Tag: Trading Account

Categories
Forex Basics

Forex Demo Account Vs. Live Account: Similarities and Differences

Forex brokers usually offer two main types of trading accounts: demo and live accounts. Although the accounts are very similar in some respects, there are also a few key differences that traders need to recognize. We will start by outlining what qualifies an account as being live or a demo. 

Forex brokers usually offer two main types of trading accounts: demo and live accounts. Although the accounts are very similar in some respects, there are also a few key differences that traders need to recognize. We will start by outlining what qualifies an account as being live or a demo. 

Forex brokers usually offer two main types of trading accounts: demo and live accounts. Although the accounts are very similar in some respects, there are also a few key differences that traders need to recognize. We will start by outlining what qualifies an account as being live or a demo. 

  • A live account is a real trading account that one opens through a broker. You invest real money into this account. A broker might offer several different types of live accounts, which include but are not limited to Micro, Cent, Standard, Classic, Premium, VIP, etc. Traders then trade in a real environment and either profit with the option to withdraw their funds, or they lose their investment.
  • A demo account can also be opened through a broker and it allows one to trade with fake, virtual currency in a live simulation environment. These accounts are used for practice and one does not invest any real money or make a real profit from them. 

If you’ve never opened a real account before, starting with a demo account can help provide the opportunity to practice in a real environment with zero risks. These accounts are offered by most brokers, but you should know that a few brokers out there don’t offer demo accounts. If your current broker or one you’re considering doesn’t have demo accounts, then a quick Google search will help you find several free options. Opening a demo account should always be 100% free through any broker.

Once you get started, a demo account can serve several helpful purposes. It can help you become more acquainted with a trading platform, practice different strategies, try out different leverages and settings, and see how far you’ve progressed towards being ready to open a live account and make a real investment. However, it is important for traders to know that there are some differences between demo and live accounts so that they do not have a bad experience when they inevitably switch from a practice account to a real account. These are the main differences that every trader should be aware of:

  • Since demo accounts involve virtual money, traders aren’t subjected to the emotions they would feel in a live trading account. Losing $100 on a demo account will not make you sick but losing it on a real account might be a different story. Anxiety, greed, excitement, and other emotions will be present once you switch over to a live account. Remember that making decisions based on emotion should be avoided, otherwise your trades will suffer. 
  • Demo accounts do not see slippage, requotes, delays, or other unexpected situations that might affect a real account. Slippage is a common example where there is a delay between the quoted price and the execution of the order. These types of events are more likely to occur when market volatility is high, but they won’t affect you on a demo account, so you need to be aware of them once you move on to a live account.
  • Execution speed is important when you’re trading on a live account. If you have a problem with your internet connection or a power outage, you could lose real money. Everything happens faster on a demo account, while the speed of your connection will directly affect your orders on a live account.

Demo accounts offer a lot of perks. They can help one to become more acquainted with trading and offer an opportunity for practicing basic skills and more advanced concepts without the fear of losing real money. While demo accounts are mostly useful, traders do need to remember that there can be problems with delayed order execution in times or high volatility or because of events like power outages or slow internet connection speeds. Another major fault with demo accounts is the fact that they cannot prepare one for the rollercoaster of emotions that come with trading on a live account.

Since demo accounts are free practice tools, there is no reason not to test one out before moving on to a live account. However, traders need to remember the ways in which demo accounts differ from live accounts so that they are better prepared to deal with those issues without losing money because of altered expectations. 

 

Categories
Beginners Forex Education Forex Basics

I’m Ready to Trade! What Type of Trading Account Should I Choose?

If you’ve ever considered opening an account with a forex broker, you likely considered an option that offered multiple account types. While some brokers only offer one account with the same conditions to all of their clients, others offer two, three, or even several completely different accounts with separate conditions. Choosing the right account can […]

If you’ve ever considered opening an account with a forex broker, you likely considered an option that offered multiple account types. While some brokers only offer one account with the same conditions to all of their clients, others offer two, three, or even several completely different accounts with separate conditions. Choosing the right account can […]

If you’ve ever considered opening an account with a forex broker, you likely considered an option that offered multiple account types. While some brokers only offer one account with the same conditions to all of their clients, others offer two, three, or even several completely different accounts with separate conditions. Choosing the right account can be beneficial, but some beginners have a hard time figuring out which option is right for them. Do keep in mind that each broker has separate offers and conditions will be different wherever you go, but we will break down the main types of accounts that are usually offered below.

Account Type 1: The Mini/Micro/Cent Account

These accounts are usually marketed towards beginners for a few reasons. For one, they can be opened with a small amount of money, with minimum account opening deposits typically falling between $1 and $100. This is attractive for those that don’t have a lot to invest in or those that don’t want to put in a lot of money at first. These accounts are also known the limit the maximum trade size offered, but this usually isn’t a problem for new traders that aren’t prepared to make larger trades. On the downside, these accounts often come with the highest spreads and don’t offer many other perks. If you do plan to open one of these account types, be sure to shop around to find the best conditions possible. 

Account Type 2: The Standard Account

A standard account is the most common type of trading account that is available. The minimum opening deposit varies widely for these accounts depending on the broker you choose, but it is typically as low as $100 to $500, although the cost can go into the thousands. Maximum trade size options are usually equal to or higher than those on the broker’s mini account, but leverage options are usually slightly tighter. Expect average commissions and spreads starting at 1.5 pips on these accounts, but do be aware that some brokers will still try to charge you insane rates if you don’t open a more expensive account, so check with several different brokers to find the best deal.

Account Type 3: The Platinum/Silver/Gold Account

While names for accounts of this tear can vary, many brokers offer one or more accounts that fall in between their standard and VIP accounts. You’ll usually find a lot of perks on these accounts, like tighter spreads and reduced commissions, along with other possible perks like an account manager, one free withdrawal a month, better bonuses, etc. On the downside, you can expect to invest a pretty penny into one of these accounts, with most opening deposits starting in the thousands. If you do plan to make a larger investment, you will probably find a much better deal if you can find a broker with one of these accounts available. 

Account Type 4: The VIP Account

Brokers reserve their VIP accounts for traders that can afford to deposit a ton of money, usually anywhere from at least $20K into the hundreds of thousands of dollars. If you can afford a VIP account, you’ll be receiving the very best perks offered by the broker, starting with the tightest spreads (often starting at 0 pips) and very low or zero commission charges. Many brokers also sweeten the pot with a personal account manager or one-on-one lessons with an expert and great bonus options, along with expedited or fee-free withdrawals and superior customer service options in some cases. If you can ever afford to open a VIP account, be sure to find a broker that will shower you in perks for making such a large investment.

Categories
Forex Basics

How to Choose the Best Trading Account

There are a lot of different types of forex trading accounts to choose from. Many brokers have taken to offering multiple accounts with different conditions, rather than only providing one account. Having options to choose from can help traders to find accounts more tailored to their needs, for example, some accounts are better for those […]

There are a lot of different types of forex trading accounts to choose from. Many brokers have taken to offering multiple accounts with different conditions, rather than only providing one account. Having options to choose from can help traders to find accounts more tailored to their needs, for example, some accounts are better for those […]

There are a lot of different types of forex trading accounts to choose from. Many brokers have taken to offering multiple accounts with different conditions, rather than only providing one account. Having options to choose from can help traders to find accounts more tailored to their needs, for example, some accounts are better for those that want to deposit $100 or less, while other accounts focus on traders that are looking to make large investments. There isn’t a black and white answer about which account is best overall, as this largely comes down to one’s trading preferences. Below, we will cover everything you need to consider to choose the best account for your personal needs.

First, we will briefly provide an overview of the main types of forex accounts. Do note that some brokers may use different names, so think of this as a general idea of the accounts that are out there:

  • Micro/Mini/Cent account: These accounts can usually be opened with a small starting deposit from $1 to $100 or so. The accounts typically allow the smallest trade size of one micro lot and limit the maximum trade size. These accounts are often targeted towards beginners and can be subject to higher spreads and fees. Sometimes, these accounts place limitations on the maximum account balance they can hold. 
  • Standard/Classic account: These are the most common type of trading accounts available and can usually be opened for $5-$100, although some brokers ask for a larger deposit of around $500. Most of these accounts offer a minimum trade size of either one micro lot (0.01) or one mini lot (0.1). These accounts often offer average spreads of around 1.5 pips. 
  • Premium/Platinum account: You might see different names for these accounts that often fall between Standard and VIP levels. These accounts typically require deposits of $500 or more, oftentimes in the thousands. Spreads and commissions are usually lower than average for these account holders and some brokers offer extra perks to these members.
  • VIP account: This is the best account available. Brokers save the best perks and sometimes offer spreads starting from 0 pips with low commission costs as incentives. These accounts usually require large deposits of $5,000 to $20,000 or even more in some cases.  

Deposit Minimums

The first thing you’ll need to consider is how much you’re looking to deposit. Unfortunately, many brokers offer the best conditions to those that can afford to make a large investment. If you only want to deposit $100 or less, your options will mostly consist of an account modeled after a Micro/Cent/Mini account or a Standard/Classic account. Those that want to start with a small investment will need to compare brokers to find the best account. If you don’t like the limitations for Micro/Cent/Mini accounts, you should be able to find a broker offering Standard or Classic accounts within your price range. Those that want to make a very large deposit should look for brokers offering better perks on their higher-tier accounts. You should expect to see low spreads and other benefits on these better account types.

Transaction Costs: Spreads, Commissions, and Other Fees

The spread is the difference between the bid and ask price. In general, an average spread is about 1.5 pips on the benchmark EUR/USD pair. If you see spreads starting from 2 pips or higher for a certain account type, then you know the spreads are higher than average for that account. Starting spreads from 0 pips are the best spreads possible. 

 Commission fees can often vary widely for different accounts. Some brokers might offer lower spreads, then offset those with higher commissions. Be sure to check these prices before opening an account so that you’ll be aware of all fees. Some traders prefer accounts with higher commissions and lower spreads and vice versa. If an account doesn’t charge commissions, it is easier to keep up with the cost of trading because that cost is built into the spread. 

You also need to look at deposit/withdrawal fees. Many brokers will allow you to deposit for free, while others charge you for both deposits and withdrawals. It’s normal to see some type of fee but know that fee-free options are out there. You also don’t want to withdraw through a funding method with insane fees. Also, be aware that bank wire withdrawals often incur fees on the bank’s behalf. 

Know that the brokerage fees will cut into your profits, so it’s important to find an account with lower fees. If you settle for high spreads and commissions, then you’ll also likely pay withdrawal fees – this will severely cut into your profits or take them altogether. Know that you shouldn’t settle for ridiculous fees simply because you don’t have a large entry-level deposit. Keep looking at different brokers instead. 

Trading Platform

Available trading platforms usually depend on the broker in general, as a broker offering multiple platforms typically offers each platform to all account holders. MetaTrader 4 and MetaTrader 5 are the most popular trading platforms and are offered by most brokers. In some cases, Ctrader is another good option. If you see that the broker offers something different, it’s a good idea to do some research to ensure that the platform works well and that it isn’t too basic for your needs. 

Asset Accessibility

Some brokers offer their entire range of assets to all account holders, while others are more limiting. For example, a broker might limit their Micro account holders to a lower number of currency pairs that don’t include exotics, while their VIP account holders can trade all currency pairs along with commodities and stocks. Some brokers also focus exclusively on currency pairs while others offer cryptocurrency and more exotic assets. If you’re looking to diversify your portfolio, you should know that it is possible to find entry-level accounts that support several different assets. 

Conclusion

Opening the right account is as important as choosing a good broker to work with. When comparing trading accounts, you need to ask yourself these questions:

  • How much am I looking to deposit? What type of account options will this get me?
  • Does the account limit the maximum balance? If so, will this be a problem for me?
  • What are the spreads and commission fees for the account? Are they above average? 
  • Which trading platform(s) will I have access to?
  • What assets will I be able to trade? 
  • Will I have to pay to deposit/withdraw funds?

You should be able to find clear answers to all of the above questions before you ever give out any information or open an account. Comparing different brokerages is the best way to get a better idea of what your starting deposit can get you. It’s also a good idea to look for a broker that you can grow with. You might only want to invest a couple of hundred dollars right now, but you might want to invest more in the future. This is why it’s a good idea to look for a broker that you can grow with so that you can eventually move up to a better account.  

 

Categories
Forex Basics

Tips for Choosing a Forex Account Type

If you’re looking for a Forex broker, you may have noticed that there are multiple account options out there. Some brokers may stick with Standard/Classic accounts, while others may offer these in addition to Mini/Micro/Cent accounts, Premium accounts, VIP accounts, or even tier-based accounts (Silver, Gold, Platinum, etc.). The exact names may differ, but most accounts fall into one of three categories: Mini/Micro/Cent, intermediate (Standard, Silver, etc.), and VIP/Premium accounts. 

If you’re looking for a Forex broker, you may have noticed that there are multiple account options out there. Some brokers may stick with Standard/Classic accounts, while others may offer these in addition to Mini/Micro/Cent accounts, Premium accounts, VIP accounts, or even tier-based accounts (Silver, Gold, Platinum, etc.). The exact names may differ, but most accounts fall into one of three categories: Mini/Micro/Cent, intermediate (Standard, Silver, etc.), and VIP/Premium accounts. 

If you’re looking for a Forex broker, you may have noticed that there are multiple account options out there. Some brokers may stick with Standard/Classic accounts, while others may offer these in addition to Mini/Micro/Cent accounts, Premium accounts, VIP accounts, or even tier-based accounts (Silver, Gold, Platinum, etc.). The exact names may differ, but most accounts fall into one of three categories: Mini/Micro/Cent, intermediate (Standard, Silver, etc.), and VIP/Premium accounts. 

Starting Deposit

The size of your initial investment plays a huge role in the type of accounts that you will have access to. Most brokers set an initial deposit requirement for each of their account types, which could be from $5 to $100,000, or more. Here’s a quick overview of what you should expect:

  • Smaller accounts, like Mini, Micro, or Cent accounts, should require smaller deposits of around $100 or less. You should never have to pay $500 or more for one of these accounts.
  • Mid-level accounts, like Standard/Classic accounts, or possibly Silver, Gold, etc. can also offer starting deposits of $100 or less, although these accounts often require at least $100 or more to get started. This could even go towards the $500 range, or higher for tier-based accounts.
  • The best accounts offered are usually VIP or Premium and initial deposit requirements typically fall in the category of thousands of dollars, or even into the hundreds of thousands of dollars. 

Entry-Level Accounts

Mini/Micro/Cent accounts restrict the trade size to around 0.01 lot (one micro lot), which helps to control the risk factors on those accounts. The smaller trade sizes and lower starting deposits can be good for beginners, but these accounts aren’t without their faults. Most brokers don’t offer benefits to these account holders, and you can expect to see higher spreads on smaller account types. 

Mid-Level Accounts 

If you’re trading with a good broker, it is possible to find some benefits and nice spreads on a typical Standard or Classic account. Of course, any more expensive account offered by the broker will likely have more advantages, but this is a good place for novice traders to start, especially if you don’t have a ton of capital to invest. Many brokers offer deposit bonuses and other perks to these account holders. 

VIP & Premium Accounts

These accounts are the best of the best. Traders get the most benefits, best spreads, and lowest commission rates. The downside is that the deposits required on these accounts are often extremely high, placing them out of reach for many entry-level and even intermediate traders. 

Choosing the Best Account Type

Before choosing your brokerage account, be sure to take the following things into consideration:

  • Figure out how much you’d like to invest and do some comparing to see what that will get you. $100 might get you a Micro account with one brokerage, while it could get you a Standard account with better spreads through another.
  • Always check the spreads and commissions associated with each account. Average spreads fall into the 1.5 pip range. VIP and Premium accounts will often offer much lower spreads, but you’ll need to pay closer attention to smaller and mid-level accounts.
  • You will need to check the minimum and maximum trade sizes for any account you’re considering. Most Mini/Micro/Cent accounts offer a minimum trade size of 0.01 lot with lower maximum trade size. Some high-tier accounts require a minimum trade size of one lot. 
  • Check leverage options for any account you’re considering to be sure that options are suitable for your trading style. Accounts with lower deposit requirements usually offer the highest leverage options with brokers.
  • Know that some advantages shouldn’t be based on account type. For example, fee-free withdrawals are offered by many brokers, but some may only offer this to VIP account holders while forcing lower-tier account holders to pay large withdrawal fees. 
  • Remember to look at other factors of any broker you’re considering. Available funding methods, fees, educational options, and other important factors will affect your experience, regardless of how good of an account you’ve chosen.

Conclusion 

Choosing a live account is an important decision, as it will undoubtedly affect your profits and trading opportunities. You’ll need to figure out how much you have available to invest and do some comparing to find the best brokerage and spreads possible. As you move up in your Forex career, you will likely be able to afford better account types or to advance to higher tier levels if your broker operates on a tier-based system. Once you’ve considered deposit requirements, leverage, trade sizes, spreads, commissions, and other factors, you’ll be ready to choose an account type and get started trading.

Categories
Beginners Forex Education Forex Basics

How to Open a Trading Account with Only $5

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering […]

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering […]

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering if it is possible to open a trading account with only $5? The short answer is yes – but there are some important things you’ll need to know. 

First, you’ll need to find a broker that offers $0 minimum entry deposits. Some brokers might offer several account types, with one option that doesn’t require a minimum deposit. Others might offer one standard account without a deposit requirement. 

  • If the broker offers multiple account types, then the account with the $0 deposit requirement is often an entry-level account, such as a Micro, Mini, or Cent account (but not always)
  • If the broker only offers one standard account with no deposit requirement, this can be a good option that will give you the same perks as those that can afford to make larger deposits

As you can see, there are a lot of different types of brokers out there with different account setups. Each broker offers its own account type(s) and requires a specific deposit minimum for those accounts. You’re looking for options that don’t require a minimum or that set the minimum at only $5.

There are some other things you’ll need to know before choosing a broker and making a deposit. Here are some tips that can help you choose the best broker:

  • Some brokers charge very high fees on their entry-level accounts. Even though you don’t have a huge amount to start with, you should still have access to average conditions. Don’t make the mistake of thinking that better options aren’t out there. Always compare options.
  • You should deposit more if you can. While $5 is enough to get started, it won’t go very far. Maybe you want to try making that first trade, test out funding options, or feel the accomplishment of making a real investment into your future. This is all fine, just know that you’ll need to deposit more in the near future. 
  • Check for limitations on your chosen account type, as some brokers set a restrictive maximum trade size on certain entry-level accounts. You’ll want to make sure that you can deal with any restrictions. 
  • Look for a broker that offers some type of welcome or deposit bonus to get more out of your initial investment. Make sure that your small investment will also qualify for any such promotion as some brokers require the deposit to reach a certain minimum to become eligible. 

The Bottom Line

It is entirely possible to open a trading account with average or slightly better than average conditions with a $5 deposit. Eventually, you’ll need to invest more, but there’s no shame in starting small and working your way up. Know that every broker out there doesn’t offer an account with a $5 funding minimum, but there are many recognizable options that do. You’ll also want to make sure you choose the best broker possible without paying unreasonable fees and keep our other tips in mind.

Categories
Forex Course

43. Steps Involved In Opening A Forex Trading Account

Introduction

Introduction

Introduction

Now that we have enough knowledge about the Forex market, it is time to open a real Forex trading account with a broker. Note that, before opening a real trading account, it is highly recommended to open a demo account first, because this will give us an idea on how the Forex market and the brokers actually work.

Once we decide on the broker with whom we wish to open an account, the process of opening the account is pretty simple and straightforward. Typically, it doesn’t take more than five minutes to create a Forex trading account.

Step by Step procedure to open a Forex Trading Account

  1. Selecting the Account Type
  2. Registration
  3. Activation of the account

1️⃣ Selecting the Account Type

The first step to open a trading account is to choose the type of account we wish to trade-in. That is, we will be given a choice to open a trading account between a personal account and a business account. Back then, traders had to choose whether they wanted to open a standard, mini, or a micros account. But now, such a choice does not exist as brokers allow traders to trade custom lots.

Apart from Personal and Business accounts, some brokers offer ‘managed accounts’ as well. A managed account is a type of trading account where the broker places trades on behalf of their clients, that is, on behalf of the traders like you and me.

Also, Forex brokers these days have customized trading accounts in order to cater to traders with different trading experiences. For instance, Student or Classic account for amateur traders and Professional or VIP account for experienced traders.

2️⃣ Registration

This is the typical paperwork which is done by all the firms. The entire process is digitalized, of course. To register with a broker, one will have to submit a form that might vary from broker to broker. And this form is usually filled on their web page at the time of registering an account with the broker.

List of requirements to register with a Forex broker are:

  • Name
  • Address
  • Email
  • Phone number
  • Birth of date
  • County of citizenship
  • Social security number or Tax ID
  • Employment status

Apart from this, traders are answerable to a few financial questions such as Annual Income, Net worth, Trading experience & Trading motive.

Important: Before completing the registration process with the broker, make sure to know the costs related to all kinds of transactions (bank wire transfer, depositions, withdrawal, etc.), as this could sum to a significant amount of a trader’s account capital.

3️⃣ Activation of the Account

Once the registration process is successful, a trader will receive an update (by email or on the broker’s web portal), which will provide the instructions to fully complete the account activation process. This step is basically for verification. One must produce at least two IDs to get their account activated. One for the proof of residence and the other for the proof of identity.

After all these steps are fulfilled, the trader will receive the final email from the broker with the corresponding username and password. It will also provide the trader with instructions on how to add funds to their account. This completes the account verification & activation process.

Once we log in and fund our accounts, we can start trading the Forex market.

[wp_quiz id=”56318″]