22.04.21 Strategy update 21.040 VR System

13.04.21 Article You are already being deceived! Forex scam

21.03.21 New utility published VR Pivot

14.03.21 New utility published VR Assistant Charts

We are in social networks
trading-go.net russian version
Trading-go.net English version
Apply

How to choose an account for Forex trading

If you have already chosen the best broker, then now you need to learn how to correctly select accounts for forex trading. After all, to effectively apply a trading strategy, you need to be able to determine the best conditions for its implementation. 

Standard and Cent accounts

Each of these accounts can be used to effectively solve specific tasks.

Standard or classic account type

It is one of the most common types. You can start with it if you do not have a goal to practice scalping. 

Account features:

  • the minimum part of the lot is 0.01 (may differ for some brokers);
  • you can open market orders:
  • the use of pending orders is available;
  • there are Stop-Loss, Take-Profit, Sell-Stop, Buy-Stop available.

The spread level on such accounts is fixed in most cases. The speed of order execution is not the highest. And with strong market movements, there may be a delay in the execution of the transaction (slippage).

We recommend choosing a standart account for non-aggressive intraday trading and when working with timeframes from D1. If you try to scalpel on such an account, you may face such a problem as closing trades with a delay. This can lead to losses.

Scalper robots also do not give good results when trading on classic. But you can use trend advisors on daily charts.

Cent account

The deposit amount is displayed in cents. That is, $30 in the terminal will look like 3000c. The minimum lot is 0.1, the price movement point at this indicator will be 0.01$.

All popular brokers offer a cent account. And due to the leverage, you can already actively open micro-transactions with a small deposit.

We recommend using cent accounts for two main purposes:

  • Risk reduction when learning to trade with a large deposit.
  • Testing an Expert Advisor or a trading system.

The disadvantages of such an account can include a negative psychological effect – working with cent transactions, traders often take risks lightly. This approach leads to losses in the long run.

Live and demo accounts

The value of a demo account is reduced to the ability to test the selected trading algorithm without the risk of losing money. You can also easily learn all the features of the terminal and the individual conditions of working with the market. For example, when using an ECN account. After getting stable results in demo trading, you can move on to real money transactions.

We do not recommend staying on the demo account for too long, as it is important for you to learn how to accurately follow the trading algorithm when working with a real deposit. After all, when transactions with real dollars are closed in the negative, there are those emotions that are not present in virtual trading – the fear of losing even more or the desire to recoup.

Regardless of your experience, demo accounts should be used for testing indicators or new trading robots.

Live account

It is better to start trading with a small amount. Experienced traders note that many beginners completely lose their first deposits. Therefore, it makes no sense for you to start large sums at once.

It is better to hone your key skills on the deposits that you are ready to lose. Only after the appearance of stable results, it makes sense to increase the amount of funds in the account.

To accurately see your indicators, you need to keep trade statistics-record all the information for each transaction. Keeping such a log will allow you to soberly evaluate your results and see the problematic moments or periods of trading. Many brokers allow you to keep all the statistics directly in your personal account.

ECN, STP, NDD

ECN, STP, NDD

These accounts are designed for traders who need fast and accurate work with quotes.

ECN

This account is characterized by a high speed of order execution. It is well suited for scalping, intraday trading, and working on charts up to D1.

Quick transactions on ECN accounts are opened and closed much more accurately than in the case of classic. Even with strong volatility, you can count on the accurate operation of the terminal. Scalper robots also give good results on these accounts.

The spread is not fixed, and it can expand in an active market, but often significantly lower than in the standard. There are trading fees. 

On ECN accounts, you can open all standard types of orders: market, limit, stop-limit, stop-loss, take-profit.

STP

Such accounts are distinguished by the fact that all your transactions are automatically withdrawn to the liquidity providers, after which they are executed at Ask/Bid prices. At the same time, the broker acts as an intermediary and earns only on commission and spreads.

STP accounts provide the following benefits::

  • there are no slippage;
  • the spreads are minimal;
  • fast order execution;
  • accurate quotes.

With direct access to the market, you get the best prices. On STP accounts, it will be convenient to trade on the news. Scalpers will also be able to effectively implement their strategies.

NDD

This is another type of account that provides trading without the participation of a broker. Trades can be immediately placed on the open market. In this case, the orders are executed at the liquidity provider.

There is also an option where one trader's trade is overlapped by another trader's opposite trade inside the brokerage platform. And only when there is an advantage of buyers or sellers, the broker "binds" all the positions, and brings them to the external market. 

With such trading, the broker also earns on spreads and fees. That is, it is beneficial to him that you continue to trade, and not drain the deposit. This scheme of work saves the players from the attempts of the dealing center to have a negative impact on the trading process.

When working with NDD accounts, transactions are closed quickly and automatically. This is one of the best options for trading with large deposits in an active market.

When working with NDD accounts

Swap-free accounts

A special feature of non-swap accounts is that there is no commission for transferring an open position to the next day. In long-term trading, this advantage becomes more valuable, because the level of profit will eventually be higher.

If you do not take into account the size of the swap, and you do not need to pay it, then you will not have to rush to bury the deal before the end of the trading session. That is, the approach to trading will be more balanced.

Swap-free accounts are also convenient for investors who want to diversify their assets.

Rollover accounts

In the Forex market, a rollover is the transfer of an open position from one trading period to another. At this time, swaps are credited and debited. Such transitions can be made once a day or every hour (PAMM accounts). 

Depending on the interest rate of the currencies in the pair, the swap value can be either negative or positive. Brokers can set their own rollover rules. Therefore, you need to carefully study the terms of trade.

There are separate currency pairs that guarantee a positive rollover charge. For example, let's take AUD/JPY. If you open a long position to buy the Australian dollar and sell the yen, then you will make a profit due to the swap with the + mark.

This result is due to the difference in interest rates – in Australia it is higher than in Japan. The gap between these rates is your additional profit.

But in any case, you need to be able to trade such currency pairs so that losses do not "extinguish" the profit from positive swaps.

Fixed and floating spread

The spread is the difference between the seller's price (ask) and the buyer's price (bid).

Floating spread

When trading on such an account, the difference between ask and bid may change depending on the current market situation. Sometimes the gap between prices reaches 50 points. This is rare in the foreign exchange market, but not very rare in low-liquid assets. Such costs fall on the shoulders of traders, and if the spread increases, then the costs increase. 

The difference between prices may decrease. Therefore, when working with instruments that demonstrate a low level of volatility, you can choose accounts with a floating spread.

Fixed spread

This is the difference between ask and bid, which does not change. Such a condition will be advantageous if the cost of the instrument changes strongly and quickly. You will always know how much you will pay for the transaction, and you will be able to put these costs into the planned profit.

Here it is important to carefully choose a brokerage company, paying attention to additional commissions and the presence of slippage.

PAMM account

The very concept of "PAMM account" does not apply to working with the market. But this is a good opportunity for financial growth for successful traders, and at the same time a profitable tool for passive investors. 

A trader can open the statistics of their trade in order to attract funds. And with good indicators, investors can transfer their money to him in trust. 

Thanks to the successful trading of investor money, the trader takes a certain percentage of the profit (for example, 10%). And in the future, having stable indicators, you can constantly increase the profit by attracting new funds. 

Articles of your choice

How to trade in Forex
How to trade in Forex
If you are just starting to trade in forex, first of all you need to decide on the size of the deposit. Better to start with a small amount. Since at first, your main goal will be to test different types of analytics, check strategies and indicators. It is also important for you to learn how to keep trade statistics and analyze your past transactions. So you can understand what your mistakes were and learn how to avoid them in the future.
04.04.2021 Comments Read Beginner, The first steps, Help
How to install a Forex trading terminal
How to install a Forex trading terminal
Step-by-step instructions for installing the MetaTrader trading terminal. How to download and install a forex trading terminal.
03.04.2021 Comments Read Beginner, The first steps, Help
How to register with a forex broker
How to register with a forex broker
Registration with a forex broker. How to create an account and pass verification for forex trading.
01.04.2021 Comments Read Beginner, The first steps, Help
How to choose a profitable Forex broker
How to choose a profitable Forex broker
Criteria for choosing a profitable broker. What determines the success of forex trading. How broker affects the trader's profit. What conditions are necessary for easiest way to earn money.
31.03.2021 Comments Read Beginner, The first steps, Help
Feedback Top icon