A Forex Trading Account is one where the account holder deposits any currency to do Forex Trading of Currency Pairs. The Forex Trading Account connects a trader with the International Forex Exchange through a Forex Trading Platform provided by the Broker. After opening the Forex Trading Account, a trader can start trading different currency pairs in the Forex Market for profitable returns.
What is Forex Trading Account?
Forex Trading Account is an account where the real money is deposited by the Forex Trader in the account of the broker. This money is transferred by the Broker to the Trading Account of the Trader which is utilized by the trader for trading Forex Currency Pairs over the Forex Exchange Market. Forex Real Trading Accounts are further categorized by different Forex Brokers such as Classic or Standard, Beginners Trading Account, Professional Trading Account, Managed Forex Trading, Forex Islamic Accounts, and further brokers can classify by themselves.
How Forex Trading Account Works
A Forex Trading Account connects a Forex Trader with the International Forex Exchange through a Platform provided by the Broker. Generally, Forex Brokers recommend Metatrader 4 (MT4) and Metatrader 5 (MT5) as standard platforms for Forex Trading. A Trader can buy, sell and exchange currencies on the Forex Exchange at the current prices or set a limit price where the order is executed.
After the Forex Trading Account opening, once a trader login the Metatrader Online Trading Platform there are many features and tools which are unlocked for the trader to utilize. A trader can view and analyze live current prices and charts. A trader can place different types of orders in real time as well as at predetermined rates. These Trading Platforms are equipped with many other features such as Research and Analysis reports and live news updates.
Buyers and Sellers of different types all over the world trade round the clock on the International Forex Exchange through the Online Forex Trading Account. Traders make a profit or loss due to the fluctuation of prices in the currencies. A trader who is selling currency pairs “ask” for the price of the currency and a trader who is buying a currency pair “bid” for the price. The difference between the bid price and the asking price is called a spread. The Currencies are traded in pairs and the prices are decided by the market. A Forex Broker charges a commission or a fee for every trade made by the Forex Trader for providing trading services. Different brokers charge different commission rates to the Forex Trading Account Holders.
Types of Forex Trading Accounts
Forex Brokers offer a wide range of Forex Trading Account types to the traders to choose from as there are different types of Traders with different needs, diverse investments, and targets. The Forex Trading Account types depend on the amount deposited in the Forex Account and the tools and features offered by the Forex Broker. When selecting a Forex Trading Account, a Forex Trader should consider how much initial investment to be deposited in the Forex Account, how much risk to take, and what tools and features there should be available to start trading. Forex Trading Accounts can be categorized into different types with their advantages and disadvantages.
Mini Forex Trading Account
Mini Forex Trading Accounts are the most widely created Forex Accounts by new traders. A Mini Forex Account requires a minimum amount of money to open an account as little as $ 25. Usually, A+ rated brokers open a Mini Forex Trading Account with a deposit of $ 250 to $ 500. Beginner Traders can face a loss when starting to trade Forex, therefore MINI Forex Accounts are best for new traders as less deposit means less loss. As the initial investment is small there would be less emotional pressure and stress on the new trader. Beginning small with baby steps will allow the trader to gradually increase the investment with incremental gains.
The currency is traded in 1/10 of lots in a Mini Account as compared to Standard and Micro Accounts which means smaller lot sizes with less amount of initial deposit. Forex Brokers offer leverage of 400:1 on Mini Accounts. As Mini Accounts have smaller lot sizes, the profit on pips is also 10 times less. Mini Forex Trading Accounts are an excellent choice for traders with less experience and less investment to get exposure to Forex Trading and the Forex Exchange Market.
Micro Forex Trading Account
The Micro account is an excellent way to transition from a demo to a normal account if you’re a newbie. You’ll study the fundamentals of risk management while gaining exposure to market volatility and getting comfortable with live trading. You can trade long-term positions while adjusting to short-term price swings by using the higher leverage offered by a Micro account.
Using a deposit that is 100 times smaller than usual with conventional trading conditions, a micro Forex account is a unique kind of trading account. In other words, if you deposit just $10 to this account, the trading screen will display 1,000 currency units. One currency trading lot size, known as a micro lot, is 1,000 instead of 100,000 when working with such accounts. The minimum Trade size is 0.01 Lot in a Micro Trading Account.
The Micro Trading Account has many benefits. It enables you to practice trading with real money under minimal circumstances and with a 100 times lower risk. Compared to other types of accounts, the way transactions are executed is not significantly different. Suitable for evaluating the broker’s terms. Different types of trading strategies can be easily tested. There can be some drawbacks as well with the Micro Trading Accounts as the broker can delay the traders to the interbank market and prefer the trades from Standard Premium Accounts.
Standard Forex Trading Account
The most common account to have while trading currencies is a forex standard account. The most fundamental features of a typical forex account include the ability to trade up to $100,000, with 100:1 leverage, extremely competitive spreads with no commissions, and to trade in 35 different currency pairs. It is the ideal platform for new forex traders.
Raw Spreads are without any markup from forex brokers on the pairs, it represents actual market rates. Raw Spreads are therefore typically very low or generally zero.
For instance, if the USD/CAD currency pair is priced at 1.3561 and you are interested in trading it, you will probably buy in at this price. In many circumstances, if you start the trade at this spread, you’ll enter the trade at 1.3563, which means you’ll lose two pip right away.
In fact, if you are an experienced trader with greater competence than a novice, you would be better suited to obtain a forex account with a raw spread because you will have access to the best conditions available throughout the forex market, even if you will probably pay high commissions per lot. On the other hand, a normal account will give you access to competitive advantages that the broker still offers, such as $0 fees.