Forex offers vast opportunities; it can be a launching pad to secure life and financial independence, but it can as well bring completely down. Novice traders willing to earn money, usually don’t have an idea what account to open at Forex. Forex trading account types differ one from another, each of them featuring specific terms and capabilities.
Before starting trading with real money it is essential to practice on a demo account for a few months. Every broker provides an opportunity to trade on a demo account and to develop the trading skills. Demo account is different from a real money account, as on a demo account there’s no risk to lose your own money, because you are managing virtual money.
You can choose any deposit and trade same way as in real life, but with two differences: you won’t receive the earned money and won’t experience the whole palette of emotions a real money trader has. Everything else is quite realistic: prices, market conditions, news, graphs.
This is a real account to which you deposit your factual, ‘own’ money that you are going to put at risk in real trading. Typically, there is a fixed spread, however, it depends on a choice of a broker; different forex brokers offer different conditions.
This type of a forex account has one specific feature – no slippage and no intermediary banks; the interaction between the market participants is direct. Any trader can see purchase/sell orders, traders have an opportunity to estimate volumes of applications. Such an account is perfect for scalping, as it is supported by the visibility of the volume amounts. Opening such an account, you can determine by yourself, who you will be purchasing and selling with.
In this case there’s no need for large volumes; high liquidity is achieved due to the quantity, and not volume. Scalping is not limited, there are no requotes.
The essence of a cent account is that you can invest a minimal sum and trade without much risk. As the account type name implies, the amount that you deposit into your account is indicated in cents. Everything you earn or lose is as well calculated in cents, not in dollars.
If you find it difficult to choose among forex account types, as you already are willing to trade on a real money account, but either are afraid of losing money, or don’t want to invest much money, this type of account is recommendable. It is good for novice traders and is different from a demo account; on a cent account you trade for real, and can experience the emotions that come only in genuine trading. However, at the same time you don’t risk your money, because losing $5 or $10 won’t influence your financial status too much and is quite acceptable.
Many beginning traders switch to cent account from demo account exactly for the purpose of feeling the excitement from the real trading process. It is easy to get used to trading on a demo account, and then real money trading might cause brain freeze.
Psychological factors often play their role, and trader who had played on a demo account for too long, sometimes cannot put himself up being afraid of losing money, or, on the contrary, he becomes hung up on making profit, and it’s only a question of minutes till he wastes his account away completely. Therefore, it is not worthy to overuse a demo account; after a few months it is preferable to trade for real and cent account appears to be the best decision for that.
Mentioned above types are the main types of forex accounts that are available to traders. When choosing your broker and account consider ratings of the broker firms as well as reviews of their former and present clients. Never make a choice based just on advertising.
Forex reviews are always ambiguous, however that’s what market is about, one guy is lucky, and three are not, but there’s nobody else to blame of a failure than yourself. Choose a reliable broker meeting your personal demands best, and open an account in accordance with the funds that you are going to manage.