More recently, to be able to trade on Forex, a trader needs to have the balance of the account not less than hundreds of dollars. But now the situation has changed significantly – many brokers offer access to financial market with Deposit only 1 dollar. Such trade on a cent account has its own conditions, advantages and disadvantages, which are discussed later.
The main difference cent from other types of brokerage accounts is, of course, in the minimum amount of Deposit, which, as already stated, is 1 dollar (100 cents). Thus, a cent account with 100 cents you can imagine the analogue of the usual dollar bills, on the Deposit which are $ 100.
Figure 1. Trade on a cent account.Need a cent in brokerage accounts appeared because of the high demand for them from beginners. Usually either they have no is required to open a regular account the amount of money, or they do not have enough experience of the Forex trading. That they before bothered to open a broker account. However, a huge number of inexperienced or insolvent traders could significantly increase the profit of brokers (it consists of the fee for each transaction, the accrual on the spread or otherwise). As a result, began the introduction and development of technology trading on cent accounts. Currently, the reputation, the popularity rating of binary options brokers are largely dependent on the provision of such services.
Next, we consider the characteristic features of cent accounts in the psychological and commercial aspects.
The psychology of trading on a cent account
The main part of human psychology that affects trading results in Forex is emotions. The most significant of them:
In fear, you can understand the fears of negative consequences from any event. In trading, there is fear of loss because of a mistake, invisible now, but well visible for subsequent analysis. This may be incorrect fear of opening a position is closed. But in any case, the trader is likely to get a loss or receive less profit (or enter the trade after the promotion prices to the target or exit the trade after the start of movement of the price to the stop loss).
Figure 2. Trading on cent accounts.
Under the greed we can understand the desire to earn more per transaction. This is manifested in the too long retention of trader positions open. Usually, a significant profit in this case brings no more than a few percent of transactions, and the rest are closed or less profit or loss. And in some periods the sequence of such losing trades could easily lead to a drain of the Deposit.
Under hope, you can understand the expectation of the occurrence of any event for which very little objective reasons. This is the place to be when entering positions in the losing stage, causing many traders to move the stop loss further from entry level to the market that in the overwhelming majority of cases leads to a significant increase in potential losses and a proportional increase trading risk.
To neutralize the negative influence of emotions on the process of trading allows strict adherence to the rules of the trading strategy.The nuances of the process of trading on a cent account cent account forexy it is best to go with a demo account, which is already prepared and tested a potentially profitable trading strategy. In this case, you will focus on the psychological factors and avoid even small losses. However, the trading strategy formed on a demo account may need some adjustment when applied to trade in cent account.The General rule for any strategy is the need for per trade several times more profit potential than the potential loss. Otherwise one losing position will destroy the profits from several profitable positions, which will inevitably lead to a drain of the Deposit. For traders who trade with the trend, you must learn to control the fear of making a loss of income in the formation in the course of trend pullbacks.
Figure 3. Trade on a cent account Forex.The owners of cent accounts are actively using them aggressive trading strategy to ensure the so-called dispersal of the Deposit. Its essence lies in the fact that with a small initial capital is used TC to get profit is ten times higher than the amount deposited, in one of several cases (the other end in a drain on the Deposit). As a result, starting with $ 10, you can easily subsequently go to the trade through the standard account, moving him earned a few hundred bucks (of course, pre-drain a few dozen USD).
As trading strategies you should choose those that focus on the identification of strong price movements when volatility is high (scalping is irrelevant here). The trade in such intensive conditions allows trader in a short time not only to develop the necessary psychological form, but also to get the first tangible profit.