Accounts - Accounts Types Explained - Account Explanation

2 Types of Accounts - Standard Account & Micro Account

A practice practice account is a beginners account provided by brokers to help beginners practice trade on the market using this practice account known as a practice account. This demo account helps beginner traders to practice on the online forex market using this demo account which is also referred to as a practice account. Beginner traders also use this demo practice account to learn how the platform provided by their broker works.

In recent years retail trading has grown hugely in popularity & demand for different types of accounts has grown. There are many different account types available to any trader who wants to invest in the online forex market market - Trading Account Explanation.

The forex market is a highly leveraged market for speculating on currency valuations. Traders can purchase large amounts of currency units using little capital of their own using leverage - Trading Leverage is what makes attractive to many online traders - with leverage a trader can make more profits or losses because they use less of their capital & borrow the rest.

There are different types of accounts available to help investors & online traders better manage their capital as well as their trade transactions.

It is therefore important that the traders consider what they want to get out of their trading, before deciding on account type to open.

Shown Below is a comparison of the two types of accounts commonly used to trade currencies. The forex account types review below explains the different features of each of the types of accounts.

1. Standard Accounts Explained - Standard Accounts Types Described

Account Explanation - Standard Account. A Standard Account is denominated in US Dollars and trade transactions are placed using standard lots. One standard lot is 100,000 units of currency. One lot is also referred to as a one contract. Minimum opening capital for a standard account - at-least $10,000 USD.

1 contract refers to the minimum size of a single trade transaction. This account option is the most suitable for investors with enough capital to invest in forex - this account option requires $10,000 to $50,000 dollars in starting capital, for this standard account the investor won't be undercapitalized & with good forex money management rules and forex money management strategies, this standard account option has the best chance for profitability because it is not under capitalized. Under capitalization is what makes most investors in forex not profitable.

It is not recommended to open a standard account unless you have an account balance of at between $10,000 minimum and $50,000.

Professional Money Managers recommend $50,000 minimum to open this standard account and only opening 1 or 2 lots maximum per every $50,000 dollars you have in your account. However, most online brokers will still open this standard account for you if you have more than $10,000.

If an exchange rate for EURUSD is quoted at 1.4000, then the smallest trade transaction available in a standard account is worth $140,000 of currency to buy 100,000 EUR. With leverage of 100:1, this is only $1,400 of your money and the rest of the money you will borrow from your broker (with forex leverage of 100:1, your broker gives you $100 for every $1 dollar that you have, therefore for this trade transaction using only $1,400 of your capital, the broker will give you $100 of leverage for every $1 dollar you have, meaning after leverage you will have $1,400*100=$140,000 which you can then buy 1 standard lot of EURUSD).

For Standard Lots Minimum Price Movement of 1 pip = $10

2. Micro Account Explanation - Micro Accounts Types Described

Account Explanation - Micro Account. Micro Accounts use lot sizes of only 1,000 currency units. These Micro accounts are often appropriate for investors & traders without a lot of capital & can sometimes be opened with only a $5 minimum balance.

This Micro account option is generally best suited for account equity balances that are between $1,000 and $5,000

This Micro account option allows the trader to open trades in micro lots. 1 forex micro lot is one-tenth of a mini lot and one-hundredth of a standard lot.

If an exchange rate for EURUSD is quoted at 1.400, then the smallest trade transaction available in a micro account is worth $1,400 used to buy 1,000 EUR. With leverage, this is only $14 of your money and the rest of the money you will borrow from your broker (with forex leverage of 100:1, your broker gives you $100 for every $1 dollar that you have, therefore for this trade transaction using only $14 of your capital, the broker will give you $100 of leverage for every $1 dollar you have, meaning after leverage you will have $14*100=$1,400 which you can then buy 1 micro lot of EURUSD).

For Micro account - Minimum Price Movement of 1 pip = $0.1

In Forex, one lot is the standard transaction minimum of a given currency pair. But many brokers offer fractions of this standard lot to enable more retail traders to access the market. Being able to offer forex micro lots reduces the minimum trade transaction size thus giving the beginners and also those traders without a lot of capital to start investing to get a feel of the market without investing a lot of capital.

There are learn online tutorials that a beginner trader can read even before opening a real account, and to get extra practice in trading before opening a live account - a beginner trader should open a practice demo practice account with a broker - so as to practice placing trade transactions before opening a real account & investing with real money.

During the training period using the practice account, the beginner trader will learn the key factors needed to succeed in forex such as: education, money management, trading plan & systems.

The types of strategies used and the skills required for any of these 2 accounts are essentially the same - those skills and strategies required for the Standard Account or Micro Account are the same, the only difference to be adjusted are the forex money management rules for each account type.