In addition to choosing a reputable broker, finding an account that suits the trader is also one of the most important things when participating in forex trading. At any forex broker, at least 2 different types of accounts are available for traders to choose from. There are even floors that offer 4, 5 types, so for new traders this is really difficult. And almost no one will teach you this problem, except you have to spend money to trade, and you will "teach" yourself to find the most suitable type of account. Understanding that, in today's article we will introduce to you the popular account types in forex. It also teaches you how to get a new trader to choose the account type that suits them best.
What is forex account?
The forex account (account), like many other types of accounts such as bank accounts, is a record of all transactions between traders and exchanges. In addition to the main purpose is to record, this is also where you use to make transactions, buy and sell currency pairs.
Why do traders need to have an account when trading forex?
Historically, forex or forex trading has always been a game of big players like banks and hedge funds. It is difficult for small individuals to participate because it requires a huge amount of money to be able to trade. Thanks to the internet, there are forex and leverage platforms that help traders make money with only a modest and meager capital.
If the forex floor is an intermediary product to connect small traders with the interbank market or liquidity providers. Then forex account is a bridge between trader and broker. Through a forex account, the broker will know which traders need to execute which orders to buy or sell, how much trade volume, execute open positions with which currency pair or which product. All the above information will be sent to the server to execute orders or search for liquidity of matching orders. Or sometimes with brokers, brokers will be the ones who open reverse orders to match orders for traders.
Thus, to forex trading you need to select a forex trading platform and then open a trading account of the floor you registered. Then, when you deposit your money, you can start trading forex.
In case of a new forex trader, it has not been selected Prestigious forex trading floor, you can find out more information here:
In addition, if you are new to opening a forex trading account, you can refer to the details of our article. We not only guide you to open an account at the two most reputable forex exchanges currently, FBS and ICMarkets, but also guide you how to register an account at any one exchange. Click on the link below to find out more:
What types of accounts are forex trading?
There are many different ways of dividing trading accounts. Based on our experience, we find it possible to distinguish forex account types in the following 3 forms:
- Split by features: real account and demo account
- Split by purpose: mini account, standard account, ECN account and management account
- Fee-sharing: commission-free accounts and commission-free accounts
Split by features: real account and demo account
Real account and demo account
Any forex has 2 basic types of account. And exchanges often encourage you to practice playing a demo account first to start getting used to placing orders smoothly, avoiding confusion in trading until learning how to manage capital through trading by volume. Different ... Therefore, before you start trading with real money, you should practice on a demo account for a few months to develop your trading skills first.
Types of demo accounts provided by Exness
Basically, the demo account is simulated to the real account from the user interface, how it works, to the exchange rate in order to help traders practice trading in the most realistic way. The only difference is that you cannot withdraw money, no matter how much you win.
Therefore, if after you know how to trade proficiently and on a demo account you can start trading on real accounts to make money.
Divided according to purpose of use: Cent account, Standard account, ECN account and management account
Cent account
As the name Cent or penny account is a type of account designed for novice traders so they can participate in forex trading with a modest amount, as well as minimize risks. In other words, playing with a Cent account will help you survive longer in the market.
The reason for saying so is because the Cent account is a type of account calculated in Cent rather than in USD, so all orders won, lost, or spread fees are also calculated according to Cent. As you know 1 USD = 100 Cent so when depositing into this account is USD 10, for example, the amount displayed will be 1000 Cent. If calculated in USD value, then 10 USD is not worth much but in Cent, this is a very significant amount for you to practice trading.
Actually, Cent account is very suitable for new traders to help them get acquainted with the market, to experience the true emotions in trading such as losing money due to losing losses, for example. However, the amount you lose is less than 5 USD or 10 USD will not affect how much, so the possibility of that loss is completely acceptable.
If playing on the demo account for too long, psychological factors will not be your most feared. Because the money you play is not the money you make yourself, you almost never regret. You can hold orders for a week, the red account is still "calm like a" because the transaction money is only virtual money. But playing on real accounts will be completely different. The first time you make a deposit, you will probably hug your phone all day just to see the numbers on your dancing account! Account up to 1 USD, 2 USD you also feel excited all day fun like catching gold so! This in the demo account does not do! Therefore, to avoid abuse of the demo account, after a few months, you should trade with a real account. And cent accounts will be the best choice for new traders.
Currently, forex exchanges like Exness or FBS have Cent accounts for you to choose with a minimum deposit of 1 USD or more. So you can just spend about 230,000 vnd equivalent to 10 USD is completely able to experience with this account already.
Standard account (Standard)
This type of account is chosen by many traders after 1 time getting used to forex trading. This account will be calculated in USD, so the risk will be greater than the Cent account. Although depending on the floor will offer different conditions, but Standard is an account type spread spread without commission, so many traders are choosing more.
ECN account
This account is often chosen by traders who have had many years of trading in the forex market. Because ECN accounts often require a minimum deposit of 300 USD or more. In addition, compared to standard or Cent accounts, the floor also requires lower leverage in this account type, the highest is usually only 1: 1000, usually only from 1: 300 to 1: 500 ( cents account at Exness floor you can use infinity leverage or 1: 3000 as at FBS). In addition, ECN accounts always charge commission usually 7 USD / lot, in return the spread will be lower.
However, this account will only be suitable for traders who have had many years of battle in the market. Because the risk you encounter will be very high, the possibility of losing money or account fire always happens if you do not know how to manage your capital well.
Management account or Pro, VIP account
This type of account usually runs in the form of a fund with the minimum deposit required from 10,000 USD or more, but in return you will enjoy many VIP-style services just for you.
Commission accounts charge commission, and accounts only charge spread
This is a division based on forex floor fees collected from traders to execute orders.
Forex brokers will usually make money mainly through commissions and spreads. And to suit the needs of different traders, the exchange will always provide at least 2 types of accounts: including spread-only accounts and fixed commission-only accounts.
With the spread fee format like mini account, cent account, standard account, for example, there will usually be a low deposit as many regulated floors are from 1 USD or more, so suitable for new traders.
For commission accounts, there is usually a minimum minimum deposit of USD 200 or more, but usually the spread will be much lower than a spread-only account.
Which account should new traders choose to trade?
This is definitely the question that many traders, especially novice traders, are most interested in when trading forex. By choosing an account is like buying clothes to wear, not too wide nor too tight. It must be appropriate to the circumstances and style of transaction you are aiming for.
Usually, each floor will have its own strengths to provide traders with the best possible experience, for example, there is a floor offering low spread for gold, for EURUSD but the currency pairs containing GBP are high. In return, there are exchanges that offer many types of stocks, extremely low overnight fees but forex currency pairs have extremely high spreads ...
Therefore, when investing forex you are the one who needs to understand what you want, how to trade and choose the most suitable account.
Among the reputable forex brokers today, Exness has a more reasonable way of dividing accounts. If you are new to you, you can experience Exness's Cent account to practice trading, then proceed to use a Mini account that only charges spread. And once you've mastered it, you can switch to an ECN account for bigger trading.
In particular, Exness ECN account is very low commission fee of only 2.5 USD / lot. Compared to many other floors this is a very attractive commission. So if you are looking for a good broker, have lots of accounts to choose from, Exness will be a suggestion for you. Good luck!
You have just read the article: “Types of forex accounts. Which account should new traders choose? ”
Author: Tin Nguyen
Do not forget Prefer and Share This article will you do?
0 Comments