The Forex exchange market is the largest and most liquid market globally, where traders purchase and sell currencies for a profit. If you want to trade forex, you’ll need an internet account to do so.
After you’ve signed up, you’ll need to choose from various forex accounts the accounts that best fit your needs. Standard, micro, VIP, and managed accounts are the three primary categories of accounts, each with its own set of benefits and drawbacks.
The appropriate type of account for you is determined by the risks you are willing to take, the quantity of your beginning capital, and the amount of time you have to trade each day. You’ll learn which account best suits your needs in this article. Let’s take a look at each account individually.
Standard Trading Accounts
The standard trading account is the most prevalent, and it allows users to trade average amounts of currency costing $100000 each. It does not imply that you must have a balance of $100,000 in your account to deal.
Because of the presence of margin and leverage (usually 100:1), you only need $1000 in your margin account to trade one standard lot. The number of leverage changes depending on several factors.
In the European Union, forex leverage is limited to 1:30, while in other parts of the world, brokers may offer leverage of up to 1:500 on standard accounts. Brokers provide comprehensive services to standard account holders. These are all depositing traders because such accounts demand an initial commitment.
The standard account, on the other hand, has considerable profit potential. The same is true in terms of lost potential. As a result, if you are an experienced trader, trading on a standard account is the ideal alternative.
Most brokers provide more services than forex traders needs who have this type of account. The gain potential is one of the advantages of this account, which is for every $10 pip, if the position moves with $100, your gain will be $1000.
For trading in this account, you need at least $2000, which the brokers require. Loss potential is one of the critical cons of this account. As mentioned earlier, you can gain $1000 for one pip of $10 when the position moves according to your choice. Similar is the case of loss, for $10 pip, if the pair moves against you, the loss will be $1000.
Managed Trading Account
Managed Trading Accounts are forex accounts in which you have possession of your capital but not of trading decisions. These accounts are just like Stock Managed Accounts, where you set the objectives and managers work for you. There are two types of these accounts: Pooled Funds and Individual Accounts.
In this type of account, professional brokers will handle your account. Moreover, if you don’t want to keep an eye all day on the rise and fall of the market, then this type of account is best for you.
In this type of account, you will need a minimum of $2000 for Pooled funds and $10,000 for an individual account. Furthermore, the account managers will also demand commission or account maintenance fees for handling your account. Overall you will have no right to decide the rise and fall of the market.
Mini Trading Account
A Mini Trading Account is a trading account that allows traders to trade with small amounts of money. Most brokers also offer mini accounts as a strategy to attract new clients.
Through Mini Trading Accounts, inexperienced traders can trade without the risk of blowing their accounts. The expert traders can also learn new trading strategies with a small amount of money. To open Mini Trading Accounts, you need only $250 to $500 with a high leverage ratio of 400:1.
Little risk equals low gain. Mini Accounts on trading $10,000 can produce $1 per pip movement, which is the very least. This type of account is more helpful for beginners who want to improve their skills, not assets.
A VIP account is also one of the most common types of forex trading accounts.VIP Accounts are more useful for those traders who are financially stable. The minimum deposit limit is $10,000 and allows the traders to trade on standard lots.
These types of accounts allow the traders to trade in the market directly. The advantage here is that you will make your decisions on your own about the market movements.
To open this type of account, you will need a considerable amount of $10,000. So we can say that this type of account is a good one for those having high capital.
We have discussed with you the best forex accounts. All of these accounts have their pros and cons. It doesn’t matter what type of account you choose for your forex trading. The important thing is to evaluate your performance test.
All beginner traders should start with a Demo Account which allows them to trade with zero risk. After that, the Micro and Mini accounts are the best choices as they allow beginners to trade forex on micro and nano lots.