The Forex market has become hugely successful while capturing a wide global variety of participants. Due to the many benefits Forex provides for its traders, investors are choosing to trade with the Forex market in favour of other financial markets. The large number of traders, the high leverage, extreme trading volume, dispersion, high profit opportunities and variable exchange rates all contribute in leading a prospective trader to trade with Forex.
The first thing that a Forex trader comes across when entering the market is the variety of variations in trading account types. Every trader determines his/her individual preferences and economic status when deciding what Forex account to trade with. The four different accounts to use in Forex are demo accounts, mini accounts, standard accounts and managed accounts. Each account in Forex can be opened with a Forex broker.
A demo account is usually used at the start of a Forex career before moving on to a funded account (micro, standard/full and managed). A trader who is unsure about the Forex market and desires to gain some experience is advised to use a demo account. A demo account includes using virtual cash; however it enables the trader to gain some practice and knowledge about the market before moving to a live funded account. Along with the practice, a trader will be prevented from any risks as a demo account excludes such disadvantages. A demo account simply prepares a trader leniently for the real Forex market and a real Forex account.
A full account in Forex means trading currencies in lots of one hundred thousand. Such an account is opened by traders who feel that they are experienced and skilful enough in the Forex market to be trading at such a volume.
A managed account is used when a trader wants a money manager to handle the trades in exchange for a charged fee. It has become a rather popular option by all types of traders, even beginner traders as they are putting their money in the hands of trustworthy experienced brokers. A trader will be free of all the stress and emotions that accompany trading as that is left down to the money manager. All a trader does with a managed Forex account is wait for profits on the receiving end, or unfortunately losses, although losses are merely responsible by the broker not the trader him/herself.
Each trader must decide on what account to open, it can depend on their trading style and preference, as well as skill and capital. Generally speaking, a small investor will most probably choose a demo or mini account so as to gain more experience and avoid some of the risks in the Forex market. A trader with more experience and is skilful in trading with Forex will probably choose a full account as they are aware of how to individually generate profit and are knowledgeable of Forex trading and the market. Finally, a trader who appears to have all the necessary resources will choose to open a managed Forex account; these are usually the experienced traders who want to focus solely on trading. A trader who is yet to learn about the Forex market must first consider whether trading with a live account is too soon a move.
The market is consistently prone to change and is known to be stable even in the most unfortunate economic circumstances due to the fairness of the competition. There are endless ways in gaining profit in the Forex market and the first step in getting there is of course, opening an account with a broker, whether it is demo, mini, full or managed.