Before you can start trading Forex, one of the most important things that you will have to consider is what type of account you should open up; a standard, micro or mini account. Before you take this leap, you might want to find out as much as possible about your options so that you can make a choice that suits your trading goals, resources and style best.
Standard Account
Standard accounts utilize standard lots in which to trade. The experts at Trade Forex Trading explain it this way;
One standard lot is 100,000 units of currency. One standard lot is also known as a one contract. Standard Account Opening requires minimum capital of at least $10,000 USD.
The term “standard lot” actually refers to the minimum amount of the single trades that are made through this account. The experts strongly recommend that new traders stay away from this type of account, because it requires a lot more capital to fund. It is only once a trader has experience, and a good amount of capital that they should invest in this account; about $100,000 should do it.
It should also be noted that the risks associated with this account are quite high, and due to the fluctuations within the market, even a small one could end up wiping out an account.
Mini Accounts
The mini account allows traders the chance to trade with mini lots, which equate to about $10,000, or one tenth of the amount of a standard lot. You will need about $1,000 to open up this type of account, and this amount makes this option a lot more appealing.
One of the biggest benefits of opening up this type of account is that there is a lot less risk involved, and so those who are new to the market have a better chance of finding success with these accounts. Because of the smaller trades, the trader will benefit from much smaller fluctuations in the exchange rates, allowing them the chance to trade for much longer with much less capital.
Micro Accounts
Micro accounts can be started by individuals with $100 in capital, making it ideal for beginners. These accounts pose a very low risk, and they tend to be opened by individuals who want to practice with Forex trading, rather than leap into the field to make a lot of money. Trading is accomplished with micro lots, and while there is a lot less risk, there is also a lot less to gain from this type of account.
Choosing The Right Account
Before you can begin trading, you need to make sure that you choose the right account out of the standard, mini and micro accounts. While the micro account might be the best option to start out with, it is important that individuals don’t stick to this alone. The experts at IKonFX explain when it is the best time to utilize a micro account;
It can be a great transition period for beginners who have done a lot of practice on the demo but not experienced enough to trade standard accounts.
One of the most difficult things for any new trader to accomplish when they enter into the world of Forex is to get comfortable trading with real money. A demo account can teach you all of the basics of trading, but when you bring real money into the equation, just about everything changes, and this means that you need to adjust the way that you tackle your trades. Once you have enough practice, a mini account is recommended to professionals who don’t have a fortune to trade with.
Knowing which account to open when you first start trading forex is very important because this could end up determining how successful you are. Make sure you have enough information to make this choice.
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