Cent accounts – are a good tool for practicing trader skills and testing trading robots. They differ in the ability to open transactions not in dollars, but in cents. In addition, there are strategies that, through automated trading, allow you to make a stable profit on cents.
Why you need a cent account
The main value of such an account – is the ability to trade with real money using minimal volumes. It is for this purpose that the division of the amount of transactions by cents, instead of dollars, is used.
With a standard account, the minimum part of the lot available to a trader is 0.01. In this case one point will be equal to 0.1 USD. If a cent account is used, then the minimum value of 1 point at 0.01 lot is 0.01 USD. That is, 1 cent.
In the terminal, the balance of the regular account will be displayed in dollars. For example, $170. When choosing a cent, the amount available for trading is displayed differently. Instead of $170, the trader will see 17,000 cents.
The player can also set the loss limits in cents. Such trading will have minimal risks, but it will give work experience under real conditions.
The following situation can be taken as a comparison:
- The trader opened a transaction on a standard account and his forecast turned out to be wrong. If in this case the stop loss was set at 15 points, then the loss will be $ 15.
- With the same result, but on a cent account, the loss would be only 15 cents. That's because the point is not $1, but 1 cent. That is, the final loss is 100 times less.
At the same time, if a player risks even small amounts, he begins to feel a standard set of emotions:
- fear of losing funds;
- desire to recoup after failure;
- euphoria when closing several positions in plus.
As a result, a trader can learn to manage his emotional state without going through the path of serious losses.
Brokers are not particularly interested in cent accounts from the profit perspective. Because such trading always implies small volumes. But an account that allows you to work with cent values attracts novices. When the risks are minimized, people are more willing to try themselves in trading. In the future, such clients may become major and regular players.
Testing trading robots
Some brokers create conditions under which you can open transactions with only $1 in your account.
Small cent orders are well suited for testing EAs with real money. But before that, in any case, the programs must be properly configured and tested on a demo account.
Automated trading with real money allows you to see what results the program gives, taking into account slippages, spreads and the current speed of order execution at an individual broker. These indicators may differ for a demo account and a real cent account. Thus, it becomes possible to identify the defects of the robot and eliminate them before moving on to serious trading volumes.
You can buy high-quality trading robots and Expert Advisors in our store.
Advantages and disadvantages of cent accounts
Cent accounts have several key advantages:
- Getting real trading experience with minimal losses. You can hone basic skills or test new strategies without the risk of losing your deposit.
- Ability to identify the disadvantages of the broker. If he has problems with the quality of services, then a cent account will help to notice it.
- Easy start in trading. You can get experience of trading in the Forex market with a small deposit. Many brokers allow you to open an account with $10 or even with $1 on your balance sheet.
- Convenient testing of automated trading. The effectiveness of various indicators and Expert Advisors is tested with minimal losses.
- Formation of trade statistics. If a trader has stable results, even with modest but real money, he can take funds in trust. At first, these may be small amounts. In a time, a player demonstrating competent trading will be trusted with larger funds.
The disadvantages of cent accounts include:
- Weakening the feeling of fear of losses. The trader will be afraid of unsuccessful transactions on a cent account only for the first time. After that, the player can get used to the fact that the losses are insignificant and begin to risk more bravely.
- There is no way to increase the deposit quickly. Some novices think that by starting with $10 or $100, they can to earn sizable sums in a short time. But cent transactions don't have such potential. They are only suitable for practicing skills, testing robots and getting additional income.
You can open a cent account in a few minutes. Many brokers have such offers. At the same time, it is important to read the trading conditions carefully.
What you can work out with a cent account
When novices come into trading, they do not always prioritize correctly. Many people aim to conclude as many transactions as possible, using every opportunity. But you need to start with the ability to control risks and manage your deposit.
A cent account is perfect for practicing money management skills.
- the trader has $250;
- within the chosen strategy, he wants to open a transaction on the daily chart (D1);
- and he conceives it expedient to set a stop loss of 100 points.
At the same time, the user has a rule not to open positions, the volume of which exceeds 1% of the deposit. Thus, if there is 250 USD on the balance sheet, then the acceptable risk level will be equal to $ 2.5. On a standard account, the minimum part of a lot is 0.1. With such inputs, 100 points will be equal to $10. This is 4 times more than the acceptable risk level.
If you open a cent account, then 100 stop loss points will be equal to 1 dollar, because each point – is 1 cent. When the stop is closed, the losses will be 0.4% of the deposit. As a result, the trader easily invests in the set values of money management, freely trading on the daily chart. The strategy is worked out, and the risks remain under control.
Rejection of emotional outbursts and losing strategies
Forex trading – is largely a methodical adherence to a clear and familiar trading strategy. Many traders get tired of such monotonous trading, and they want to use new methods of working with the market.
The problem is that deviation from the trading algorithm often leads to losses. But experienced players advise not to block such impulses, but to open a separate account for them with a small deposit.
A cent account allows you to actively use not always logical intuitive trading with a small amount on the balance sheet. It can be said that the trader is just indulging in, realizing his most daring ideas and at the same time remaining protected from major losses.. At this time, trading is conducted on the main account in full accordance with the proven strategy.
Automated order grid trading
This is one of the working strategies on which robots can trade. Its essence reduces to opening positions on the understanding that all currency pairs return to their average values at some time. The Forex market as a whole is characterized by such a feature of asset behavior.
If the price moves to the overbought or oversold point, the robot opens an order in the direction of the average value of the pair. From the first and even from the 10th time, it may not be possible to guess the reversal moment. Therefore, when opening the first orders, the minimum volume is used. It increases with each new transaction.
When the price does reverse, the order volume is already large enough to close losses and make a profit due to the moderate length of the movement.
This strategy does not always work, so it is too risky for a standard account. And for the full implementation of grid trading, it will take from $5 thousand. The amount is too large for this format of working with the market.
But the use of a cent minimises all risks and allows you to make additional profit with minimal participation in the process. As a result, a cent account is the best option for performing individual tasks.
For all our readers, we can offer to visit our store , where you will find high-quality Expert Advisors, indicators and scripts. With their help, you can trade on both a cent and a dollar account.