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Earnest

What are the various Forex accounts?

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Hi Earnest,

The Forex market is a highly flowing financial market across the globe. Here, you trade one currency against the other. This market is unique since you can compete with established banks and other big financial firms; all you need is to devise an excellent account.
In the Forex market, you can choose to deal with a standard account, a mini account, or a managed account. You need to retain that though these accounts are great to work with, each has its drawbacks. The account you choose to work with will largely depend on the amount of capital you initially invest, your risk tolerance strategies, and the time you will dedicate each day for trading. 
Many investors usually use the standard trading account. While using this account, the necessary quantities of currencies worth $100,000 will be available to you. Since the leverage to margin ratio is 100:1, you will only need $1,000 in your margin account to trade one regular lot. In this account, the broker may give you many services and more enormous benefits since you need adequate initial capital to trade all lots. Your gains in this account are also more substantial, unlike other accounts. One drawback of this account is that the minimum balance needed is usually high. Also, this account can result in considerable losses if a trade does not favor you.
In a mini trading account, transact with mini quantities. A mini lot is about $10,000. You will often find that if a broker is offering a standard account, then most likely, they will also be dealing with a mini account. The mini accounts are there to entice new traders who are not willing to trade their whole amounts.
 One benefit of this account is that your risks are minimized since you do not trade your full lot. You can employ new techniques without risking a significant amount of your capital. This account is also flexible. You can easily manage your risks since if you feel that trading one standard lot is risky, you can deal in five or six mini lots, which will be less risky. Since this account is unsafe,  the benefits you will reap from it are low.
In managed accounts, you will own the capital; however, you cannot decide whether to place a trade. In this account, you will set the objectives for your account manager and handle it. Such targets may be, making huge profits and managing the risks that will come by while trading. 
A managed account may be of two types, the pooled funds where the money you wish to invest will be combined with that of other investors and put in a mutual fund. The profits that will arise in this fund will be shared amongst the investors in this fund. The other account is the individual accounts where your money is put in your account.
One great advantage of a managed account is that you will get a professional Forex broker who will handle your account. Managed accounts are an excellent choice if you aim at diversifying your portfolio without being glued to the screen for a long time studying the market trends. These accounts will, however, need a substantial minimum balance to operate, and they are also not flexible to trade with.
Before you deal with these accounts, you should first practice trading using a demo account since it is risk-free.

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Hi Stella, thanks for asking this question.

Traders use Forex demo accounts to test out the trading platform, without using real money. With a demo account, traders can practise trading and get to know the live trading environment without putting capital at risk.

Forex traders, especially those who’re new to trading or those who switched to a different trading platform are strongly advised to use a demo account in the beginning and get a feel of All Forex traders should use a Forex demo as their first Forex account to get acquainted with the currency market. Apart from improving their trading skills, there are many more advantages that a demo account brings. 

Think of it as trading training that involves using virtual funds. Becoming a successful trader involves spending a considerable amount of time practising the craft, and a demo account is an excellent starting point to at least familiarize yourself with the trading tools available on the platform.


 

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Hi Stella, thanks for coming here. 

A Forex demo account, also known as paper trading account, is used to practice trading or try out new trading strategies without involving real money. Traders use demo accounts to adapt to a trading platform, learn how to place orders, test out different trading tools and so on.



Using a demo account is highly recommended for new traders until they get comfortable with the platform. However, a demo account can prove very useful to experienced traders as well. Even expert traders have demo accounts to develop their trading strategies and improve skills.


Apart from testing strategies and learning the platform, demo accounts are great for learning risk management. Knowing how many positions to open or how many lot sizes to trade can be very difficult for novice traders, and demo accounts are a great place to learn how to manage risk.


Once you’ve spent enough time on a demo account, you can open a live account and start trading with real funds.

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