It is not a secret that a Forex trader provides all transactions with buying and selling currency pairs using online means, cooperation with Forex brokers and each of them also applies a Forex trading account: at first a demo account operating with virtual money to prepare for real time or live trading in the Forex market and then appealing to different types of FX trading accounts when supposing one is ready for risks dealing with losing or earning real money.
Below you will find a review of pros and cons of the most common type of a Forex trading account plenty of traders choose all over the world - the standard FX trading account. There are also not so popular but applied managed trading accounts, as well as mini and demo accounts for new Forex traders.
Explaining a standard Forex trading account
It stands for the most common and widely used trading account applied by Forex traders. It has such label because allows its owner to gain an access to standard lots of any currency every of which is worth about 100 thousands USD. Many beginners suppose that one needs to invest real 100 thousand dollars in order to start live trading at forex market. Those common rules of leverage and margin (usually 100 to 1 in Forex trading) denote that you need to put only one thousand of bucks down to this margin Forex trading account to get 1 standard lot necessary for such Forex trading. Ask any FX expert and he/she will prove this fact because most of traders work for years using advantages of this type of a FX trading account. However, only an experienced and full-time as well as successful and rich trader can expect to understand all nuances while using such account for FX trading.
Speaking about advantages of a standard trading account we should name the most obvious ones:
- servicing: due to the fact the standard Forex account needs an investment of the adequate initial capital from FX traders into trading process to get an access to full lots plenty of Forex brokers have to provide outstanding services and conduct improvements to draw attention of rich and private investors. You can expect to get the best service using the standard FX trading account.
- gaining potential: each pip here is worth about ten dollars or higher and in a case positions moves according to your strategy and natural Forex fluctuations by one hundred pips during one day your gain can increase up to one thousand dollars. Any other type of a Forex trading account can't boast such potential when it concerns a possible gain.
However, even the sun has it spots and a standard Forex account is not an exception. The most common cons of its usage are:
- requirements for capital: as it was mentioned above the most important issue is to find an initial sum of money should be no less than one thousands of dollars while many brokers start their rates for a standard Forex account from tow or even thousands of USD. So prepare to invest such money and also be ready to lose them as well.
- losses potential is also high: you may win a lot or may lose it all. Only really experienced traders can expect to use a standard FX trading account and risk one thousand of real dollars expecting and forecasting that 100 pips won't move against them during one trading day.