The best thing to do while deciding on Forex trading is to approach a good broker. Forex brokers are always attached to a lending institution like a bank, due to the requirement of large capital. They should be registered with Futures Commission Merchant (FCM) and come under regulation of CFTC or Commodity Futures Trading Commission. It is very important to make sure that your broker has the backing of a reputed institution.
Broker offer different types of trading accounts for people with different trading requirements and skills.
Brokers extend services of demo Forex trading accounts for beginners and those who are new to the Forex market. This account can be used to get knowledge about the nuances of Forex market and trading. These demo accounts are free so there is no requirement of any money here. The broker uses virtual money to finance the account so you can begin trading without the risk of making losses. This would give you an insider’s view of the market and teach you the strategies to be employed, the timing of trades and potential profit that can be made. This can be taken as training before actual trading with money can begin.
Micro accounts are those which can be funded with as little as $1. This is used mainly for an experience with very little risk. This is another training tool that can be utilized to increase trading skills and sharpen your mind to detect potential profitable movements of currency pairs.
Mini Forex trading accounts require a deposit of $100 minimum. Those people who are familiar with Forex trading methods and routines but do not want to take high risks can try the mini account. This account reduces losses greatly but profits are also less here.
Premium accounts are ideal for experienced traders. These require a minimum fund $1000. The risks involved here are higher and so are the profits. Hence only traders with sharp and efficient trading skills should open a premium account for trading.
Brokers offer more than one type of account for their customers. The mini accounts requiring less funding offers high leverage and the standard and premium accounts that allow trading on different leverages requiring significant amounts of capital is offered tools and additional services. Thus it is vital to ensure that the broker of your choice is equipped with right kind of tools and is offering appropriate services in accordance with your capital amount in your Forex trading accounts.
There are several types of forex trading accounts that can help you invest in the forex market. An effective forex strategy can be the key to maximizing the return on investment in this high risk market of foreign exchange.