Understand Forex Accounts
For trading success, good money management is the key. Many traders ignore this aspect of trading at their own peril and get their account blown in a few weeks of trading. Trading discipline means using a trading system based on money management rules that limit your risk and avoid making trading decisions based on emotions.
You need to have sufficient capital in your account if you want to make meaningful profits. One of the worst blunders that currency traders can make is to trade without sufficient capital. Low capital increases your chances of getting blown out too soon. This does not mean that you should have a lot of money before you start trading. It only means that you need to have enough capital in your account in order take advantage of the movements in the currency markets.
A trader with limited capital is always a worried traders always looking to minimize losses beyond the point of realistic trading. The minimum amount required to open a standard account with most forex brokers is $2000. You can start with $2000 but it is recommended by most of the professional traders that you should start with $5000-$10,000 to get good results.
A standard account or a regular account lets you trade a $100,000 standard lot with a $1000 deposit. This account is often also called 100k account. The broker is giving you an interest free loan of $100,000. This $1000 is kept as the margin or guarantee by the broker. This is a 1% margin. Your account should have more than $1000 if you want to trade.
You can change the margin account to whatever you feel comfortable with. When you open an account with the broker, you must determine what the default margin is. If you start at 2% margin, then it will cost you $2000 to trade one standard lot.
Many brokers offer huge leverage to the new trades. This is done to entice them to trade more. You can get a leverage of up to 400% by some brokers. Using 400% leverage means trading $400,000 with a $1000 deposit. With a small deposit you are controlling a huge amount. Be careful! You will get wiped out in a moment. Dont use more than 4% leverage while trading in the start. Too much leverage is dangerous for you.
With practice and more experience, you can increase the level of leverage in your trading. Its not that leverage is bad. Its just that you need to understand and learn how to use it. You can only do so with practice.
Mini accounts are great for newbies. You can open a mini account with a deposit of only $300. The mini account was developed to accommodate investors who were looking for diversification out of their stocks portfolios. This small dollar requirement allows many investors to participate in the forex markets who were previously unable to do so. Recently micro accounts have also been introduced.
One lot on a mini account means $10,000. On a mini account, you have a different lot size as compared to the standard account. You only need $50 to control a mini lot of $10,000. This is a leverage of 200%. Pip size on a mini account is also small as compared to the standard account. A pip size on the mini account is equal to $1 instead of $10 as on a standard lot.
A mini account is a great way for beginners to practice forex trading. If you lose 100 pips on a mini account, it means losing only $100 as compared to losing $1000 on a standard lot. You can say a mini account reduces your risk by 10%. But it also reduces the amount of profit that you can make. Start with at least $500 on a mini account. - 23223
You need to have sufficient capital in your account if you want to make meaningful profits. One of the worst blunders that currency traders can make is to trade without sufficient capital. Low capital increases your chances of getting blown out too soon. This does not mean that you should have a lot of money before you start trading. It only means that you need to have enough capital in your account in order take advantage of the movements in the currency markets.
A trader with limited capital is always a worried traders always looking to minimize losses beyond the point of realistic trading. The minimum amount required to open a standard account with most forex brokers is $2000. You can start with $2000 but it is recommended by most of the professional traders that you should start with $5000-$10,000 to get good results.
A standard account or a regular account lets you trade a $100,000 standard lot with a $1000 deposit. This account is often also called 100k account. The broker is giving you an interest free loan of $100,000. This $1000 is kept as the margin or guarantee by the broker. This is a 1% margin. Your account should have more than $1000 if you want to trade.
You can change the margin account to whatever you feel comfortable with. When you open an account with the broker, you must determine what the default margin is. If you start at 2% margin, then it will cost you $2000 to trade one standard lot.
Many brokers offer huge leverage to the new trades. This is done to entice them to trade more. You can get a leverage of up to 400% by some brokers. Using 400% leverage means trading $400,000 with a $1000 deposit. With a small deposit you are controlling a huge amount. Be careful! You will get wiped out in a moment. Dont use more than 4% leverage while trading in the start. Too much leverage is dangerous for you.
With practice and more experience, you can increase the level of leverage in your trading. Its not that leverage is bad. Its just that you need to understand and learn how to use it. You can only do so with practice.
Mini accounts are great for newbies. You can open a mini account with a deposit of only $300. The mini account was developed to accommodate investors who were looking for diversification out of their stocks portfolios. This small dollar requirement allows many investors to participate in the forex markets who were previously unable to do so. Recently micro accounts have also been introduced.
One lot on a mini account means $10,000. On a mini account, you have a different lot size as compared to the standard account. You only need $50 to control a mini lot of $10,000. This is a leverage of 200%. Pip size on a mini account is also small as compared to the standard account. A pip size on the mini account is equal to $1 instead of $10 as on a standard lot.
A mini account is a great way for beginners to practice forex trading. If you lose 100 pips on a mini account, it means losing only $100 as compared to losing $1000 on a standard lot. You can say a mini account reduces your risk by 10%. But it also reduces the amount of profit that you can make. Start with at least $500 on a mini account. - 23223
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.
posted by X - Men @ 12:33 AM
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