Accounts

2 Types of Accounts

In recent years retail stocks has grown hugely in popularity & the 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 stocks market - Account Meaning.

The trading market is a highly leveraged market for speculating on stocks instrument valuations. traders can purchase large amounts of stocks units using leverage - Leverage is what makes stock trading attractive to many online stocks traders - with leverage a trader can make more profits or losses because they use less of their capital and borrow the rest.

There are different types of accounts available to help investors better manage their stocks account capital as well as their stocks trade transactions.

How a Real Account Looks Like

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

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

1. Standard Accounts Explained

Account Meaning - Standard Stocks Account. A Standard Stocks Account is denominated in US Dollars and trade transactions are placed using standard lots. One lot is also known as a one contract. Minimum opening capital - at least $10,000 USD.

1 contract refers to the minimum size of a single stocks trade transaction. This account option is the most suitable for stocks traders with enough capital to invest in stocks - this account option requires $10,000 to $50,000 dollars in starting capital, For this standard account the trader won't be undercapitalized & with good stocks money management guide-lines and stocks money management strategies, this standard account option has the best chance for profitability because it is not undercapitalized. Under capitalization is what makes most traders in stocks 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 advice $50,000 minimum to open this standard account and only opening trades with only 2% of the capital you have in your stocks account. However, most online stocks brokers will still open this standard account for you if you have more than $10,000.

With stocks leverage of 100:1, you'll borrow from your stocks broker (with leverage of 100:1, your stocks broker gives you $100 dollars for every $1 dollar that you have in your stocks account, therefore if you have $1,000, the broker will give you $100 of leverage for every $1 dollar you've, meaning after stocks leverage you will have $1,000*100=$100,000 which you can then use to trade stocks trading).

2. Micro Account Explained

Account Meaning - Micro Account. Micro Accounts use lot sizes of only equivalent one-hundredth that of a standard lot. These Micro stocks accounts are often appropriate for stocks traders without a lot of stocks capital and can sometimes be opened with only a $5 minimum balance.

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

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

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

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

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

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