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Forex Trading Basics-Setting Up Online Trading Account

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  • Forex Trading Basics-Setting Up Online Trading Account

    Foreign exchange, also known as Forex, involving the purchase and sale of major world currencies. This is considered the most liquid market in the world and the largest by dollar value.

    It is the most popular form of investment because it allows the average trader to compete with large institutions such as banks and hedge funds. The only thing you need is to have a Forex trading account.

    Online Trading Account Types

    There are various online trading accounts that traders can register and start trading in Forex. The most popular online accounts including standard, mini, and managed accounts.

    Each account online has its own advantages and disadvantages. So it is important to learn about the online trading account that is available before you start Forex trading.

    This account has different features and the one you choose to trade with depending on the size of the initial investment, your tolerance for risk, and the amount of time you can spend every day.

    When it started, it is important to choose the appropriate account of the knowledge, skills, and experience.

    Besides, there are demo trading accounts which also are quite popular these days. By the way, if you don't know the difference between demo and live trading the following guide is for you: Demo Vs Live Trading [ The Ultimate Comparison ]

    Standard Account For Online Trading

    It is the most common online trading account. The standard trading account gives traders access to $ 100,000 worth of currency.

    However, it does not mean that you have to invest $ 100,000 to operate a standard account. According to the rules of margin and leverage, you only need to have $ 1,000 to start trading.

    Many traders choose a standard trading account because it has a high-profit potential. For example, if you invest $ 10 and the position moves 100 pips, you stand to earn at least $ 1,000.

    You can not get benefits like with another trading account. In addition, the account comes standard with a delicious facility for individual investors.

    On the other side of the coin, the standard trading account has a large capital requirement. Many brokers will require you to have at least $ 2,000 minimum balance before you can trade.

    Others were even asking for $ 5,000 to $ 10,000 as the minimum balance. In addition to large capital requirements, standard accounts also have a high potential for making losses.

    The only way you can easily make $ 1000 from a position moves with you, you can also lose $ 1,000 if it moves against you. The standard account is best suited for experienced traders and well-funded.

    Mini Trading Account

    While the standard account allows traders to trade full lots, the mini trading account allows traders to trade using mini lots. In many trading platforms, a mini lot is equivalent to $ 10,000, usually one-tenth of a standard account.

    Many platforms offer standard accounts that will also offer a mini trading account. Mini trading accounts are most suitable for new traders who are hesitant to trade with a standard account.

    One of the main advantages of a mini trading account is that they are low risk. Beginners and experienced traders can trade with a mini account with safe because they only need to trade with 10,000 increments.

    Mini trading accounts also provide an excellent platform for traders to test new trading strategies without risking a lot of money.

    Most mini accounts have low capital requirements. You can open a mini trading account with as little as $ 250 and start trading. The only major loss from a mini trading account is that they have low returns.

    Managed Trading Accounts

    This is a Forex account where you invest money and let others make decisions about buying and selling.

    In a managed trading account, you invest money, set your goals, and let the account manager’s job to meet them. Either the funds collected or individual funds may fund a managed trading account.

    The main advantage of a managed trading account is that you have a professional Forex broker to run the account. The account is best suited for investors with a busy schedule, but they want to make money trading Forex.

    Most managed accounts have large capital requirements. Some platforms will require you to have at least $ 10,000, especially if you are operating an individual account.

    Last edited by ronykhan; 11-17-2020, 04:08 AM.