Standard Trading Accounts
Although this account type is no longer as popular as it used to be, Forex traders still use it as it often has a fixed spread.
The advantages of these retail investor accounts include:
Higher quote accuracy;
Market execution of orders;
No requotes;
No Stop or Limit levels;
High leverage up to 1:1,000;
- Low minimum deposit of $50.
The disadvantages of a standard account should also be mentioned:
Some brokers and trading platforms don’t bring positions the interbank market in this type of account; in this case, the broker itself is often the counterparty to your transaction;
High spreads;
No accumulative annual rate;
Possible delays in the execution of orders.
Demo account
Forex demo account is the most popular account for learning how to work on the Forex market. This account is completely identical to standard retail investor accounts in terms of the conditions, but in contrast, to a live account, it uses virtual money for trading Forex. In other words, with demo trade, you risk nothing, and in case of failure, you can always top up the balance again and again.
The advantages of a demo retail investor accounts include:
Real quotes from a liquidity provider;
Scalping and market news trading are allowed;
No requotes;
There are no restrictions on the duration of the position;
Full access to all trading instruments, including complex instruments such as CFDs;
No risk of losing real money;
- Ideal for trading strategy testing and learning.
There are not many disadvantages of this account:
You cannot withdraw the earned profit;
- When trading Forex and other financial instruments, there is no emotional pressure, the investor does not experience stress as on the real market.
Mini account
Forex mini account is a special type of Forex trading account that uses a deposit reduced by 10 times with standard Forex trading conditions. In other words, if you deposit only $100 to this account, you will see an amount of 1,000 currency units in the trading terminal. When working on such Forex trading accounts, 1 currency trading lot costs 10,000 instead of 100,000 and is called a mini lot.
The advantages of this account are as follows:
It allows you to gradually get used to Forex trading with real money;
Your risk warning is 10 times less;
There are no significant differences in the execution of transactions as compared to other types of Forex trading accounts;
Well suited for testing the trading platforms’ conditions;
- Often used by experienced traders in the PAMM system to demonstrate the yield curve.
The disadvantages of such accounts are as follows:
Broker orders are executed last;
Sometimes trading platforms don’t bring the trades to the interbank market;
Possible delays in the execution of orders;
Not suitable for short-term positions.
Micro account
Micro Forex account is a special type of trading account which uses a deposit reduced by 100 times with standard trading conditions. In other words, if you deposit only $10 to this Forex trading account, you will see an amount of 1,000 currency units in the trading terminal. When working on such accounts, 1 currency trading lot size is 1,000 instead of 100,000 and is called a micro lot.
The advantages of the micro trading account are as follows:
It allows you to get used to trading real money with minimal conditions;
Your risk warning is 100 times less;
There are no significant changes in the execution of transactions as compared to other account types;
Well suited for testing the broker’s conditions;
Often used by Forex traders in the PAMM system to demonstrate the yield curve;
Often used for testing strategies instead of demo accounts.
The disadvantages of such accounts are as follows:
Broker orders are executed last;
Sometimes the broker doesn’t bring the trades to the interbank market;
Possible delays in the execution of orders;
Switching to a standard lot can be emotionally difficult.
Cent account
Forex cent account is a special type of trading account which uses a deposit reduced by 1,000 times with standard trading conditions. Cent accounts are also called NANO accounts. In other words, if you deposit only $10, you will see an amount of 10,000 currency units in the forex trading terminal. When working on such accounts, 1 lot of currency costs 100 instead of 100,000.trading accounts.
The advantages of this account are as follows:
You can trade all lots: nano, micro, and mini;
Your risk warning is 1,000 times less;
There are no significant differences in the execution of transactions as compared to other account types;
The most popular account in the PAMM system for demonstrating the yield curve;
Often used for testing strategies instead of demo accounts;
Ideal for those who want to skip demo trading;
Suitable for testing new trading instruments and trading CFDs;
Often used to test trading robots.
The disadvantages associated with these account types are as follows:
Broker orders are executed last;
Sometimes the broker doesn’t bring the trades to the interbank market;
Possible delays in the execution of orders;
Profit not worth the time.
In general, all types of Forex accounts from mini to nano are just a way to reduce the initial deposit and high risk when trading. The names of these accounts correspond to the standard designation of fractional lots.
These types of Forex trading accounts are not very suitable for professional trading, since the main obstacle in trading is the emotional stress, and these accounts artificially lower it. These accounts do not make good money, and they are all good for practice only.
If your goal is to earn money, all the conditions of a fractional lot are also provided by standard ECN. On it you can trade both mini and micro lots.
You can read in detail about the lot in foreign exchange trading in this useful article, where the lot for trading CFDs or currencies is presented as an international designation rather than a fantasy of a private broker.
Forex ECN accounts
ECN is currently the most popular type of trading account and is suitable for absolutely any investor (including a Forex trader) regardless of their goals. An ECN account is the real choice for professionals and those who want to achieve perfect order execution and price accuracy. With ECN you are trading on the interbank market, thus completely eliminating the broker from the process. The recommended deposit starts from $500.
The advantages of ECN accounts are:
Guaranteed entry to the interbank market;
Highest quotation accuracy;
Instant order execution and no requotes;
The ability to trade lots: 0.01, 0.1 and 1;
Maximum leverage from 1:1 to 1:500;
Minimal (sometimes zero) spreads;
Ideal for scalping;
The possibility of accruing annual interest up to 2.5% in the account currency;
Minimum deposit of $50;
The ability to trade without leverage.
Despite the impressive list of advantages, there are also disadvantages:
Possible slippage;
Spread may widen as volatility rises;
Brokers often set a large initial deposit.