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Forex Trading Basics: Trading Accounts

By Edited May 28, 2016 0 0

What types of forex accounts should you have?

Although you can choose to have any Forex account you want there are just three main accounts for you to consider. Which account is best for you is totally up to you.

First, the most common type of forex accounts is the managed Forex account. Although most starting Forex investors may choose this account it may not be the best one for you. What this means is that the managed forex account is managed but not by you. So if you want to be active and control what happens with your funds, a managed Forex account is not your best choice.

Second, the standard forex account is what ends up being used by most investors. This allows you to invest as you see fit and you will immediately see the gains if you invested wisely and you will also see losses if you didn't.

Third, the last time of accounts are the mini forex accounts. This does not mean that the account is limited but that the amount required to invest is. You can start investing in the Forex market using this account with as little as $25, but more than likely $250 or $500 which is a more advantageous amount.

So which account should you choose?

The managed account is probably best if you just want to let someone else do the work for you. This is the most expensive route because you won't be in control. Someone else will be figuring out what the best trades will be for your type of personality. The investments you would prefer to make are not an option. Someone will make the investments they think are best for you. As you mature in your knowledge of the Forex market this may not be a good choice. This also requires the most money up front. And, there's no guarantee you will not lose it all.

The standard account is the choice for many new investors because they have the control over the investment choices available. Which means that you should see immediate returns on your investment activity. The drawback is that those returns may not always be to the upside. You may find yourself facing some real bad losses in between your winings. This requires a good chunck of money, around $2500 but most likely your investment will be around $5000.

The mini forex account is a good way to go if you aren't sure what you are doing. This is because you will only commit a small amount of money most likely what you can lose without much thought. Some accounts can be started with as low as $25 but the best will always be to start with more. You have more options that way. The minimum required could be as low as $25 but the average is more likely to be around $500.

Just because you open an account of one type, doesn't mean that you are stuck with it for life. Once you become better educated about your investment methodology and you know what you are doing and feel comfortable doing it, by all means shop around for a better account. Starting small then graduating to better is a great way for you to minimize your losses as you learn the ropes.

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