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Which forex trading account is right for you?

There are different types or levels of forex trading accounts. Forex demo account, forex micro account, forex mini account, forex standard account, managed forex account. I will briefly explain what each account entails so you can decide which one best suit your level of trading.

Forex Demo Account

This is a free practice account that you can open with any forex broker. It is very important that you use this forex demo account in the beginning, until you become comfortable with how the forex market really works. You need to open a free forex demo account. As part of your forex education, you will be using your free demo account to test and implement what you learn from this forex tutorial. There are many brokers who will allow you to demo trade for only 20 days, while others will allow you to trade for 30days. You can always open a new demo account. But I love to follow my test trades for at least six months. So if you like a practice account that does not expire then open your demo account here

Forex Micro Account

A Forex Micro Account is meant for traders new to online currency trading. If you are new then I highly recommend you start with a forex micro account after trading long enough with a demo account.

Traders are allowed to make transactions with micro lots. A Micro lot is $1000 and the approximate pip value is 10 cents. By trading in units of only $1000 as a new trader you can avoid the huge losses that most traders experience. I use micro account to test new strategies, without risking much money.

To open a micro account, you need a minimum of $25. However, $500 is mostly recommended. The risk with this account type is minimal. You can open a real forex micro account here Start with a Forex Micro account and as you gain confidence, you can move up to a Mini Account.

Forex Mini Account

A Forex Mini Account can also be used by new forex traders. In this case, you will be handling your transactions in increments of $10,000 that is one-tenth of a standard account. While a pip value in a micro account is 10cents, a pip value in a mini account is $1. Almost all brokers offer a forex mini account. If you are financially sound and just testing the forex market, you can open a mini account.

Advantages of Forex Mini Account

Forex Mini account is great for accounts under $10,000. If you have less than $10000 to trade with, I would advise you open a mini forex account, instead of a regular account. With $2000 or $2500, you can open a regular account. I will strongly advise against this if you want to stay in the game for long. Let me explain why. If you open a $2000 account using a regular account and you have a losing trade of just 20 pips that is $200, you just lost 10% of your account. However, if you had the same loss of 20 pips in a $2000 mini account, that would be $20, a 1% loss to your account. Remember whether you lose or gain in a trade the broker makes money on every trade you place. So guide your capital well.

Another advantage of a forex mini trading is that you can always use the leverage the trade your account like a regular account. For example instead of trading just 1 lot in a mini account, you decide to trade 10 lots, that would be an equivalence to 1 lot in a regular account. So you can trade incrementally based on your success rate. You can increase your lots size every time you make a profit of $500. So you start with 1 lot, everytime your account increase by $500 you increase to 2lots. And so on. When you ignore greediness and focus on managing your trades, you will stay long enough to become a profitable forex trader. If you are confident enough and know yourself, you can graduate with a regular forex trading account.

To open a forex mini account, you need a minimum of $100 to $500. In fact, it defers with different brokers. However, $2000 is mostly recommended. The risk with this account type is minimal if you are not tempted by greed. You can open a forex mini account here and you can receive first time deposit bonus of up to $5000

Forex Trading Account (Standard)

The standard forex trading account is the regular account offered by all forex brokers. As mentioned already, most standard accounts require a minimum of $2000 to get started. Again, I would caution. If you are new to forex, even if you are a veteran equity trader, I would advise you, to begin with, a mini or micro account. A lot in a standard account is $100,000 and the approximate pip value is $10 a pip. If you have an account below $10,000 then consider opening a mini account. It will serve you well. If you can double a $5000 forex account to $10,000 trading with a mini account, managing your trades well, then you can consider upgrading to a standard account, but this time with profits gain from trading using a mini account. With a standard account, you can easily lose a $20000 account. Many have lost that much. However, with a mini account you cannot lose that much if you learn how to manage your account properly.

To open a standard account, you need a minimum of $2000. Instead of opening a standard account, I would advice you to open a real forex mini account here Start with a Forex Mini account and as you gain confidence, you can move up to a Standard Account.

Managed Forex Account

Managed Forex Account enable those with little time to learn for themselves to participate in this $4 trillion market. There are many people who desire to participate in the forex market. It takes time to learn how to effectively trade the forex market. But there is a solution for you, if you don't have the time. The solution is managed forex account.

What is a Managed Forex Account

There is high liquidity and markets are open 24 hours a day from Sunday evening to Friday evening. These are just some of the reasons that many are attracted to the forex market. Since some people just don't have the time to learn how to effectively trading the forex, a managed forex account seems like an ideal option. However, there are dangers associated with managed forex account. While some investors may diversify their portfolio by opening trading accounts with different managed forex traders, some people are simply convinced that they can open a managed forex account and allow someone else to trade it on their behalf. That can happen and there are a few good traders out there with great results. However, finding these traders is a difficult task. If you are looking to open a managed forex account, I will advise you to do your due diligence. If you are not convinced, don't do it. Take little baby steps and learn forex trading yourself.

To continue your forex trading education, now that you know the different kinds of forex trading accounts available to you, please head back to Forex Trading Tutorial

You can also continue your studies with the topic Pivot Points
Are you new to forex trading, then I strongly recommend the course Beginning Forex Trader. This course comprised of clearly laid out video and audio designed to take you from A-Z of Forex Trading.You will learn everything you need to know to start trading the Forex the right way.Highly Recommended

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