Types of Forex Trading Account

The type of forex trading account you choose is an important part of the process. So, you must understand each of these types – their features, functionalities, limitations, and charges. Service providers also offer different rates for their accounts, so one should compare all the existing accounts and pick up the one that suits his needs best. Let’s have a look at what are available types of forex trading accounts and how are they different from one another.

Demo Account

The demo account is available to everyone who is interested in Forex trading. It is a very educational and interactive account that gives new investors the opportunity to test their skills and knowledge without the risk of losing any real money.

The demo account is used by both professional traders and beginners. Professional traders use it as a testing ground for new strategies or trading techniques while beginners use it as a way to get familiar with the market before they start risking real money on trades.

The demo account can be opened by anyone, and without paying any fees or commissions. It only requires some basic information, such as an email address, a password, the first and last name of the investor, etc., which helps to create a virtual profile for each trader so that he can log in from anywhere at any time.

Standard Account

The Standard Account is the most common type of account in the Forex market. This type of account is suitable for both beginner traders and experienced ones. The main advantage of such an account is a fixed spread, which allows you to calculate the ultimate goals of your trading operations. The amount of a deposit depends on the broker’s requirements. A standard forex trading account has no commission fee and you can use it with any currency pair you want.

Another advantage of Standard Account is that they allow using any trading strategies, including scalping, hedging, and news trading. In this case, the broker provides high-quality execution of transactions, which is especially important for scalping.

ECN Account

The ECN account is an acronym for Electronic Communication Network. In this type of trading, you trade directly with the market. That is, there are no dealers that act as a middleman between you and the liquidity providers, only technology.

The most important aspect of an ECN account is that there is no conflict of interest between your broker and you. In fact, there are no spreads to be paid. You simply pay commission for each round turn lot traded.

The account offers very competitive trading conditions and a wide range of trading instruments: currency pairs, metals, oil, and other raw materials. The average spread is 0.1 pips on EUR/USD pair.

Final words

These are only three types of forex trading accounts. Different brokers may offer different types. For instance, many forex brokers may also offer an Islamic forex trading account. So, learn more about the broker you’re dealing with. Make sure they are offering the right type of forex trading account that fits your unique needs and requirements.