If you are planning to trade in the foreign exchange market, you need to enlist the services being offered by a broker. When choosing a forex broker, you have to take into consideration the type of account that you would like to open. There are basically four different types of accounts you can choose from, and these are the following.
Leverage and Margin Accounts
Forex traders and investors are provided with access to a number of leverage amounts. These amounts will depend on the binary options broker they choose to work with. The typical amounts include 50:1 and 200:1. Leverage is the term used to refer to a loan that has been extended to a margin account holder by a broker. This type of account works in your favor, providing winning positions seeing that your potential for generating profits will be significantly enhanced. One thing to keep in mind is that leverage can also destroy your account since your potential for losses will also be magnified.
Commissions and Spreads Accounts
A foreign exchange broker generates profits through a commission or a spread. If you select a broker that makes use of commissions, you may be charged with a set percentage or portion of the spread. The spread is the term used to refer to the difference between bids and asking prices of forex pairs. However, there are also a great number of forex brokers who put up advertisements claiming that they do not charge commissions, instead, make profits through wider spreads.
Initial Deposit Accounts
Most of the forex accounts available today can be financed with small initial deposits. These deposits can be even for as low as just $50. With leverage, the buying power will be greater than what the minimum deposit is. This is actually one of the main reasons as to why new traders are easily attracted to become participants in the foreign exchange market. You will find a lot of brokers offering standard, mini, as well as micro accounts with different initial deposit requirements.
Ease of Deposits and Withdrawals Accounts
Last but not the least is the ease of deposits and withdrawal accounts. Each foreign exchange broker follows different policies when it comes to withdrawal and funding.