One of the main reasons why we have various forex trading courses and fx workshops available is because Forex trading is gaining tremendous momentum, with many people showing interest. As you decide to learn to trade forex, one of the first steps you should take, is choosing an account type to trade with.
In this piece, we discuss various types of forex accounts, giving you the advantages and disadvantages of each.
Demo Account
Demo account is an entry account for all traders; giving you a virtual experience of trading without losing any money.
Advantages
- You have the freedom to trade the way you like as there is no capital risk involved
- All mistakes are forgiven: With this account, you will bear no loss to your income. Even if you lose your demo account, you still have the opportunity to reset it
Disadvantage
- You don’t get to learn from real market conditions that affect real-life trading
Mini Trading Account
This type of forex trading account involves a trading lot that is one-tenth the size of a standard lot of 100,000 units. You can make a personal investment of up to 500 dollars.
Advantages
- Requires a relatively small amount to start. This gives many traders the ability to afford a mini trading account
- You will learn necessary money management rules, so you don’t get wiped out fast.
Disadvantage
- One major drawback of this account is that you will have a limited gain of information.
Standard Trading Account
This is the most common trading account. You need between 1,000 to 10,000 dollars to trade with. Check out the advantages and disadvantages below:
Advantages
- You have big potential for substantial gain. This is straightforward; The fact that you make a larger deposit for this account gives you a better opportunity to make a greater gain.
- As the broker generates more commission from a standard trading account, they offer you more service in return. This includes an educational service, cash bonus on deposit, dedicated account manager, etc.
Disadvantages
- There is the possibility for significant loss. There is no gainsaying that it’s two sides of a coin here. Just as you have a potential for colossal gain, you can also lose a substantial amount of money if things go wrong.
- The high capital requirement may prevent some people from having this account.
Managed Trading Account
Here, you implement the capital while you leave the trading to another trader or robot to manage. This also comes with certain advantages and disadvantages as follows.
Advantages
- You have the potential to make a profit as the person helping to manage the trading will most likely have more experience in trading than you.
- You can save time for other activities.
Disadvantages
- It requires you to pay for the service of the person or robot managing the trading for you.
- You need to trust this trader or robot as you don’t have much control.
The Ball is in Your Court
Having read up to this point, you have gotten yourself acquainted to the different types of account in forex trading. Now the choice is yours.