Forex (foreign exchange) primarily works thanks to buying and selling currencies from all around the world. Trading, in general, includes assets and commodities such as oil, different company stocks, etc. Whatever you want to start trading with, or instead investing, you should know that it’s completely normal having a trading account.
Like you would open a separate account for saving, the same goes for trading. You need to have a specific type of account that will serve only for trading purposes. It is not unusual or suspicious if a company asks you that, but it’s essential you checked their credibility first. Supposing you got that out of the way, and your brokerage is licenced and certified, opening a trading account will require this; your id, you need to be over 18, and you will need a utility proof (usually your bill no older than three months, etc.).
It’s important to acknowledge that many companies don’t ask you to put money in your trading account right away, but you will need it if you want to start trading. It doesn’t mean you need thousands of dollars – on the contrary. There are many types of trading accounts, and three of them are main ones: standard managed and mini (or rather a demo account that goes with it). In this article, we would like to explain why you should start with a demo (beginners/mini) account if you’ve just started trading.
The Basics
Naturally, most brokers offer starter accounts enabling newbies to learn more about forex trade. We say “naturally” because, with a starter account, you get to experiment and learn, rather than going blindly into trading. A broker with experience won’t let their client make this mistake. They would rather have you learn step by step, using a beginner account than investing a lot and not knowing why you’re doing it. Of course, every account will have good and bad sides, but having a beginners account will release you from initial stress, you will learn to control impulsiveness and how the whole trading system works, without risking much. If you get a demo account, you will probably risk nothing for a couple of weeks, since you will get “fake” money to invest, so you can adapt to a new environment and get a sense of trading routine.
Mini account
Mini accounts are often referred to as the best for beginners. They minimize risks by reducing the maximum lot size to 10,000 dollars. It is advantageous if you are someone who has a limited source of investment. Keep in mind that you can always upgrade your account once you are ready. Don’t make yourself anxious because you think you need to advance as soon as possible. What makes you a skilled trader is patience, above everything. When choosing a trading account, you should always consider your goals, the time you have and most importantly – experience. That’s why a beginner account is excellent because you will interact with the system and get to ask your broker anything you don’t understand while you are experimenting. By “experimenting”, we mean that you can (and should) start trading small, and you can even start with 5 dollars, even if you have a thousand in our trading account. It is where beginners get confused and tend to act impulsively because they forget that it is their money, and they shouldn’t only “give it away”. Once you mastered the basics and feel ready for bigger goals, you can always switch to a different type of trading account.
Pros and Cons of beginner accounts
Benefits are naturally risking a lot less when you are using a beginners account. You are secured, even if you do act impulsively or rather unknowingly. On the other hand, you won’t be able to experiment much with different strategies, but this is a pro and a con because you should establish one strategy, at least at the beginning. Your trading strategy will undoubtedly change as you grow as a trader. Beginner’s accounts are flexible, but you can’t make a huge profit, since you can make only 1 dollar per pip (if you trade $10000 slots).In the end, the low reward is worth the low risk, because you are learning, and you are adjusting to something you will put a lot of time and knowledge into, so you can eventually become a successful trader.
