4 Things to Know About Forex Account Types

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Forex trading involves buying and selling of foreign currencies. In the forex markets, individual traders are able to compete with banks and some large hedge funds. It is very easy to make both massive profits and losses trading foreign currencies. You need to take your time to learn the various dynamics of trading before investing any substantial amount. You can start with demo or practice accounts to learn a few tricks, or have an experienced account manager such as those from https://www.connectfx.org/managed-forex-accounts to trade on your behalf. A managed account is just one type of forex account types. You can start learning a few things about the various account types.

1.    Three Types of Accounts

There are three types of trading accounts. These are the standard, mini and managed account. Each of these accounts has different dynamics of operations.

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2.    Standard accounts

With the standard account, you are required to have an upfront trading balance of more than $1000. You can make significant profits if a trade is in your favor with this account due to its high leverage. Most account managers provide more services with this account since they can make more money without having to invest their own starting capital.  You can also make a substantial loss if it goes against you.

3.    Mini Accounts

A mini account is less risky and requires a low amount of investment as a trading balance to start with. You can start with about $250. This account allows traders to transact using mini lots. It is an ideal starting point for a learner. This account is also flexible, allowing beginners to diversify risk. It has, however, lower leverage as compared to a standard account. Losses are minimal, but so are profits. It is a good account for trying out new strategies or for learning the mechanisms of forex trading.

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4.    Managed Accounts

When you use such an account, you deposit the trading balance then appoint a trading manager to operate the account for you. Your role is to set your objectives and then let the manager work towards attaining those objectives. You also have to agree with the manager on the ratio at which to share the profits. You can choose to have your account pooled, where your investment is placed in a mutual fund. Accounts placed in the mutual funds are risky, but have the ability to get more profits. If you have a high-risk appetite, you can have your account pooled into one of these funds. You can also choose to have an individual account where a manager focuses solely on your account. You only enjoy the share of profits the manager makes.

With a managed account, you do not have to go through the complexities of forex trading or spend time doing any analysis. Everything is done for you. All you have to do is wait for profits as your account is handled by a professional. The downside of this account is that you have to start with a large deposit and only take as profit what the account manager makes.

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