11 Types of Forex Account
To trade and make money on the Forex market, you must have your own Forex trading account with real funds. In today’s Forex markets, most reputable Forex brokers and trading platforms provide their clients with a variety of account options. Each type of account is designed to address specific trading needs and opening a trading account has become incredibly simple and accessible to anyone.
Different Types of Forex Account
In today’s Forex market, there are numerous account types available. Traders have the freedom to choose how and what they want to trade.
Below is the list of different types of forex account.
Standard Forex retail investor accounts were the most popular type of trading account. Another name for this type of account is “CLASSIC.”
The Forex demo account is the most widely used account for learning how to operate in the Forex market. This account has the same conditions as standard retail investor accounts, but instead of using real money, it uses virtual money for trading Forex. In other words, with a demo trade, you take no financial risk, and in the event of failure, you can always replenish the balance repeatedly.
The Forex mini account is a unique type of Forex trading account that operates with a deposit reduced by 10 times compared to standard Forex trading conditions. For instance, if you deposit only $100 into this account, you will see an amount of 1,000 currency units in the trading terminal. When using such Forex trading accounts, 1 currency trading lot costs 10,000 instead of 100,000 and is known as a mini lot.
The Micro Forex account is a unique type of trading account that operates with a deposit reduced by 100 times compared to standard trading conditions. For example, if you deposit only $10 into this Forex trading account, you will see an amount of 1,000 currency units in the trading terminal. When using such accounts, the size of 1 currency trading lot is 1,000 instead of 100,000 and is referred to as a micro lot.
The Forex cent account is a unique type of trading account that operates with a deposit reduced by 1,000 times compared to standard trading conditions. Cent accounts are also known as NANO accounts. For instance, if you deposit only $10, you will see an amount of 10,000 currency units in the Forex trading terminal. When using such accounts, 1 lot of currency costs 100 instead of 100,000, as seen in standard trading accounts.
ECN, or Electronic Communication Network, is currently the most popular type of trading account and is suitable for any investor, including Forex traders, regardless of their goals. An ECN account is the preferred choice for professionals and those seeking perfect order execution and price accuracy. With ECN, you trade on the interbank market, completely eliminating the broker from the process. The recommended deposit for an ECN account starts from $500.
(7) Straight Through Processing (STP)
An STP account is an account that directly transfers your orders to a liquidity provider that is a partner of your broker. Typically, a bank or multiple banks serve as liquidity providers, each offering its own price. The price closest to the client’s order is displayed in the trading terminal.
(8) Percentage Allocation Management Module (PAMM)
PAMM accounts, or Percentage Allocation Management Module accounts, are special types of Forex accounts designed for investing. A PAMM account in Forex is one of the initial methods for investing in the Forex market, especially for those who lack the knowledge and time to trade. PAMM accounts involve entrusting Forex account management to a professional on behalf of the investor. However, there is no direct transfer of money, and the Forex account money manager does not control the distribution of profits to investors. Instead, your personal trading account is linked to the trader’s trading account, and trading activities take place. As a private investor, you only see the final result and cannot evaluate the trading process itself.
(9) Multi Account Manager (MAM)
MAM trading accounts, or Multi Account Manager accounts, are a special type of account money manager designed for investing. The MAM managed accounts differ from PAMM accounts in that they allow the investor to intervene in the trading process. In other words, the investor can observe the trader’s process and close positions if they believe it’s the right decision to make. MAM accounts are also known as Forex managed accounts.
(10) Copy Trading
Social Trading, also known as a copy trading system, is currently considered the most advanced and secure method to generate income from trading, benefiting both the trader and the investor. The primary feature of copy trading that sets it apart from other systems is the effortless replication of the positions of any investor you choose. In this system, the investor retains full control over their account. The system offers a ranking of traders, comparing them based on several key parameters, including profitability, amount of own funds, duration of work, share for management, and risk management of trading.
(11) Swap Free
Swap-free Forex trading accounts are accounts that do not incur any overnight fees. These accounts are commonly known as Islamic accounts and are ideal for clients who wish to adhere to the principles of their religion. Islamic swap-free accounts do not involve any commission in the form of interest, as Muslims are prohibited from earning income in this manner, according to Islamic laws. These accounts were specifically designed to accommodate this requirement. Anyone can now open a Forex swap-free account, but to do so, they need to submit a special application to their broker or trading platform.
Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].