Types of FX Trader Accounts
Demo FX Trader Accounts
When you sign up with a Forex broker, you will find that most offer you the option to trade on demo FX trader accounts. This type of account allows you to trade in real time market conditions and emulates a live account with one slight difference, namely that you will be using virtual funds.
Forex brokers offer their customers this option for a number of reasons. Firstly, it’s a good way for their clients to test their trading platform as most traders are reticent to make a deposit and then later find that they don’t like the trading platform or it isn’t suitable for their requirements.
Additionally, demo FX trader accounts are also extremely useful to novice traders who are still learning their way around Forex trading. These types of accounts are absolutely vital to anyone who is looking to become a serious trader. By trading on a demo account you will be able to better understand all the theoretical concepts you have learned and see how they can be applied in live trading conditions.
However, if you are looking for demo FX trader accounts you need to be aware that most Forex brokers place a limit on how long you can trade with a demo account. Some brokers offer these accounts for as little as a week but most allow their customers up to a month.
However, there are certain brokers who allow traders to use their demo accounts indefinitely, and this is the type of account you will need as a beginner. This is because you will need at least two or three months trading on a demo account before you can go live. This might seem like a long time but consider the fact that you are protecting your capital and learning to trade successfully in real market conditions.
Live FX Trader Accounts
These FX trader accounts are the standard account you will be using when trading with your own cash, versus the virtual option. There are a variety of types of live accounts available, including micro, mini and standard accounts. These refer to the lot size you will be using when trading. On a micro account you will be allowed to place transactions using 0.01 of a standard lot size or 1,000 units, a mini account allows trades with 0.1 of a standard lot size and the standard account, as you can tell, requires the minimum transaction to be of one standard lot size.
You will find that these different live FX trader accounts also come with different conditions, such as the minimum deposit required and spreads. They also offer different services for each different account type. For example, a Forex broker might offer free trading signals to customers with a standard account while a mini account won’t have this advantage.
As a beginner Forex trader, your best option is to start with a micro account as this type of account requires the lowest deposit while also allowing you to trade with small lot sizes. Once you feel confident in your trading abilities and you are profitable you can then consider moving up to larger FX trader accounts.
Managed Forex Accounts
Last, but not least, there are managed FX trader accounts where you, essentially, hand over all control of your trading account to a professional trader. He or she will trade in your name and you will have a separate password which will allow you to view the status of the account at any moment in time.
The advantage to these FX trader accounts is that your account balance can grow while you are still learning how to trade on your own. However, you need to ensure that you pick a good company to work with so you don’t have any nasty surprises.