What is a Forex account type and how to choose the most suitable one for you, we will consider further. As a rule, novice market participants cannot decide on the choice of a trading account from among their many types.
Today there are various types of trading accounts,
among which any client can choose the best option that meets the requirements
of his trading strategy.
The following types of trading accounts can be
distinguished, which take into account the needs of all traders:
- MarketExecution - an account with market order execution, which takes place at the
best price of the liquidity provider. They are used by traders who
prefer short-term intraday deals.
- InstantExecution - accounts with instant order execution, take advantage of manual
trading
- ECN - trading
accounts with increased quotation accuracy. A feature of such accounts
is the absence of slippage.
Separately, it is worth highlighting a demo or
training account, trading on which is conducted with virtual funds. It is
recommended to open a demo account before direct trading using your own funds.
Preliminary work on demo accounts for just a couple
of months helps a beginner to get acquainted with the capabilities of a trading
terminal and hone his trading skills.
The only drawback of trading on demo accounts is
the lack of an emotional component. For this reason, it is not worth
working on a demo for a long time, as there is a possibility of getting used to
such a risk-free trading process, and further transition to an account with
real money on the balance will cause difficulties.
What are the cent and dollar types of forex accounts?
By the type of deposit presentation and its minimum
size, real accounts are divided into two categories:
1. Classic is a standard trading account with a dollar deposit, which, depending on the conditions of the broker, provides a fixed or floating spread.
2. Cent are cent accounts that allow beginners to invest the lowest possible amount and gain practical trading skills in the real market. Thanks to the display of the trade balance in cent equivalent, the novice trader can learn to operate with amounts with three zeros on the account. Choosing this type of account, a novice market participant can feel the full range of emotions inherent in trading on the real market, and not risk a lot of capital.
Everyone who has decided to start making money on
the foreign exchange market should know what this type of
account is in Forex . It should be understood that the choice of
the type of account must be taken with full responsibility, as this will
greatly affect the efficiency of trading. There are several types of
accounts, each with its own characteristics. In addition, you need to
understand that not every account is suitable for completing a particular task.
Main types of Forex accounts
Brokerage companies today offer several types ofForex accounts.
Each trader should know what the type of account in forex is , as well as what advantages and capabilities each individual account has:
- Demo account. It
is from this account that traders should learn the Forex
market. Using a demo account, you can get very useful skills that
will be useful in the future for full-fledged trading with a real
account. The main advantage of such an account is that the trader
does not risk his own funds and the virtual funds provided are
endless. It should be noted that the demo account is actively used
not only by beginners, but also by professional traders. The latter
choose it in order to relieve emotional stress from real trading, while
not breaking away from trading, and also in order to test the created
strategy;
- Cent accounts. After the demo account has allowed you to acquire the
necessary skills for trading in the Forex market, you can start trading
with real funds. Cent accounts allow you to fully immerse yourself in
the world of trading, but at the same time the trader does not risk large
sums. Each cent broker has restrictions on the minimum rates, but
they still fluctuate between $ 1-10. The deposited amount of traders
will be displayed in cents. For example, after depositing $ 5, 500
cents will be deposited. It is not worth calculating a large profit
from using a cent account, since it is also a training
one. Nevertheless, the psychology of trading is taking on a real
shape and a trader may for the first time encounter those emotions that he
will experience when trading large sums.
Interesting: just like a demo account, cent
accounts are very popular among those traders who trade large amounts. On
the one hand, this allows you to test the performance of the developed
strategy, and on the other hand, to ensure a stable income. Very often,
cent accounts are used for professional trading. Really good income can be
obtained if long-term strategies are used, as well as scalping trading
advisors.
Also, the advantage of such accounts is that there is no swap or commission for opening a deal, which means that there are no unnecessary expenses.
- What is the standard type of forex account ? The most popular account type used by experienced
traders. The main feature of such an account is that it has a fixed
spread, which makes it convenient for traders to calculate the final
goals. For example, with a lot size of 0.01, the profit will be $
0.1. By and large, the standard account type is the most optimal
option for those traders who trade on time frames and also use trend
strategies and trend trading robots. For those who use scalping, such
an account is not suitable, since in this case there are frequent delays
in order execution;
- ECN account. If
a standard account for scalping is not the best option, then ECN accounts
are just created for such a strategy. Despite the fact that the
spread is also floating here, in contrast to the classic and standard
accounts, it is quite low. This is explained by the principle of
operation of such an account, when the seller and the buyer set the sale
and purchase prices of currency;
- Swap-free accounts. This category can include standard, cent, and ECN accounts. If this name is present in the account description, it
means that there are no swaps. Thus, when the position moves to the
next trading day, no commission will be charged from the trader. This
is the best option for those traders who keep deals open for a long time,
from a week to several months. For short-term transactions, such an
account is not suitable, since they will be closed on the same day, but
each time you have to pay a commission for opening a transaction, which
the broker withdraws, compensating for the absence of a swap;
- Investment PAMM accounts. If a trader does not want to trade on his own, but at the
same time earn in this way, then the best option for him is to invest in
PAMM accounts. Thus, he simply makes a profit without caring about
how the trade is conducted and so on;
- Managed PAMM accounts. Such accounts are suitable for those traders who have gained
experience and want to significantly increase their income from trading in
the foreign exchange market. The best option for making this desire a
reality is to use managed PAMM accounts. The whole point is that
investors invest their funds in an open PAMM account of one trader, who is
engaged in trading. When the deal ends successfully, he gives the
investors their profit, but at the same time takes a certain percentage
for his work.
When a trader just enters the forex market,
what type of account should he choose in this case? If
the above information did not answer this question, then you should start with
a demo account. It will allow you to learn all the subtleties of trading,
and also make it clear how simple or difficult this process is. If you
really want to improve yourself and learn more and more every day, then you
should start with a cent account, gradually moving to a standard one. If
you just want to provide passive income without delving into the specifics of
trading, then the best option would be to invest your funds in PAMM accounts.
