DEFINITION of 'Forex Account'

Forex accounts give investors and traders the ability to trade all major currency pairs and some emerging market pairs. 

BREAKING DOWN 'Forex Account'

A forex account is a type of account a forex trader opens with a retail forex broker. Forex accounts come in many forms, but the first that is opened is often the forex demo account.

From Forex Demo Account to Forex Account

After the trader has tried out demo accounts with a few different dealers, a funded account would be the next step. Mini accounts, full accounts and managed accounts are the most common types of funded accounts. Mini accounts are similar to full accounts except that currency is traded in lots of 10,000 rather than 100,000. This allows for lower mandatory initial deposits and greater customization of risk management.

As the number of forex brokers have grown, the lower the cost of managing accounts has become. Most will have no initial set-up fee and charge the user per trade, which will often be determined by the size of the trade. For example, someone who wishes to trade a notional amount of 1,000,000 units will pay a higher fee than a beginner who is trading in units of 10,000.

Forex Accounts—Which One to Open

It is important for currency traders to consider what they want to get out of their accounts before deciding on the type to open. Demo accounts and mini accounts are great for the retail forex trader to learn a profitable system and get used to the broker's execution methods. For currency speculators who don't want to trade themselves, a managed account may be a better option.

Depending on the type of forex account, some may give the trader capabilities to trade productions such as forex options and forward contracts

 

 

RELATED TERMS
  1. Managed Forex Accounts

    A managed forex account is a type of forex account in which a ...
  2. Forex Futures

    Forex futures are contracts which fluctuate as the underlying ...
  3. Forex - FX

    Forex is the market in which currencies are traded.
  4. Forex Trading Strategy

    A forex trading strategy is a set of analyses that a forex day ...
  5. Forex Option & Currency Trading ...

    Forex option & currency trading options are securities that allow ...
  6. Mini Forex Account

    A mini forex account is a foreign exchange account that allows ...
Related Articles
  1. Trading

    10 ways to avoid losing money in forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
  2. Trading

    Forex market: Who trades currency and why

    The forex market has a lot of unique attributes that may come as a surprise for new traders. Learn more about who trades foreign currencies and why.
  3. Trading

    Why It's Important To Regulate Foreign Exchange

    In an increasingly globalized economy, the significance of the foreign exchange marketplace cannot be underestimated.
  4. Trading

    Forex or Stock Trading: Which Works For You?

    Even though the odds favor stock trading, forex trading has several advantages to offer a particular type of investor.
  5. Trading

    Forex trading: A beginner's guide

    Foreign exchange is the act of changing one country's currency into another country's currency for a variety of reasons, usually for tourism or commerce.
  6. Trading

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  7. Trading

    How To Trade Forex Right Now

    With the expected continued world volatility in the near future, there is a lot of money to be made in the forex market. How can you make the most of it?
  8. Trading

    Forex day trading: 5 mistakes to avoid

    Learn more about the five common mistakes that foreign exchange (forex) day traders often make in an attempt to boost returns.
  9. Investing

    The Biggest Financial Market You've Never Heard Of

    Though many traders aren't familiar with it, the forex market is is actually bigger than the NYSE in many ways.
RELATED FAQS
  1. What are the advantages of using a mini forex account for trading?

    A mini forex trading account involves using a trading lot that is one-tenth the size of the standard lot of 100,000 units. ... Read Answer >>
  2. How do I use an arbitrage strategy in forex trading?

    See how forex arbitrage acts upon opportunities presented by pricing inefficiencies through the buying and selling of different ... Read Answer >>
  3. How does the foreign exchange market trade 24 hours a day?

    Because foreign currencies are in high demand, the forex market is open 24 hours a day, and trading is not done at one central ... Read Answer >>
  4. What should I look for when choosing a forex trading platform?

    A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. A trading ... Read Answer >>
  5. What does rollover mean in the context of the forex market?

    In the forex (FX) market, rollover is defined as the process of extending the settlement date of an open position by rolling ... Read Answer >>
Trading Center