Forex trading has become a popular career option due to its easy accessibility, liquidity, high gains, and fast returns. It offers the benefit of trading despite the ups and downs of the market.
However, to get the best advantages from the forex markets, it’s important to select a forex trading account as per your knowledge, skill, and expertise in the field. So, how many types of forex trading accounts are there?
Forex trading accounts can be initially classified into demo and funded/live accounts. Traders enter the forex industry with a demo account. After that, they try out funded or live accounts, which are categorized into three types:
- Standard Accounts
- Mini Accounts
- Managed Accounts
Let’s learn about each Forex account type in detail:
Demo Account
Like crypto demo accounts, forex demo accounts are ideal for beginners who want to check whether they are on the right track with their trading plan or not. It allows the traders to test their plan for any net gains, losses, or overall performance.
To enroll for a Forex demo account, you need to provide some personal information to the brokerages. Once you provide the details, your demo account will be opened for practice.
Note that the demo accounts allow a certain amount of virtual funding for a particular period of time. Once you cross the limit, you’ll have to renew the account or try a funded Forex account.
Funded Account
Before you switch to the funded account, it’s good to try out a demo account to get acquainted with the fundamentals of forex trading.
When you choose the funded account, you can deposit funds to trade with real money. It’s worth noting that whether it’s a demo account, a funded account, or any other type, you should always choose trusted global forex brokers that comply with respective regulations and offer multiple account features. A good forex trading broker doesn’t have to be costly. With a little research, you can find low-cost yet reliable brokers like FP Market. Also, don’t forget to check products before you sign up. Like, if you choose FP Markets, it’s important to check what products does FP Markets offer currently.
Brokerages can fund your accounts as per your money deposits. This will allow you to liquidate and start trading in the forex market. Depending on the amount you want to trade, risks, and investment size, there are three types of funded or live accounts:
Standard Forex Accounts
A Standard forex account is a regular Forex account type offered by brokers. It is denoted by several names like Premium, Gold, Classic, and Intermediate.
In Standard forex accounts, you generally make a minimum deposit of $100-$500. In return, you can access a standard lot of $100,000. Although it can help you earn good profits in a single day, there are associated risks too. You must have good knowledge about the field before enrolling for Standard accounts.
Mini Forex Accounts
Mini forex accounts are best for beginners as you can input smaller trading amounts.
In this type of forex account, you can deposit an amount valued between $20-$100.
While in Standard forex accounts, you can access 100,000 base currency units, in a mini forex account, the amount is limited to 10,000 base currency units only. With smaller amounts, your risk for blunders or monetary loss reduces too.
Mini forex accounts are best for trying/experimenting with new strategies in the forex market. Its low capital requirements and flexibility are convenient for traders who are still learning.
Managed Forex Accounts
In managed forex accounts, the money of inexperienced traders is managed by professionals. Put simply, here the funds are handled by the money manager after charging some fees.
As a trader, you’ll put the capital/deposits in a managed forex account, but the money manager will make all the decisions. Your job will be to tell them about any objectives or set of currency pairs that you focus on, and they will handle the rest. Make sure to learn about the most traded currency pairs in the forex market before starting.
The best thing about managed forex accounts is the lesser associated risks. As the account is managed by professionals, you can stay assured of rational decisions. However, you may have to invest a little more than what you expect. It’s also less flexible as compared to other accounts.
Managed forex accounts can be:
Individual account: It’s a basic managed forex account where the money manager decides for each investor.
Pooled funds account: Money is invested in a mutual fund (with other investors), and profits are equally shared.
While choosing your money manager, check their past performance and client testimonials thoroughly. You should stay cautious of scammers who represent them to be authentic managers. We recommend you do your research and read all the facts about forex trading before starting.
Other Forex Account Types
VIP/Professional accounts: VIP accounts are forex accounts for individuals who are financially stable and can pay high deposits with large trade volumes.
Swap-free accounts: Swap stands for interest in forex trading. So, any Forex account that is free from swap is called a swap-free account. Here, you will neither receive nor pay the swap fees.
To sum up, these were some of the forex trading account types in the forex market.