Types of Forex Accounts

Types of Forex Accounts

Several different types of forex accounts are available to the retail investor. Demo accounts are offered by forex brokers as a way to introduce traders to their software and execution methods. After trying a demo account, a real money or a funded account is the next step.

Funded accounts can be mini accounts, full accounts and managed accounts. Mini accounts are similar to regular trading accounts; however currency is traded in lots of 10,000 rather than 100,000. This allows for lower mandatory initial deposits, and greater customization of risk management.

It is important that the currency trader consider what they want to get out of their account, before deciding on the type to open. Demo accounts, and mini accounts, are great for the retail forex trader to learn a profitable system, and get used to the execution methods of the broker. For the currency speculator that doesn't want to trade by themselves, a managed account would be better.

Forex Managed Trading
Forex managed trading involves a money manager that trades a forex account on behalf of a client for a fee. Managed forex accounts are similar to hiring an investment advisor to manage a traditional investment account of equities and bonds. Returns and fees between managed accounts can vary greatly; therefore, it is important to research your options thoroughly before assigning your account to a professional manager.

Managed Forex Account
Some managed forex accounts involve the trader "teaching" the manager what signals to look for and how to interpret them. It is thought that forex managed trading takes the psychology out of managing personal wins and losses.

Another managed forex account type uses the firm's own proprietary trading systems. However, it is important to note that there is no such thing as the "holy grail" of trading systems. If a system is a perfect money maker, the seller will not want to share it. This is why big financial firms keep their "black box" trading programs under lock and key.

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