Buying and selling foreign currencies is the ultimate goal of forex (foreign exchange) trading. You should make sure you find out how this investment works and what its risks are before you make one. There are a very few trading markets in the world that are as liquid as forex.

The problem here is that many beginners flurry into selecting an account type without fully understanding the benefits. There are several types of forex accounts to choose from, and some users get overwhelmed. So, in this article, we have discussed the forex account types and their pros and cons to help you choose the right account for you.

Forex Accounts- Why it is Important

There was once a time when people solely listed forex after they traveled abroad and were required to use foreign currency to shop for something. However, as time passed, a banking establishment or different forex account types have provided the service to allow them to exchange their own currency for an additional country's currency, and also the traders would receive their foreign currency at the present rate provided by forex broker account or forex accounts.

Forex accounts are not only used to carry and trade foreign currencies or purchase and sell currency pairs. Cashing in on your trades is your goal. Forex traders tend to lose cash most of the time; most shut their commerce accounts when losing most cash in only four months. Forex accounts may be reasonable trading accounts that permit users to open accounts in a very range of currencies. Exchange markets move this manner, that affects however these trades area unit created. The world markets will offer you an excellent deal of potential comeback through this sort of account. Forex commerce is attracted by these factors, among others.

Forex Account Types

You can trade different lot sizes depending on the forex account type you choose. When you choose an account, you should consider the volume of trading you will perform and your capital. Forex accounts usually fall into three categories. The requirements of each forex account type are different. Choosing an account that represents how much risk you are willing to take, investment amount, and trading time. By the combination of these things, you can determine the best account for you. Hence, it is mandatory to have knowledge on all the details and functions of the three main forex account types. The three forex account types are discussed below-

The Standard Account

The names of standard accounts vary from broker to broker. These accounts may be referred to as 'classic' or 'intermediate' by some brokers. In some cases, they will call them premium accounts or golden accounts, which is confusing since these are just the same as the forex brokers accounts. You can trade mini lots of up to $100 on standard accounts, and the minimum deposit is $100 - $500.

It is one of the highly popular and common forex trading account types used by traders. Standard lots are available for each currency, so it requires a bigger investment. A single day's gains can be greater with such an account, but it's also possible to lose it the following day. In live trading at the forex market, beginners have to understand how margins work. However, this is not the right choice for a beginner. Only an expert is suggested to open this type of forex account.



The Mini Account

Forex Traders with small amounts of capital should consider micro-accounts as their forex account types. The minimum deposit limit in this type of account is not very high. It is $100 or less. So you can easily enter the market. Despite the low entry barrier, trading activity on these accounts is restricted. Nano and micro-lots are the only trading units offered by most micro-accounts. Beginners benefit from these types of accounts, as they help them control their risk levels.

Having a protected account gives you the opportunity to guard against losses you may suffer early in your trading career. The loss of money will be less with a lower investment. The owner's stress level is also lower since the account has a risk limit. In addition, beginning with a small sum of currency will give one the opportunity to make incremental gains in the future, which ultimately will allow one to have a larger account. A novice can understand that starting this way is always the best way.

The Managed Account

As one would be entrusting their money to smaller traders with more experience, managed forex accounts are essential for beginners. Money managers act as forex broker account for clients for a certain commission. Although it is impossible to personally manage an account of this type, starting to master the skill of trading will still enable you to be in the loop when these forex trading brokers of this account are managing your money.

There is some efficiency in waiting for results from managed accounts. However, almost everyone will discover that there are many strategies available, and most of them differ from the ones used by the account managers. The managed accounts are therefore suitable for beginners or new forex traders, and they can be converted to standard forex accounts once they have mastered the trade.

Final Words
No matter which forex account type you choose, it should be tested and examined first. Demo accounts are offered by most brokers, which allow investors to experiment with different platforms and services without any risk. However, if you do not feel 100% confident about the stock investment, do not put money into the forex broker account.