When you’re ready to start trading Forex and already have a preferred broker, the next step is to choose an account type.
What are the different types of forex accounts that are available to traders? How are you going to choose the best one for your goals? Let’s explore the answers to these questions together in order to make a choice in your favor.
Forex account types
There are 4 main types of forex accounts – Standard, Cent, ECN, and Demo. Each type has its own advantages and disadvantages which you need to carefully consider before selecting the best one for you. Factors that you should take into account include your trading style, risk tolerance, investment amount, and trading strategy.
Let’s have a short overview of each type:
Forex standard account
The Standard account is the main account offered by most forex brokers. The main advantage of using this type of account is that you can get access to a broker’s best features and benefits. For Standard accounts, it is 1 lot = 100,000 currency units.
Forex cent account
A Forex Cent account is a trading account with a balance measured in cents, which makes it ideal for beginners who want to trade without risking too much money. The minimum lot size required is 0.01 lot, so anyone can enter the forex market and begin trading with very small capital.
Forex ECN account
ECN stands for Electronic Communication Network – it is a system that allows traders to buy and sell currencies without the need for an intermediary or agent. ECN accounts are one of the most popular types of trading accounts because they offer transparency and direct market access. Most Forex brokers offer ECN accounts, which come with different commission rates, leverage levels, and minimum deposits.
A demo account is a type of Forex trading account that helps traders explore the Forex market without spending any real money. Trading on a demo account lets you explore real-world trading functions, like analyzing price movements and understanding spreads.
How to choose the best Forex account?
Now that you know the main types of accounts you have to compare some factors in order to make a choice. Here are they:
When choosing a Forex account type, you will need to consider the minimum deposit required. Most brokers require a large investment, but some offer accounts with lower deposits.
A spread is the difference between a currency’s bid and ask prices. This cost can be influenced by market volatility, trading instruments, and liquidity.
Access for trading all assets
Brokerage firms often have different account types with varying restrictions on what assets you can trade. That’s why you need to consider this as well.
When trading, you’ll need to pay both entry and exit commissions. Make sure to compare broker prices before opening an account, in order to be aware of all associated fees. To find out more see ic markets review.
With the above in mind, we hope you are now better equipped to make a decision on the best forex account type for you and your trading goals.
Remember, making a smart choice about which account type to open is just one step on the road to successful online trading. Explore the world of trading for yourself and see where it takes you.