Types of forex accounts
The forex market is a large and global market for the exchange of currencies of different countries. To enter this market, you must first open a trading account in one of the reputable forex brokers. Due to the vastness of the forex market and the variety of trading assets in it, forex brokers offer different types of trading accounts to their customers.
Each of these accounts has its own features and conditions, and the choice between them depends on your goals and trading strategies . Choosing the right trading account is very important because it will significantly affect your success in trading. In this article, we will review the different types of trading accounts in the forex market and describe the characteristics of each.
Standard forex account
The standard trading account is the most common type of account in the forex market, which is suitable for a wide range of traders from beginners to professionals due to its simple conditions and ease of use. In standard accounts, you can trade with standard trading volume (one lot); Each lot is equivalent to one hundred thousand units of the base currency, for example, one EUR/USD trading lot is equivalent to one hundred thousand euros. However, you don’t need to have 100,000 units of the base currency to start trading, and you will be able to enter into transactions with a much smaller amount of this money, and this completely depends on the margin and leverage rules of your chosen broker.
The risk of trading in the standard account is higher due to the large trading volume, and even small market movements can have a big impact on your trading account. The trading spread in standard accounts is slightly higher than other accounts such as ECN; However, the spread figure is usually fixed and does not change, and this is an advantage for traders. Also, transaction fees and other costs in the standard account are lower than other types of accounts. The amount of initial deposit required to open a standard account is between $100 and $500, which can vary depending on the brokerage package.
ECN forex account
An ECN account is a type of trading account in the forex market where transactions are made directly between the trader and liquidity providers (such as banks and financial institutions) and the brokerage does not play a role as an intermediary. ECN accounts are suitable for professional traders and those looking for direct market access. In ECN accounts, traders have access to the depth of the market and will be able to register their orders at different levels of quotient; This allows traders to get the best price for their trades.
One of the biggest advantages of ECN accounts is their very low spreads, which is due to the absence of intermediaries. In ECN accounts, instead of applying a high spread, traders are charged a commission; This commission is applied to traders under the title of transaction execution fee by the broker. The speed of execution of transactions in ECN accounts is high because there is no need for broker intervention; This is very important for algorithmic and short-term traders.
Forex STP account
STP account is a type of trading account in the forex market, in which transactions are done directly between traders and liquidity providers, and the brokerage does not play a role as an intermediary. In the STP account, when the trader registers an order, this order is sent directly to the liquidity providers, and the providers offer the best buying and selling prices for the desired currency pair; The trader can choose one of these prices and the transaction will be executed immediately. STP accounts have smaller spreads than standard accounts due to the absence of intermediaries and access to the best prices from liquidity providers.
The difference between STP and ECN accounts
STP and ECN accounts have many similarities; However, there are key differences between them. For example, there are differences in the way transactions are done in these two accounts. In STP accounts, your trading orders are sent directly to liquidity providers without the involvement of a broker, and the broker does not act as an intermediary; But ECN accounts give you access to a network of liquidity providers; In such a way that traders’ buy and sell orders are directly matched with each other and the broker acts as an intermediary and receives a commission from each transaction.
Also, in STP accounts, spreads are variable and some brokers may charge a percentage as a commission for each transaction; But ECN accounts usually offer fixed spreads and specific commissions for each transaction, which makes trading costs more transparent.
Forex VIP account
VIP trading accounts are a special type of forex account offered by some forex brokers to high volume traders or special clients. VIP trading account is a special account that allows traders to operate in the forex market with better conditions and more benefits. Whether a VIP account is right for you depends on your needs and trading conditions; If you are a high volume trader looking for low spreads, advanced trading features and higher trading limits, the VIP account is a good choice for you.
Forex demo account
A demo account in the forex market is a test and simulated account that allows you to trade without risking real money. This account is offered by many forex brokers to their clients. Demo accounts have many uses, including familiarization with trading platforms, testing different trading strategies, gaining experience and the possibility of risk-free trading. The demo account is actually the account with which you should start trading. In this account, you really trade in the market, but you do not need to pay any fees and you will not incur any losses.
Saint Forex account
A cent account is a type of forex trading account that allows traders to trade in smaller units of currency called cents instead of standard units such as dollars, euros and pounds. In other words, in this account, the scale of your transactions will be cents. As a result, you are able to make smaller transactions. This account will be a good choice for new traders.
Mini forex account
Mini account is a type of trading account in the forex market, which is designed for traders with low capital or traders who want to do their transactions with less risk. In mini accounts, due to having a minimum deposit and low volume transactions, traders will be able to enter forex transactions with less money and earn profits.
Micro Forex account
In the micro account, you can trade with smaller units of the base currency, as much as 1000 units. In this account, you don’t need a lot of capital because the minimum balance of micro accounts is even lower than mini accounts. Low risk makes this account a good option for novice traders; Keep in mind that the less risk you take, the less profit you will receive.
Forex PAMM account
PAMM accounts are a type of trading account in the forex market that allow investors to benefit from the profit of this market without having to make a transaction in the forex market. In this type of account, investors entrust their money to an experienced account manager, and the account manager uses this money to make trades in the market. Finally, the profits and losses from this account are divided between the account manager and the investors based on the percentage of each person’s investment.
In the PAMM account, investors have no control over transactions and can only observe the performance of the account. PAMM account is suitable for traders who do not have enough time or knowledge to manage their own trades; However, it is important to do your research before investing and to choose a suitable and reliable account manager.
Managed forex account
Managed accounts in the forex market have a function similar to PAMM accounts. In this way, the investor in this type of account entrusts the management of his trading account to a professional manager and allows the manager to trade in the account. with the difference that the account holder will maintain full control of the account and will have the ability to withdraw money and close the account at any time.
Copy Forex trading account
Forex copy trading accounts are a type of trading account that allows traders to copy the trades of experienced and professional traders. This is done automatically by copy trading platforms. Copy trading accounts are subscription-based, and by purchasing a subscription, you can copy the trades of the reference trader during the subscription period.
Islamic forex account
Islamic forex account is a type of trading account designed based on the laws of Islamic Sharia. This type of account allows Muslims to trade in the forex market without receiving or paying usury (Swap). In the Islamic account, instead of receiving or paying swaps, a fixed fee is charged from open transactions during the night; This fee is known as maintenance fee and is determined based on interest rate without interest.
final word
In this article, we introduced the types of trading accounts in the forex market. Note that choosing a trading account that fits your needs and strategies in the market is of great importance. Before taking any action, complete your research and make sure your decision is correct.