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Forex Trading Account Types

 

Foreign exchange or Forex is a very profitable option for investors. As long as the investor knows how to deal with selling and buying different currencies and using the differences to post a profit, the investor will see considerable success in a short amount of time.



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Unlike shares, Forex trading could be handled anytime and could even be predictable as long as the investor has diligence in researching on the currency’s economic status.



Since Forex trading is not only based on a single currency, there will be losers and winners daily.



Transferring from one currency to another is also easy so it would be possible for investors to post a profit as they could just jump to a profitable currency anytime.



To ensure success in Forex trading, the investor should set up the right Forex account. Forex trading that involve a lot of currencies and done online is not just exchanging your money to another profitable currency, there are certain ways to do it to ensure your success.



Standard Trading

This is the most popular type of trading. You will be required at least $1,000 to start trading in this account but brokers will usually require you $2,000 or even $5,000 to start in trading. In this type of trading, you will be able to use up to $100,000 of a currency for exchange.



Since standard trading has become the common practice for trading, the services and expertise of brokers in this type of trading is usually impressive. You will be able to access more than just updates on trading but also tips on different currencies.



The downside of this type of trading is the risk it poses. Although you will be able to earn considerably in one day, you could lose a lot more the next day. For that reason, brokers will require their Forex traders to have at least $2,000 to start in this type of trading.



Mini-Trading

Mini-Trading is a smart way of starting in Forex especially when you are not familiar with any of the terms, conditions and basic movements. Traders will have the ability to test the market a little bit and slowly move on to bigger things when they become accustomed to trading.



This is also recommended for traders who wanted to test which currency pair is perfect for trading. Those who wanted to start Mini-Trading could do so in as little as $250. The 400:1 leverage makes this type of trading very impressive since it lessens the required capital.



The downside of this type of trading is that traders could have lesser profits. Since there is relatively small risk in this type of trading, it is just natural that your earnings will be a lot smaller.



Managed Trading

This type of trading could require you from $2,000 to $10,000 to start trading. Technically, you will not be trading since your account will be handled by a broker. You will have to give your broker the money to trade and let it grow overtime.



The decision in making them grow is based on the broker and you will not have any decision on how to trade them. Some brokers will offer a pooled fund option wherein you will be providing smaller capital along with other traders. When you have pooled enough funds the account manager with then start trading.



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Through managed trading, the account manager will effectively trade the funds. Because of their familiarity with the industry, they would be able to know the ins and outs of the business.  The downside of this however, is that you will not have the power to make some changes on trading. The overhead cost in trading is also larger as the brokers will require commissions for their services.





Read Next: Broker Payment Options



 

 

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