Forex Account Types – Discover Which is Best for You

The varieties of forex account are there depending on your experience. Opening the forex demo account helps you to understand the forex market. Without real money, you get the real market experience. So, there is no loss in forex trading using a demo account.


We recommend beginners to trade using the forex mini account because trading through a mini account is less risky. Forex micro account suits the small-scale traders. They can trade like professionals using micro-accounts. The choice of Account varies on multiple factors. Let’s discuss different types of accounts in the forex.

Forex Account Types - Discover Which is Best for You

What is the Forex Demo Account?

Trading with a demo account is the most advantageous form of forex trading. Online trading platforms offer a demo account. You will run trade using fake money through these forex trading demo account. There is no involvement of real money. There is no risk of losing your money, as well. It’s entirely safe for you to do experiments as much as you want.

You can use the paper money to practice trading after signing up on the Account. Traders prefer to use the demo account to understand the trading style that would suit them. They learn productive forex strategies, as well. Experts say demo accounts are the best choice for the beginner. They understand the real environment of the forex market through this Account.

Apart from the forex trading demo account, foreign exchange trading venue, stock trading platform & commodities exchange also offer the demo account. The demo account is an excellent choice to experiment with different category commodities. For example, an investor in stock would like to invest in the commodity or currencies. Using a demo account, he can run the test trade to understand the nature of new trade. Once he learns how he would profit in the commodity/currency market, he can run successful transactions using real money. It reduces his risk of losing in the trade as well.

The benefits of using the forex demo account are:

  • Learning the risk-free trading
  • Familiarization with the forex trading platforms
  • Creation and improving the trading strategies
  • Choosing the best-suited trading strategy

The best ways to use the forex trading demo account effectively:

  • Make a trading plan with real money, then implement your trading plan through the forex demo account. Your plan may include,
  • You will trade in which market
  • The trading strategies you will use
  • The time of your trading
  • The risk analyzing tools you would like to use
  • Keeping the track (record) of the practice/demo trade’s result will help you know your trading plan’s effectiveness. You can use a trading journal for this purpose.
  • Create a goal for the live trade

What is the Forex Mini Account?

Unlike the forex demo account, the mini accounts are live forex account. Beginners and intermediate traders mostly prefer to use the mini Account. The deposit amount to open a mini account is minimal. The deposit value is much less than the standard forex account.

You can start trading with 10,000 base currency (mini lot) using the mini Account. Trading with a mini lot sometimes offers more massive forex liquidity. The percentage in point (pip) movement cost is also small here, i.e., $1 only.

Mini account holder access to the same forex market as the standard account holders. Both mini and standard account users use similar trading platform, tools, receive similar customer service. The benefit of using the forex mini account is there is less chance of losing in the trade. The small deposit reduces the amount of loss. For example, let’s take the USD/EUR trade. The Euro lowers down to 1.5015 and gives a pip .0002. The loss through mini account trade is 10,000*.0002= $2. Whereas the loss through standard account transaction is 100,000*.0002= $20. The loss through the mini account trade is comparatively less in mini account trading like the profit.

The advantages of using the forex mini account are,

  • Small deposit amount
  • Opportunities to learn about currencies with a small risk of losing money.
  • One can trade ten mini lots at a time. So you control the trade risk by trading multiple small lots.

What is Forex Micro Account?

The micro account is like a bridge between the live Account & forex demo account. If you have a tight budget, then the forex micro account would be the best choice for you. You can trade through such a micro account with a little experience.

LiteForex first introduces the micro account concept in the year 2006. Retail traders who want to invest in the forex market but have insufficient capital can trade through the micro Account. You can trade with a minimum deposition of $1 (example – FBS Malaysia)

You enjoy similar facilities using the micro Account like the standard one. One lot in the standard Account is equivalent to 100 micro-lots in the forex micro account.                           The micro Account always displays the account balance in the cent. That’s why Cent account is another name for such an account.

The advantages of using the forex micro account are,

  • Newbies can try the forex skill without risking much money
  • Spread the capital with leverage
  • The trader has reasonable control over the trading position.
  • Good for experimenting about the algorithmic trading.

Account types other than the forex demo account, standard, mini, and micro Account are prevalent in the trading platforms. We will discuss some of them below.

Multi-Account Manager (MAM) Account

The fund manager operates multiple accounts without investment using the MAM account. The account manager’s primary Account is associated with the client’s Account. The client can see all traders’ accounts under the manager’s Account as well. MAM account raises the potential return and sophistication level.

The money manager has authority:

  • To add/remove the fund without impacting on the trading activities.
  • To presents professional reporting analytics.

Multi-Account Manager (MAM) Account Features:

  • No limit on deposition amount and number of trading account
  • Real-time control on the trading parameters
  • Supervise performance and commission in real-time
  • Different allocation types are available- lot, percentage, balance, and equity.
  • Minimum client allocation 0.01 lot (per trade)
  • Accepts both the usual standard (stop, limit, and market)and unique ( close all, close by & trailing stop)order.

Percentage Allocation Management Module or Percentage Allocation Money Management (PAMM) Account

PAMM is sort of poled money trading. The investor allocates a desired amount of money to the trader or the money manager. The trader/ manager would manage different forex account with their own money or the investor’s pooled money.

  • Investors
  • Money manager or trader &
  • Forex brokerage firms participate

in trading through the PAMM account.

The investor independently chooses the money manager for the trade. The money manager plays a significant role here. The manager can use the pooled money. He doesn’t have access to the investor’s trading account. The manager would accept a new investor as per his choice. The investor makes a profit from minimum involvement. The chance of investors losing their capital depends largely on the money manager’s performance. The investor should always be intelligent while choosing the trader and money manager.

Lot Allocation Management Module (LAMM) Accounts

The profit and loss in LAMM Account depend on investor’s multiples of the lot. LAMM is best suited for large accounts with large capital. Such an account lowers the risk of loss in trading. LAMM is the iteration of PAMM. The places where PAMM loses significance for the high volume of capital, LAMM is the Account to trade through.

The transaction through the account is transparent. The investors pay special attention to liquidity while trading with large capital. The trader uses different leverage for different investors. Such accounts are safe for trading as traders and investors have individual control over the transaction. The investor has the authority to verify the trader’s performance before the trade.

Individual Retirement Account(IRA)

IRA accounts are promising innovations to save investor’s capital from tax expenses. They allow multiple tax ramifications. The procedures of opening an IRA account are a bit complex and time-consuming; still, such accounts are safe. IRA accounts would reduce tax liability and protect your income, will ultimately lead to retirement saving.

Two types of IRA accounts are Roth IRA accounts & traditional self-directed. Roth account utilizes post-tax income, but the withdrawal amount is tax-free. The traditional IRA account reduces liabilities, unlike the Roth account.

Segregated Account

Well-grounded brokerages offer separate accounts for investors and the company’s fund. In the segregated account, the broker doesn’t have the authority to use the investor’s money. The trader’s capital is entirely preserved. In the case of an accident like bankruptcy, the client would receive a refund on the broker’s term.

Safety is the prime attraction of the segregated account. The segregated account is the broker’s prove of transparency and reliability. The investor is assured about preserving his capital on the offering of such an account.

Rollover Free Account

The rollover fee is the net interest return on holding a currency position overnight. Using the Rollover free accounts, the trader doesn’t pay or receive payment on holding a trading position. Rollover free accounts are the right choice for long-term trading strategy.

Islamic Account

Forex account that entirely runs on the Islamic law (Sharia) is the Islamic forex account. The users of Islamic accounts follow the rules guided by the Quran. The best trait of such an account is, the obedient of the Sharia has the opportunity to trade forex without going against their beliefs. There is no provision of receiving or paying interest in Islamic accounts. Clients of such accounts pay the administrative charge, margin, and commission.

Scalping Account

The traders earn profit from the small change in price trading with the scalping strategy. Using the scalping account, the trader first buys or sell the currency pair. Then hold the pair for a short time to make a profit. Small price movement results in massive profits through the scalping account.

The forex demo account is always the first suggestion to experience different trading styles. You will understand the difference among trading strategies, accounts (like mini account, micro account) by running the demo trade. It is always wise to invest after knowing the environment well. Forex trading demo will help you to learn trading strategies without losing the capital.

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