Accounts - Accounts Types Explained - Account Explanation

2 Types of Accounts - Standard Account & Micro Account

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

In recent years retail forex trading has grown hugely in popularity & demand for different types of trading accounts has grown. There are many different forex account types available to any forex trader who wants to invest in the online forex market online forex trading 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 forex leverage - Trading Leverage is what makes Forex attractive to many online forex 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 forex 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 trading account type to open.

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

1. Standard Trading 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 forex lots. One standard forex lot is 100,000 units of currency. One forex lot is also referred to as a one forex contract. Minimum opening capital for a standard forex account - at-least $10,000 USD.

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

It is not recommended to open a standard forex 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 forex trading account and only opening 1 or 2 forex lots maximum per every $50,000 dollars you have in your account. However, most online forex brokers will still open this standard forex trading account for you if you have more than $10,000.

If an exchange rate for EURUSD is quoted at 1.4000, then the smallest forex trade transaction available in a standard forex trading 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 trading 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 forex trading 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 forex lot of EURUSD).

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

2. Micro Trading Account Explanation - Micro Accounts Types Described

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

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

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

If an exchange rate for EURUSD is quoted at 1.400, then the smallest forex trade transaction available in a micro forex trading 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 trading 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 forex trading 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 forex lot of EURUSD).

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

In Forex, one forex lot is the standard transaction minimum of a given currency pair. But many forex brokers offer fractions of this standard forex 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 forex traders without a lot of capital to start investing to get a feel of the forex market without investing a lot of trading capital.

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

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

The types of trading strategies used and the skills required for any of these 2 trading accounts are essentially the same - those forex trading skills and forex trading 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 forex trading account type.