Among traders there is such a thing as “a cent broker.” It’s the broker which opens the clients with cent accounts, i.e., accounts denominated in lot sizes. Let it be not absolutely an exact definition, but its essence is the following: the deposit is conditionally updated for 10 dollars, and the minimum allowed lot size by the broker — 0,0001. For the broker it is not convenient, because the profit from such transactions is virtually nonexistent, and operating costs comparable to conventional transactions. So cent brokers has its own characteristics:
most of the traders out of the TOP 30 have a similar product in the arsenal, but all transactions are operated through clearing, that is, according to scheme B-Book. It’s neither good nor bad. It is still too far to the real trading conditions (with all the slippage and volatility), but still better than demo account;
a range of trading assets is limited. Most often it is 3-4 dozen currency pairs, gold and silver. Only a few cent brokers have CFDs or oil;
the declared type of account execution — Instant and Market Execution. In fact you should not count on the market instant execution;
80% of cent of brokers have no demands to minimum deposit. It is either missing or is less than $ 1, and the rest of $ 10 or more;
to trade with cent lot you need to open a separate account, the money in the future can be transferred into a regular trading account (often without a fee).
Cent broker: does it make sense?
A reasonable question: why open a cent account, if almost all brokers offer demo account? There are two aspects here:
psychological. As long as the trader takes no risks, his style of trading is more irresponsible. The tendency to save money clearly starts to emerge, when the reality comes to understanding. “If there is no money, you do not mind loosing them” is a classic psychology of many people. Only risking their own earned money, the trader begins to appreciate every moment and weigh the risks. No matter the dollars or the cents. A sense of reality makes another look on the process of trading;
technical. Demo account differs in the orders executions and the internal data transmission from a cent account. It would be like to breathe clean air in an enclosed ventilated space and then get into the atmosphere of the industrial city.
Demo account is only needed to understand how generally the indicators and software of the platform work. Testing of strategies can be started on a demo account, but professionals prefer the cent brokers. Cent brokers actually negate the risks of losing money and allow you to test strategies in real trading conditions. For new traders cent accounts is to gradually build up experience and be responsible for the results of trading of your real money.
