There are a range of account types that traders can choose from, this will, however, depend on the broker you are using.
Accounts can be broken down into different categories, most brokers will offer a version of, ‘starter, medium, premium accounts’, which will have different services being offered.
Traditionally accounts that are broken down into three are separated by the amount you deposit into the account. Essentially this means those that deposit more will have access to more services than those that deposit the minimum amount. This isn’t ideal, however, it is a reality. There are brokers that don’t discriminate between account size but they are few and far between them.
The three main account types are:
Micro Forex Accounts
These accounts are for beginner traders, who are looking to start small before depositing more into the account. They often let traders enter the market with as little as $100, although this will depend on the broker. The plus of these accounts are that you can take significantly smaller trades by using micro and mini lot sizes, which are increments of 0.01 for micro and 0.1 for mini lots.
Being able to trade such small amounts helps a trader get used to trading real money before they look to up their size.
These accounts are the most accessible for beginner traders and is why we would always recommend you start with a small account. We have put together a list of our preferred brokers that offer great micro accounts, see here.
Intermediate Forex Accounts
Intermediate accounts have a higher minimum deposit amount, usually between $500-1000, and they normally offer an improved service to the trader, including better bonuses, a dedicated relationship manager and better access to different account types, for instance, if the trader was interested in opening a corporate account, this process would be a lot easier.
Premium Forex Accounts
Premium accounts often referred to as VIP accounts, cater for those who intend on trading large quantities, often having a minimum deposit of $10,000 or more. Those with these accounts will have access to the brokerage’s full suite of services, often receiving smaller spreads, a dedicated service team, API connection and access to expert analysis.
It is understandable to question why those who have more money get treated better, and unfortunately, the reason is that these clients will contribute significantly to the broker’s revenue stream and therefore it is imperative to keep them happy.
Additional Broker Accounts
Whilst the three accounts mentioned above are the most common, there are a number of other account types that traders can consider.
Managed accounts aren’t just accounts that are managed by third parties but they are also accounts where you can control multiple accounts at once, these are known as MAM accounts.
There are also accounts known as PAMM accounts which allow you to allocate certain percentages to trades. It basically allows you to take a trade of 1% in one account, which will then take the same size trade in a larger or smaller account.
The final account type like this is called LAMM, which stands for lot allocation management module and is a predecessor of PAMM accounts.
Brokers will continue to make new offerings when it comes to accounts. Additional accounts that are popular are:
- Hedging Accounts – These are accounts that allow you to hedge your positions, this might be a case of taking both a long and short position in one asset or simply by offering you instruments that are connected meaning that you can manage your risk.
- Demo accounts – Most brokers now offer a demo service, which allows you to get used to the brokers platform before you begin trading live. They can also be used to practice a new strategy or just to help build confidence before going live.
- Swap free accounts – These are normally accounts for traders who for religious reasons aren’t allowed to receive swaps. These tend to be for the Islamic community and you will often see these accounts call ‘Islamic Accounts’.
- Segregated Accounts – This should be the norm now for any regulated broker. This basically means that when you deposit into a brokerage account, your funds are spearated rather then being put in a large pool of money.
You also open investment accounts through brokers however traditionally Forex brokers do not offer the longer term investment accounts some people are after. The primary reason is that because these investment accounts are not the type of account you regularly interact with, they are long term accounts where people will normally pay in over a certain time period and slowly watch them grow.
Forex accounts are designed to be more active, which is why they come with built-in charting platforms loaded with features to help traders profit from intermittent price movements.
Accounts like Individual Retirement Accounts (IRA) are as the name suggests, accounts designed to save for your retirement. It is always important to have a plan about retirement, we have found what we consider the best options to look for when thinking about starting your IRA.
Once you have set up your long term saving / investing strategy then it is time to start looking into the shorter term forex trading brokers.
If you are looking for your broker to tick several pieces of criteria, then see our other lists of broker categories and how we rank certain brokers: