same amount, only in cents. That is, there will be 100,000 cents (1 dollar = 100 cents, therefore, 1000*100 = 100,000).
If 1 lot is opened on a cent account, then the value of 1 pip will be equal to 10, not dollars, but cents. If 0.1 lots – the cost of 1 pip will be 1 cent.
Benefits of cent accounts
From the main advantages of cent accounts, the following can be distinguished:
1. The ability to open an account with minimal financial costs. Starting capital, which in this case is necessary, ranges from 50 to 500 dollars. It should be noted that opening a cent account provides relative freedom in trading with lower contact sizes, in most cases 0.1 lots. This circumstance greatly facilitates the management of funds.
2. Trading on the Forex market using cent accounts allows traders to test and learn various trading platforms in practice, finding out for themselves all their possibilities and gaining experience in currency trading.
3. It is the cent account that can be called the most effective platform for testing the trading strategies developed by you. So any newcomer can, without fear, put all of his trading ideas into practice. At the same time, even if you suffer a series of failures, it will not make you a bankrupt.
There are no serious disadvantages to this type of accounts. There are differences in terms of trading, for example, fewer tools are available on a cent account, a little slower execution of orders, the bonus policy may not apply to this type of accounts. But these features are not critical.
Where to open a cent account?
Today, many brokers offer the cent account for trading in the Forex market. For example, the JustForex broker suggests the most favorable conditions for cent accounts, namely:
- there is no minimum deposit;
- leverage us up to 1: 1000;
- a spread starts from 0.3 points;
- there is no transaction fee;
- minimum lot is from 0.01 cent lots;
- there are 34 currency pairs for trading + 2 metals.
So, if you are just starting to trade in the Forex market and want to test your skills, pay your attention to cent accounts.