Last Updated: January 11, 2022
Many types of Forex accounts make new traders confused by its jargon, just like when I was starting my journey to trade in the Forex market. A lot of you may have seen Forex brokers that offer you standard accounts and other types of accounts. When I researched more about this, each account is different and you should know it before you begin to trade in Forex or if you are a professional Forex trader, then, this may refresh your knowledge regarding types of accounts in Forex.
Mainly, there are three types of accounts if you want to trade in the Forex market, that is, standard, mini, and micro. These types of accounts would be crucial to your trading plan goal in which this would determine your result of trading in Forex whether you want to test a strategy or maybe you are a complete beginner not knowing which account you have to choose. So, below here you could see the types of accounts in Forex as well as the explanation.
Standard Account
If you sign up on Forex brokers and you choose a standard account, then, according to Dicks (2010, p. 4) you need to have at least $2000 in your hand to open the account and trade with it. This standard account lets you control $100,000 units where the leverage itself is 1:100 (Dicks, 2010, p. 4). With this type of account, you have to be prepared for the risk that may occur, and if you have prepared for it, then, you are also ready for the profit that may occur. To simplify it, just look at the bag of dollars of the topmost image on this page as it represents the standard account.
Mini Account
This mini account is explained by Dicks (2010, p. 4) that this makes you control $10,000 units, which you could start with around a $250 deposit where you need $50 for every trade that you make with 1:200 leverage or even up to 1:500. With a mini account, you could start trading in the Forex market with a lower amount of money than a standard account. This certainly gives traders an advantage to start with smaller investment requirements in which those traders may use the account for testing their strategy. The representation of a mini account is like when you have some paper money in your hand.
Micro Account
After standard and mini-accounts, there is a micro account in which Forex brokers who provide this account type that explained by Dicks (2010, p. 5) let you control $1000 units with a minimum deposit of $25 where the pip values are about $0.10. While Dicks (2010, p. 4) would not recommend it as the leverage is super high. Still, from my perspective, this type of account is useful and suitable for beginners or people who only have a small amount of money to trade as you could try to test your trading strategy without having to worry that you will lose so much money because you only spend a small amount of money as little as $25. And also this account could help those who have different currencies than USD, such as IDR, which is around Rp 14.000 to get $1 and so you only need to spend around Rp 350.000 to have this account. Micro account as its name suggests is like a coin of the dollar.
Conclusion
In my point of view, a standard account is for people who are already adept with Forex trading where the representation of this account is like when you trade with a bag of dollars. A mini-account is for people who have intermediate skills in Forex trading just like when you have some paper money in your hand. And a micro account is for those people who are new to Forex trading and people who only have a small amount of money to trade that could be seen as if you hold the coin of dollars. Aside from the explanation above, all decisions are up to you to choose any types of accounts in Forex, be it standard, micro, or mini accounts.
Written by Andre I.
Reference
Dicks, James. 2010. Forex Trading Secrets: Trading Strategies for the Forex Market. New York: McGraw Hill.