Difference of 3 Forex Trading Accounts and How to Select them
Trading Accounts – Some brokers that we meet will definitely have a real account offer. Of the many brokers there will also be those that offer accounts with various levels, namely micro, mini and also standard. This type of account will be the possibility of a trader to choose according to his abilities and criteria.
Choosing the right trading account, of course, must depend on the ability of the trader to be able to overcome the risk of the amount of capital that will be his initial investment. So what are micro, mini and standard accounts? The following is the discussion.
A standard account is a forex trading account that is very common, traders can make transactions as much as USD 100,000 / lot. In this account traders can also trade with many currency pairs. Because the nature of the account is quite common, so you can find a standard account at all brokers.
The term “lot” is an indication of the size of the minimum trading volume per transaction. If you are a beginner trader then it is very necessary to understand first that your forex trading cannot transact with retail for only USD 1 but must follow the lot size for the minimum amount per transaction.
But of course this does not mean that you have to be able to deposit capital as much as USD 100,000 when you first open an account according to the rules of margin and also leverage is usually only 100: 1, and only requires USD 1,000 in a guarantee account or margin for standard lot size traded.
Next. a mini account that allows traders to make transactions with mini lots. For most brokers, a mini lot equals USD 10.00 or can be said to be one-tenth of a standard account.
Most brokers who offer standard accounts will usually offer mini accounts as a way to get new customers who are still hesitant to trade using a standard lot. So that this account is highly rated suitable for novice traders or those who are not really ready to bear the risk of loss on a standard account.
If you calculate it using the help of 100: 1 leverage then trading on a mini account will require USD 100 for each lot traded. Even so, you must also be prepared to face unexpected price fluctuations. So, the actual minimum capital will be greater, between USD 2000 – 5000.
And the last is a micro account, which is a forex trading account account that has the size of a first transaction in a mini or one hundredth account on a standard account, precisely at the size of a micro lot equal to USD 1.00 or equal to 0.01 lots.
This type of micro account is usually used by traders who are beginners and practice trading directly as one of the transitions from a demo account.
Although not common like a standard account and also a mini, there are currently quite a lot of traders who offer this type of account as one solution for beginners who are eager to know real forex trading with low risk. For example, you choose 100: 1 leverage, so you really need a minimum of USD 10 as a margin on 1 micro lot to be traded. The recommended initial capital deposit is USD 500 to 1000.
COMPARISON OF THE LOT CONVERSION OF MICRO, MINI AND STANDARD ACCOUNTS
To make it clearer, here is a comparison of the conversion to the three account lots above using the conversion comparison on 1 lot for each account:
- 1 lot for standard account: 100,000 units or 1 pip = USD 10
- 1 lot for mini accounts: 10,000 units or 1 pip = USD 1
- 1 lot for micro account: 1000 units or 1 pip = USD 0.1
Then, how much profit can be obtained? Here is an example:
Traders open positions in GBP / USD pair then assume to use 1 lot when the price is at 1.7800, then the price will go up to 1.7850 at 50 pips. So, the benefits to be gained are:
- 1 lot for standard account: USDD 10 x 50 pips = USD 500
- 1 lot for mini accounts: USD 1 x 50 pips = USD 50
- 1 lot for micro account: USD 0.1 x 50 pip = USD 5
In the case example, you can already see that it is very easy to understand how to learn the differences from the three accounts.
HOW TO CHOOSE THE BEST ACCOUNT
In forex trading, maybe for those of you who are new, it will be difficult to decide which account is most suitable for you, whether it is a micro forex account, a mini forex account, or a forex standard account? The following is a review that might help you.
The thing you need to know, to be able to choose the best account you must have capital and also psychic readiness. Both of these things are very important to be your reference for selecting an account. If you have an idle fund of $ 1,000 to make a deposit and also lose that amount, you will not make your own economic life become shaky. Then you are suitable to use a standard account. However, if it turns out your capital is only for $ 1000 and you are still not too ready to lose capital then you should choose a micro account.
There are also traders who will choose a standard account with a minimum deposit amount of $ 100 because they are sure that using the standard account can make transactions with a small pip amount but can achieve maximum profit.
The difference and the method of choosing requires the trader to be wise. Learn to be an advanced trader, so you can get profit according to your target. Be careful with brokers who give big and fast profit frills, because some rogue brokers can trap you.