Standard Forex Trading Accounts

Forex stands for foreign exchange, and is a market in which investors trade foreign currencies. This market is different from the regular stock market as it is open 24 hours a day, five days a week. Standard Forex trading accounts are the most popular for traders of foreign currencies. The reason it is called a standard account is because the account holder has access to trade any foreign or domestic currency up to the amount of $100,000. This leads those new to Forex to believe that you need $100,000 to begin trading, however you can start with only $1,000.

There are certain advantages of standard Forex trading accounts you should be aware of. The first is service for investors. Because of the amount of capital required to open your Forex, or FX account, you are able to get good customer service from a wide variety of different brokers who can help you make the most of your money. While you can open an online Forex trading account and do everything yourself, this is only recommended if you are extremely knowledgeable and experienced. Otherwise, you should use the services of a Forex broker.

In Forex, a pip is worth approximately $10 or more. A pip is the smallest quoted change of a currency pair’s exchange rate. It stands for percentage in point. Positions move based on your trading methods and the ups and downs of the Forex market, if they move by 100 pips in a day you could make $1000 in one day. This is only applicable to the standard account, as other types of accounts do not have this type of earning potential.

While there are clear benefits to standard Forex trading accounts, there are some disadvantages as well. As previously discussed, you need at least $1,000 to open a standard account, however it is better to have more. Not only should you be able to invest that much, you should be prepared for the possibility of losing your investment.

In addition to standard Forex trading accounts, there are mini accounts that might be best for beginners. These accounts require a small amount of capital and as compared to traditional Forex accounts are low risk. They can be acquired from brokers and even opened online. The main use for a mini account is to teach you how to trade Forex without the need for a lot of risk. These mini accounts give you real experience in foreign currency trading but you do not stand to lose a lot of money. Also, mini accounts are good for testing experimental trading systems and tools. For a mini account, you only need several hundred dollars. In mini accounts, pips are worth $1 rather than $10 so profit potential is less.

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