One needs to set up a trading account to trade and earn money on Forex. Most Forex brokers and platforms like the MetaTrader 5 in Australia offer a wide range of accounts, each suited for solving unique and specific problems.
Standard Trading Account
The standard trading account at one time was the most popular type of account as it has a fixed spread most times. Often going by the name ‘Classic’, this account is no longer as popular as it used to be.
- What Works
- Higher quote accuracy
- No requotes
- High leverage
- Low minimum deposit.
- Why You Might Consider an Alternative
- High spreads
- Possible delays in executions
- No accumulative annual rate
Demo Accounts
A demo account is mainly utilised for learning how to trade on the Forex markets. These accounts work very similarly to standard accounts but use virtual money, so there are no risks involved. Various trading platforms like the MetaTrader 4 in Australia support such accounts so that new traders and beginners can practice and learn the process while minimising the risks.
- What Works
- No risks
- No restrictions on the durations of the positions
- Full access to trading instruments
- Ideal for learning and testing strategies
- There isn’t much emotional pressure or stress a trader can experience
- Why You Might Consider an Alternative
- You can make no profits.
Mini and Micro Accounts
Mini and Micro accounts are special accounts that use deposits reduced by 10 and 100 times, respectively, with standard conditions. Under such conditions, trading lots cost 10,000 or 1,000 instead of 100,000 and are called mini-lots and micro-lots, respectively.
- What Works
- The risks involved are minimised
- Best suited for testing a broker’s conditions
- Allows one to get used to the platform
- Why You Might Consider an Alternative
- Orders are executed last by the broker
- Not suited for short-term trades
- It may involve delays in execution
ECN Accounts
These are the most popular types of trading accounts and are suited for all traders. These are the first choices of professional traders and other traders who wish to execute perfect orders with great accuracy. It is usually recommended to deposit a minimum of $500 to get started.
- What Works
- Entry to the interbank market
- Instant order executions
- Best quotation accuracy
- Suited for scalping
- Why You Might Consider an Alternative
- As the volatility increases, the spread may widen
- Slippage possibility is high
STP Account
Straight Through Processing or STP accounts are trading accounts that allow one to transfer the orders directly to the liquidity providers, normally banks that offer their prices and are partners of the brokers.
- What Works
- Minimal spread
- Flexible leverage
- Fast order execution with high accuracy
- Low minimum deposits
- Why You Might Consider an Alternative
- Slippage possibility is high
- Partial slippage of ongoing orders is possible
PAMM Accounts
PAMM accounts are made for those that don’t have the knowledge and time to trade and are created for investing. These accounts involve entrusting accounts on behalf of the traders. The managers do not have authority over the distribution of profits, and the account is only synced with the manager’s trading account and the trading proceeds.
- What Works
- Only the investor has access to the money in the account
- The trade managers do all the work
- The risks are limited only to the amount that is transferred to the PAMM account.
- Can work on mini-accounts as well.
- Why You Might Consider an Alternative
- Investors do not learn the process.
- Money in the account is usually frozen and inaccessible to the investor.
Depending on the needs and expertise one possesses, there are various types of accounts, each suited and catering to specific audiences. The traders have full freedom to choose what and how they wish to trade as per their liking. There are various brokers and platforms like MetaTrader 4 in Australia that support such accounts and provide full access to their tools and services. So if one can decide their purpose, the amounts they can trade with and realise their risk appetites, anyone can see what account type is ideal for them.
