Forex Trading Account

Forex trading is an interesting and worthwhile business to invest in. A lot of its benefits have been discussed, but how well can an average person begin forex trading? You will need to first identify a forex broker that you would like to trade with. Most forex brokers provide clients two options for trading accounts; a demo forex trading account and a funded live forex trading account. The features provided in these accounts vary from one forex broker to another.

Primary Types of Forex Trading Accounts

 

  • Demo Forex Trading Account

 

As a beginner you should start by opening a demo forex trading account that is usually provided for free by most forex brokers. A forex demo account is more or less a virtual training program where you evaluate the operations of the broker without committing any funds. When operating this account, you are not exposed to any risks as the demo account is usually opened with virtual money. This allows you to evaluate the forex broker’s services and their provided trading platform.

You may feel that you have appropriate business strategies that you will put in place in forex trading. However, it is vital to test these business strategies in a forex trading demo account. Additionally, most brokers provide education materials and some professional news feeds to their clients with the demo account to keep them updated on the changes taking place in the forex market. This would be very relevant for you.

Nevertheless, these accounts usually have limits on the amount of virtual funding provided in the account along with the time limit of how long you will use the account before you are required to open a live forex trading account. Therefore, you should make quality use of the available resources within those timelines as they will enhance your success in actual forex trading.

 

  • Live Forex Trading Account

 

After you have adequately practiced your forex trading skills and evaluated your desired forex broker using a forex demo account, you can confidently open a live forex trading account. This is usually a funded account and the initial deposits to this accounts vary in different forex brokers. Some forex brokers can allow initial minimum deposits of $50.

When opening a live account, it is important to select the most appropriate type of account for you to fulfil your forex trading needs. These accounts include; Individual; Trust / Superannuation; and Corporate / Partnership.  This is important as every account type has its own features and requirements, therefore opening the wrong account type may cause some inconveniences.

In the recent times, forex brokers allow traders to trade custom lots. This was not the case in the past as a forex trader also had to choose between a “standard” account, a “mini” account, or a “micro” account when opening a forex trading account.

Allowing for trading custom lots has given the inexperienced forex traders an opportunity to trade in the forex markets even with a small amount of capital.

Benefits of Having a Forex Trading Account

In addition to the education and analytical resources provided by forex brokers when one opens a forex trading account, there are some other benefits a trader enjoys.

 

  • Liquidity

 

Having a forex trading account allows you to trade in the forex markets. The forex markets have high liquidity due to the constant supply and demand for money. This market is open 24 hours, 5 days hence you are able to trade all day long. In addition, you are able to change your trade position with ease during normal market conditions due to this high liquidity.

 

  • Gain access to the online trading platforms

 

Once you have a forex trading account, you are able to get access to the highly developed and advanced online platforms such as the MetaTrader 4 online platform for forex trading. This platform provides desirable features that enhance your effectiveness in forex trading. Such as acquiring the mobile version of this platform which is compatible with both android and iOS devices.

 

  • Leverage

 

With leverage, a forex trader can trade up to 500 times more funds than he has in his account. Therefore, one can generate significant gains even with a small amount of capital.

In conclusion, beginning forex trading by practicing with a demo forex trading account, assists in efficiently managing risks during the actual forex trading.

 

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