Micro, Mini and Standard Accounts?

Hi!

In financial literature it is widely suggested, that "…you have at least $100,000 of trading capital before opening a �standard account�, $10,000 for a �mini account�, or $1,000 for a �micro account�.

I wonder if this also applies to “real life” situations? I’ve read somewhere that one should have at least $30.000 before changing from micro to mini account.

What is the best possible way to determine the threshold, when should one up his game and change his accounts?

My soon to be broker (EFX Group) has a fixed lot size: 1 lot = 10.000 units. If I’d like to emulate a micro account, all I would need to do is buy 0,1 lots for 1000 units, 1 lot for 10.000 units (mini account) and 10 lots for 100.000 units (standard account)?

I’d be very thankful for your help with this!

In my opinion, I think being able to trade the smallest number of units possible gives you the most flexibility to adjust your position sizes, especially after you are in a trade. So, that’s my preference.

It all really depends on what size positions your trade. Position size depends on your trading style and risk tolerance.

Let’s say you have a $50k account and you are a day trader. You take 20 pip stop losses and only risk 1% of your account per trade ($500). In order to stay within that $500 range and 20 pip stop, your max position size would be approximately 250k units (depending on the pair you are trading). In this case, a mini account would work fine.

Let’s say with that same $50k account you are a swing/position trader. You take 200 pip stop losses and only risk 1% of your account ($500). In order to stay within you risk comfort level of 1%, then your max position size is about 25k units. In this case, I would go with a micro account to have the flexibility to add to/close portions of my position.

Makes sense?

So, it all depends on your trading style and I hope this example helps guide you in the right direction to pick the right account for you and manage your risk. Good luck

Hi Pipcrawler!

Thank you for the reply.

For example, if I would open an account with $4000, my risk per trade is 3% and my stop loss is 50 pips, then the position size would be 24.000 units. That would leave me with 0 standard lots, 2 mini lots, or 24 micro lots to buy. (EUR/USD)

Since EFX has only one account type, which is set to 1 lot = 10.000 units, how would I place my order? Would I buy 2,4 lots? And since I can’t change my account type, I guess I don’t have to worry about anything else, but how to grow my account? Let’s say that one day my account grows to $50.000 and with the same risk and stop loss parameters as above, I would need to place an order of 30 lots (for a position size of 300.000 units).

Is that assumption correct or do I need to adjust my lot sizes (with EFX) another way?