Forex Account Basics – What Types Of Forex Trading Accounts Are Available?

If you are interested in trading Forex, you will first need to open an account with a Forex broker. There are a number of things you should keep in mind when selecting among the many available Forex brokers:

When selecting a Forex broker, before opening an account, you should be sure to check with the Commodities Futures Trading Commission (CFTC) to determine whether any complaints have been filed against the broker. You can also use the CFTC website to research the financial strength of different Forex brokers.

In addition, you should determine what services are offered by the broker. Most brokers will offer several different kinds of accounts, which may include the following:

Demo Account – Ff you are new to Forex trading, you may wish to start off with a demo account. Most Forex brokers offer demo accounts at no charge, through which you can practice Forex trading without risk using virtual money;

Micro Account – If you are interested in smaller trades, this type of account can be opened with an initial investment as small as $25, and the pip size can be as small as $.10;

Mini Account – This type of account requires an initial investment of at least $400;

Standard Account – The minimum initial investment for a standard account is $2000. Each pip is $10;

Managed Account – Unlike the aforementioned accounts, a managed account does not allow you to trade for yourself. Instead, a money manager designated by the brokerage is assigned to your account to determine how the account should be traded, and executes the trades for you.

In addition to determining which type of Forex account is right for you, you will want to determine the following in order to ensure you have selected the right Forex broker:

1. Is the trading platform fast, reliable and customer friendly?

2. What is the Forex spread? (The Forex spread is a cost to the trader, so a lower Forex spread is better.)

3. How responsive is the broker? Obviously, you want a broker who is responsive to your questions and concerns. Before selecting a broker, you should thoroughly review their website, and perhaps contact them (either by email, by telephone, or both) to determine how responsive they are to your needs.

4. Are there any hidden fees? For example, some Forex brokers charge a fee for withdrawals.

Now that you have the basics of Forex trading, you’re ready to start research brokerages. Prior to making a final selection, you may wish to open a demo account with several brokers, to determine which trading platform works best for you. As you practice trading, keep track of any issues that arise with each platform, as well as of any positive features of the platform. Once you have a good understanding of the services offered by each broker, you should easily be able to determine with which broker you wish to open an account.