A forex online trading account is a platform used to place buy and sell orders for currencies and financial securities using a brokerage internet based software. This forex trading account is operated with the use of high speed computers and network. They are three main online forex trading accounts which are named the standard account, the mini account and the managed account. Each of these trading accounts has their advantages and disadvantages and they are as follows.
STANDARD ONLINE TRADING ACCOUNT
This is seen as the most common form of online trading account. It gives traders access to standard lots of currency which is worth 100,000 dollar each. This doesn’t mean that in other to trade with the standard account one must provide 100,000 dollars. No, a trader can trade this account with a standard lot of 1,000 dollars using the rules of margin and leverage.
The major advantage of using the standard online trading account is the fact that brokers provides more service and good perks for traders since the platform requires a huge capital to trade full lots. The disadvantage of using this account is that they are a lot of loss potential because if a trader can gain up to 1,000 dollar in favorable moves, he can also losethe same huge amount in a 1,000 pip move. This magnitude of loss can be detrimental to new traders.
MINI ONLINE TRADING ACCOUNT
This account allows traders to make various trades using mini lots. A mini lot is an equivalent of 10,000 dollar which is far smaller than that of a standard lot of 100,000 dollar. Brokers who offer standard accounts also offer mini accounts for traders who are beginners in forex trading and have small capital to start up the account with.
The major advantage of using this type of online account is that is requires a small capital of about 400 -500 dollar to begin and it is flexible in that is has high risk management scheme when compared to that of a standard account. The disadvantage is the fact that it attracts low reward or profit.
MANAGED ONLINE TRADING ACCOUNT
This is an online trading account in which trading decisions of what to buy and sell are made by the brokers and professionals but the money still belongs to the trader. Here, the trading goals are set by the trader while the broker meets the target.
The advantage of trading with this account is the fact that a professional broker handles all the mind games in the account. The trader does not need to a whole time monitoring the market for great trading times. The disadvantage of using this trading account is that it requires a huge startup capital since it is managed by professionals and also, when a trader sees a good opportunity to place a trade, he won’t be able to.
In conclusion, before trading with an online account, one should know every necessary fact that should be known to avoid trading lose and maximize profit.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.