Foreign exchange (forex or FX) trading involves the purchase and sale of world currencies, and the market is one of the most liquid in the world. Foreign exchange (Forex) trading is one of a kind because small investors can take on institutional ones by opening a margin account.
There are three types of trading accounts: standard, mini, and managed, each with its own benefits and drawbacks. Market volatility, initial investment, and available daily trading time will determine the type of account that best suits your needs. Listed below are the types of forex account that you can see and decide which one is best suited for you?
Money required for opening a forex trading account:
The minimum deposit required by most brokers to open a Forex trading account is $1,000, though some discount brokers will open nano accounts for as little as $100.
Is Forex Trading Risky?
Major currency pairs are typically very liquid with tight markets and do not exhibit the same volatility as stocks. Nonetheless, forex trading can become risky due to the large amount of leverage (margin) available to currencies. This can range between 50:1 and 400:1 or higher. For every dollar in your account, you can buy $400 in currency. This has the potential to increase both profits and losses.
1. Standard Trading Accounts:
The most common type of trading account is the standard trading account. This account grants the user access to $100,000 standard lots of currency.
That does not imply that you must invest $100,000 to trade. Margin and leverage rules (typically 100:1 in forex) require only $1,000 in the margin account for one standard lot to be traded.
2. Mini Trading Accounts:
Mini trading accounts are standard trading accounts that facilitate trades in increments of micro lots. A mini lot in most brokerage accounts equals $10,000, or one-tenth of a standard account. Because of the high initial capital outlay associated with total trading lots, most brokers who provide standard accounts will also provide mini accounts.
3. Managed Trading Accounts:
Managed trading accounts are forex accounts in which you own the capital but not the buying and selling decisions. Account managers work the account the same way that stockbrokers manage a managed stock account, with you setting the objectives (profit goals, risk management) and the managers working to meet them.
Pooled Funds: Your money is invested in a mutual fund alongside other investors’ money, and the profits are split. These accounts are classified based on risk tolerance. A trader seeking higher returns would place their money in a pooled account with a higher risk/reward ratio, whereas a trader seeking a consistent income would do the opposite. Before investing, read the prospectus for the fund.
Individual Accounts: A broker will handle each account individually instead of making decisions for the entire pool.
Best brokers in south Africa for beginners:
As the market for the trading is highly, it is hard to say for sure whether the investment you are making is safe or not. It involves risks, but we have reduced that factor by selecting some of best brokers in south africa, you can check them out, and then decide what is best for you.
- HFM (HotForex) – Best Overall Broker for Beginners:
HFM is a global CFD broker that allows clients to trade foreign exchange (FX), cryptocurrencies, metals, energies, indices, shares, commodities, bonds, and exchange-traded funds (ETFs). Traders can choose from five account types: tight spreads, leverage of up to 1000:1, and minimum deposits as low as $5 USD on their entry-level account.
HFM is a better option for first-time traders in South Africa than many other international brokers because of its local South African support team. HFM’s award-winning customer service is available 24 hours a day, seven days a week, in over 27 languages via email, live chat, and phone.
HFM also provides various resources for learning about and analyzing the market, such as articles, video guides, and regular webinars covering topics like news, advanced trading techniques, and chart analysis. Traders who open a demo or live account will also have access to the HFM e-Course, which covers Forex theory and trading fundamentals, chart reading and interpretation, trading psychology, and technical analysis.
- FXTM – Best Copy Trading Platform for Beginners:
FXTM, a well-regulated market maker/ECN broker, provides several account options on the MT4 and MT5 platforms. FXTM also offers a robust copy-trading system, which is beneficial for novice traders who lack expertise and skill in CFD trading. FXTM Invest provides traders with trading opportunities without technical knowledge by replicating the trades of more experienced traders known as Strategy Managers.
FXTM also has excellent educational and market analysis content, including tutorials, articles, webinars, seminars, e-books, a trading glossary, and videos that comprehensively overview Forex trading. All of the market analysis materials on FXTM are as thorough, up-to-date, and reliable as the educational content. Overall, the education and market analysis materials provided by FXTM are among the best in the industry.
- Exness – Best Trading Conditions for Beginners:
Exness, founded in 2008, is a market maker that provides both market and instant execution accounts on the MT4 and MT5 platforms. Exness offers some of the best trading conditions in the industry, including a low-cost Cent Account to help new traders get started.
Exness provides two standard trading accounts and three professional accounts, each with various options for traders of all experience levels. The Standard Cent MT4 Account requires only one dollar for new traders and provides spreads as low as 0.3 pips on the EUR/USD.
This is an excellent account for new Forex traders who want to learn the ins and outs of trading without putting their money at risk. Customer service is also available 24 hours a day, seven days a week, to help new traders set up accounts and answer technical questions.