Between cent account and the micro account, which one is better for new traders? Read on to find out the difference between those two so that you can decide which one is more suitable for you.
Many forex brokers offer cent and micro accounts to the newcomers because those types of accounts are actually the right place to start. Cent and micro accounts end up as the two most common next stops after trading in a demo account.
You can adjust yourself to the real market where both your profits and your losses are as real as they can get. At the same time, you don't have to worry about big losses and psychological burdens as both cent and micro accounts are specifically designed to keep the risks minimum.
If you end up facing a choice between a cent or micro account, which one would you choose?
If you are a novice trader aiming to gain practical experience in the real market with minimal to no risk, the cent account is an excellent option. Conversely, if you seek a greater potential for profits, the micro account would be more suitable.
To compare between the two, here is an insight of cent vs micro account that may help you.
Which One Is Better?
To lower trading risks as much as possible, the cent account uses the account currency while the micro account cuts down the minimum trading lot. If the cent account's minimum trading size is converted into a trading lot, it can reach much lower than that of the micro account.
Therefore, it is safe to say that cent account offers fewer risks than micro account and doesn't take as much deposit. If you are a newbie whose purpose is to learn how to navigate the real market with a very small to no risk, the cent account is a great choice.
On the other side, you can take the micro account if you want to take on a higher chance of profit.
See Also: Lowest Deposit Forex Brokers
Cent Account Explained
As its name implies, a cent account is characterized by its ability to allow trading on the smallest denomination of a currency, about 0.001% of a standard lot. You can start trading in this type of account with a very small amount of deposit, where some brokers even place no limit on how low the deposit can be.
Unfortunately, this type of account is so small that not many brokers provide this feature. This is to be expected since every trader wants to make some profit immediately and making a couple of cents at a time does not seem very rewarding.
Still, a couple of cents is still something when compared to zero cents you earn from a demo account. Although it is technically possible to earn a huge profit, the main goal of this account is to get you used to the real market at a minimum risk.
A Side Note
As mentioned before, it is technically possible to score a large profit out of this account. This is where leverage comes in. Keep in mind that the leverage can work both ways, it can move alongside you or against you. Therefore, operate an account of high leverage only after you gain some experience on the field. Even with some experience in trading, remember to exercise caution.
Aside from its role as a starting point for new retail traders, the cent account is also useful for some of the more seasoned traders to test out new strategies without risking a lot of money.
Another thing to keep in mind is the fear of loss. Usually, new traders are encouraged to move to a real account as soon as possible because using a demo account for too long may eliminate the fear of loss.
Such effect can occur as well on a cent account since the loss can be really small and insignificant to your overall money. But since cent account is a real account where the loss can be realized and affect the condition of the trader's balance, this account sits perfectly between a demo account and a real account.
Micro Account Explained
If a cent account is not quite suitable for you, you can try the micro account. It is one of the three accounts that is offered by a forex broker aside from a mini account and the standard one. This account trades a one hundredth smaller lot than that of a standard account; only $1,000 per transaction. Hence the name micro.
Since this account trades in micro lot, you do not need a hefty sum for deposits. It usually only takes below $50. Such amount is quite small when compared to a standard account that often starts from $500 to $10,000.
That also means you may not gain a huge amount of profit from this type of account. It does fit its purpose to give a real market experience for novice traders with low risks.
In addition, traders can start to train their perception of risk management. As the loss is starting to get real in this account, they may want to risk less of their hard-earned money by using this type of account.
Some experts may also use the micro account to test their new strategies in the real market.
That is the main feature of a micro account. The fine details often vary from broker to broker. Please refer to your broker for more details of this account.
See Also: Best Forex Brokers with Micro Lot
Furthermore, you need to know that the account currency's display in a cent account would be different as they are denominated in cents (a hundred times smaller than the standard one). You don't have to adjust this perception if you trade in the micro account.
Take the advantage and disadvantage of both micro account and cent account into consideration and contemplate thoroughly. Whether you choose a micro account or cent account, real money has started to be involved here. After all, we are here to make money, not to lose money.
We do wish you a successful trade, but in case your plan goes south, it will not hurt your deposit too much. You still can practice or try out a new strategy or expert advisor without risking too much of your deposit. That's why applying the risk-reward ratio is important.
Oct 30 2021
Hi, Dwirachmat you have indeed outlined thoroughly between these two types of accounts. All made clear with simplicity, thank you soo much. I learned a lot from this article. Keep up the good work as a writer with precision😊
Nov 14 2022
In fact, a cent account gives you real proft of money. So when you make a profit you get money and when you take a loss you lose money for a very small amount of money. This means that you can train your psychology before jumping to micro accounts. I think beginners who want to test their forex trading strategy can use cent accounts. If in some testing of your strategy is very smoothly which is give you more profit than loss in every trade, you can up to the next level of trading with micro account. Or if you get loss than profit in every trading with cent account, you will experience some of the feelings that you can't required when trading with demo account. For example FOMO feeling (which is you must train your psychology and your emotion to avoid this), Margin call, setting and feel the leverage that broker gives, or even how to deposit in there. Such an good rewarded-experience you can't get in demo account. I went through a very boring situation because the demo account was able to define my real situation. As the author has already mentioned, cent accounts can be found in some broker features if you can get. Therefore, not all brokers have this account. If you want to learn a cent account with real money, it is advisable to check if the broker allows you to open a cent account before signing up with your preferred broker.
Dec 9 2022
Andy Wijaya: For me, micro accounts are more challenging. We know that losing is more real, but gaining is also more real. Cent is boring and unrewarding, I jumped right into the market without a demo account. I think micro accounts really capture the true picture of live trading. I touched the cent account, and sometimes I get a lot of pips, but when I get a big profit, the profit is only $1-2, but with scalping, I get only 0.1-0.5 cents. I think this win is totally worthless and more like a demo account.
Feb 5 2023
Rodrigo: I think it would be better to use a micro account if your trading strategies are ready. I mean, the cent account is really one more step in Forex Learning Trading. Therefore, the mentality of wanting to get big profits must be removed. It is good to start thinking about making your first profit from the forex market, but never think that a cent account will be profitable.
The cent account is used to test all your risk management and money management abilities, as well as your ability to monitor the markets. It's time for demo account traders to take it to the next level, with very near zero risk.
So for me, of course, a cent account can be a great live trading teacher, but not profitable
Feb 5 2023
It's very interesting to trade with a penny account because my local brokers don't offer it. I mean I as a beginner trader just start a demo account and can train my psychology in it. I think this cent account offers half demo account psychology and half live market. The real question here is: are spreads and commissions also get charged in this account? As you know, some brokers may not include spreads in trading demo accounts, which makes traders always feel lost when trading live. (They don't know that in the demo account they are still profitable because they don't get the spread)
And also on this site, BrokerXplorer has an article explaining which broker offers penny accounts?
Feb 5 2023
Agustian: Most brokers that offer cent accounts will not charge a commission but will charge a spread. So, you have to charge the spread as a transaction fee. But I think the commission is not so important to find out as they will charge a flat fee, unlike the spread which can be floating and can be different each time (if you are trading with floating spreads)
Regarding articles, you can read this article about the list of brokers that offer cent accounts:
Feb 5 2023
I am not a US dollar user. So I don't know the value in cents against dollars. But I must admit that if you trade with cent, the risk of loss also would be start in cent. It means you can reduce a lot of risk with cent account. But I actually want to know 1 dollar = how many cents?
And I am also confused about the picture comparing micro lot and coin lot. I mean, how do you get 0.01 lot = 0.1$? What about coins, I mean how many coins can 0.01 lot cent get? The picture shows the same 0.1 but a in cent account column, it doesn't show how much cent that I will get.
Feb 5 2023
Rowan: The pictures show the pip value comparison is correct. Because you can count manually with this formula
Tick size x lot size
Ticks size usually 0.001 and meanwhile lot size either can be standard, mini or micro.
So if you want to calculate a micro lot, the result you get is 0.001 x 1,000 = 0.1 USD.
Whereas cent lots are only 100 units, which means that 1 pip movement out of 1 cent lots is $0.01 (1 cent lot). And normally a trader will use a 0.1 cent lot account whose pip value will be $0.001
Whereas, 1 dollar = 100 cents (that's why the table said 1 USD = 100 unit), the lot of 1 cent will be worth 100 cents x 0.01 = 1 cent. And if you trade with 0.1 cent lot you will get 1 pip move value of only 0.1 cent which is very little profit