Trade Forex Trading

Types of Trading Accounts Explained

Pick Your Best Trading Account - Account Types Breakdown

What Account Types Exist? - Overview of Diverse Account Options - Account Classifications There are three distinct classes of accounts available for selection when a forex trader decides to establish a new trading account, namely:

The two primary classifications of trading accounts are: Standard Account and Micro Trading Account.

Forex Account Types Explained: Options for Traders of All Levels

1. Standard Account - Types of Accounts

A Standard account is denominated in United States Dollars, and all executions are processed using standard lot sizes provided by brokers supporting standard forex accounts. A single standard forex lot equates to 100,000 units of the base currency. One lot is also commonly referred to as one contract. The minimum initial deposit required to open a standard forex account is set at a minimum of $10,000 USD.

A single standard lot, or one contract, represents the smallest volume for a trade transaction. This standard account type is optimally suited for forex traders possessing substantial capital - it typically requires an initial investment ranging from $10,000 to $50,000. With this capital base, the trader avoids being undercapitalized, significantly increasing the potential for profit when adhering to sound forex equity and money management principles. A primary reason most retail forex traders fail to achieve profitability is insufficient capital (undercapitalization).

Opening a standard account is inadvisable unless your Forex account possesses a minimum balance ranging between $10,000 and $50,000.

Pros suggest at least $50,000 to start this standard account. Limit trades to one or two lots per $50,000 in your forex account. Most online brokers will open it for you with over $10,000.

2. Micro Trading Account

Micro Account uses lot sizes of only 1,000 units of currency provided for by micro account forex brokers. Micro account is often appropriate for forex traders without a lot of capital and micro accounts can be opened with only a $100 minimum forex equity balance.

The micro account choice lets forex traders start trades using forex micro lots. A micro lot is one-tenth of a mini lot and one-hundredth of a standard lot.

Forex traders pick from various account types. Choose your preferred one when opening an account. Your broker offers these options.

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