pros and cons of a cent account
A forex account is typically funded with amounts exceeding $1000. However since some years creative forex brokers came up with a new idea; the cent account. A cent account allows traders to trade in cents instead of US dollars. Is it really that interesting? Here we go..
For whom is a cent account created?
- beginners wanting to learn how to trade
- traders that want to test an expert advisor
- traders with small deposit amounts
A Cent account balance is indicated in cents, which helps beginners to get used to the whole concept. Therefore a cent account is considered a kind of a transitional stage between demo and dollar accounts being a first step into a real trading.
advantage of a cent account
The advantage of a cent account is that traders get the real trading environment without risking of losing large amounts. For example, you just created a manual trading strategy and now you want to know if the strategy is successful or not. What better than trading this with absolute minimum lot sizes. After all, increasing lot sizes does not increase the profit factor. Or what if you developed an expert advisor and you want to test drive it. Also here, a cent account is a perfect solution for forward testing your strategy.
disadvantage of a cent account
The disadvantage of a cent account is most definitely the spread that brokers offer you. First of all the spreads are fixed and In some cases widened to 3 pips or even more. Now before blaming your broker of being scammed, first consider the cost that brokers have. A cent account is by default not interesting for brokers, also considering that newbie traders require more attention. Thats why most brokers will try to get you to open a regular account. So for scalping strategies, a cent account is not the best option.
can my ea run on a cent account
Bad Bad idea! Consider this before you start to run your EA on a cent account. How much is the purchase price for an EA.. right, over $200. So if you made a $200 deposit in your cent account, you need to produce 100% profit to just break even on the purchase.
For this reason we created a special EA that you can run in a cent account and that only cost $99. Agreed, this still means 50% profit to break even, but this is the rock bottom price we could get. Have a look at the Centurion EA that runs in cent accounts.
If you are not an experienced forex trader or you just finished developing an expert advisor, i highly recommend to start with a cent account. This will reduce your financial risk drastically and allows you to learn the ropes of trading in the fascinating forex markets.