Forex Recipe

If you decide trading Forex online you must first decide which type of account would be just the right one for you. There are basically two types of accounts you can choose - Forex mini account and a full size 100K account. Demo accounts are not operational accounts, in true sense.

Demo or practice account, however, is a great way to learn the fact, features, and working procedures of the Forex market. It gives you the best way to learn and practice trading for free, with no risk of losing money because you do not invest money. For the beginners this is the best method to get the feel of the real currency trading.

The small or mini accounts are very popular because of the lower capital requirement to get started. However, to open a mini account you will need a broker. Different brokers charge different amount to set up a mini account. Initial deposit to open a Forex mini account is often $500 or less. Some may offer as low as $50 to open a mini account. You obviously won’t be able to trade much with it!

When you trade Forex, the instrument traded is called a lot. The size of a mini account lot is 10,000 units of whatever the base currency is. If the US Dollar is the base currency, then with a mini account when you buy or sell one lot, you are actually buying or selling $10,000.00.

Live or actual account is for those who are ready to explore and experiment with the real world of currency trading. Once a live account is open, you can start trading. Depending on your broker’s policy the initial sum varies for opening the live account.

Bottom line for opening any account would be to make sure the broker you choose has the right leverage, tools, and services with honest, transparent operations. The broker should not charge commissions for any accounts and should offer tight 3 to 4 pip spreads.

This entry was posted on Friday, April 18th, 2008 at 1:19 am and is filed under Forex for Beginners. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.