Nano and cent accounts are great options if you want to trade with small capital. What are the differences between the two?

For many years, forex trading has been widely known as one of the most promising investments to make. Brokers have become way more accessible, online trading platforms have simplified the process of trading, and of course, made it available from almost anywhere in the world. The forex market has grown into the biggest financial market in the world with about 13.9 million online traders actively trading in 2021, according to Modern Trader Study and several other types of research.

Nano vs cent account

With that being said, entering the forex market is now easier than ever. But despite being easy, you should only invest with the money that you can afford to, due to the risky circumstances and the volatile nature of the market. Even so, this doesn't necessarily mean that you need to be wealthy first before you can trade.

In fact, it is highly recommended to start small in forex trading. One of the things that would help you to minimize your trading risk and potential money loss is by using the right trading account, such as a nano account or a cent account. Many brokers mostly designed these types of accounts for beginners in order to help them adjust to the real market condition.

 

Defining Nano Account

Nano account is a type of trading account that uses a smaller trading size compared to standard account. The most important to remember is that one nano lot is equal to 0.001 standard lot. So, if a standard account requires $100,000 to trade, then in a nano account, you will only need $100. This amount can even go lower depending on the broker or occasion. Some would even allow you to trade with as low as $10.

For beginners, using a nano account is definitely a smart choice. Firstly, it allows you to start small and keep the risk as low as possible. You can also use this opportunity to sharpen your trading skill and try out different trading strategies.

While most people would suggest using a demo account to practice, but nano account can be a great option as well. Think about it: if you trade with a nano account and win, you will pocket some real money as profit, but if you lose, you won't have to worry about losing a lot of money because the risk is very small. If you're interested in using nano accounts, some of the brokers that you can choose are:

 

Defining Cent Account

On the other hand, cent account is a trading account type that uses cent as its base currency instead of regular dollar. That means, if you open a cent account and deposit $1, then it would appear as 100 US cents in your trading account. Interestingly enough, you can start with a minimum deposit of as low as zero.

The purpose of this system is to help new traders get accustomed to seeing bigger sums of money in their accounts. The key to using cent account is as if it's a regular account. In a sense, this would help traders make better decisions and be more aware of their trades before actually investing in the standard trading account. This is why cent account is usually used as a transitional stage between demo account and real accounts.

However, one of the notable downsides is that not many brokers offer cent accounts because of its smaller size. As a result, cent accounts are usually known to have higher quote spreads to compensate the broker. Some of the top brokers that provide cent accounts are:

 

The Bottom Line

Besides micro accounts, now you know a lot of other types that can be used to trade small.

To put it simply, we can say that both nano and cent accounts have a similar function, which is to let traders start small. Both come out with a great opportunity for traders to explore various strategies and trade without worrying over huge money losses. The difference lies in the system that they offer. Cent accounts allow traders to trade small because the account's base currency is converted into cents instead of actual dollars. Meanwhile, nano accounts only cut down the minimum trading lot and let traders invest with lesser money compared to standard accounts.

We've learned that there are many benefits of trading small with nano and cent accounts, including the potential of earning real returns with small risks. Even though you won't get as much return as with a regular trading account, but profit is still profit.

There is no risk if you use a demo account, however, you won't get anything no matter how great your performance is. Nonetheless, it's important to note that gain shouldn't be the main goal in these types of accounts. If you're relying on small trades to earn profits, you will have to wait for a long time for it to pile up. Therefore, it's best to only use these accounts to practice.