What Is an FX Trading Account?
The foreign exchange
(FX) market provides exciting opportunities for investors to increase capital
by taking advantage of fluctuations in the exchange rates of global currencies.
Investors do not have direct access to the FX market; they can only gain access
to the global currency markets through the services of an FX broker.
What is an FX
broker? An FX broker has direct access to the FX markets and is responsible for
matching suitable currency buyers and sellers within the market at any given
time. Brokers do not typically charge a commission for their services; they
attach a spread to each transaction, which is the difference between the "bid”
and "ask” price for a particular currency pair. For each trade there is a
spread, and the spread is how the broker makes money in the FX market. Some
brokers may provide clients with the option to pay a commission in return for minimum
their clients with an FX trading account which provides a method for the
investor to actively hold and trade global currencies on the FX market. Brokers
may provide investors with different options for opening an FX trading account;
there are both live accounts and demo FX trading accounts. Live accounts provide
access to the live FX trading environment and generally require a minimum
deposit amount to be activated. Demo FX trading accounts are often risk-free
and only mirror the live trading environment.
Demo FX Trading Accounts
Demo FX trading
accounts are valuable trading tools for a number of reasons. Demo accounts
allow new investors to gain invaluable experience executing trades in the FX
market with real-time variables such as prices and broker spreads.
Both new and
experienced FX investors can take advantage of demo accounts to understand and
employ different types of FX trading strategies without risking real funds. For
example, strategies such as leveraging are exciting for many investors because
they provide the potential for growing capital quickly with smaller initial
investments. Leveraging brings considerable risk as well; a demo account
provides a perfect opportunity to try this particular strategy while eliminating
One of the best
uses for a demo FX trading account is to thoroughly assess the products and
services that a broker offers clients. The top FX trading brokers provide demo
accounts with full functionality, allowing investors to see if the products and
services meet their unique trading needs.
Live FX Trading Accounts
Live FX trading
accounts provide the opportunity for investors to access the live FX market.
This is where investors have the chance to hold and trade foreign currencies
using real capital.
up for a live trading account, investors should take the necessary time to
become familiar with the requirements and limitations associated with the
account. Here are a few examples of things to keep in mind:
- What is the minimum live
account deposit amount?
- Is there a minimum trade size,
and if so, what is it?
- What kinds of trading platforms
does an account provide access to?
- Does the broker offer
internationally recognized and FCA-regulated
FX company is a good place to start when looking for an FX broker. Take the
time to try different products and find the FX trading account that is right