This article looks at the different types of trading accounts available on the forex Singapore market.
When entering the forex Singapore market, new traders will discover there are numerous trading accounts available for use. It is highly recommended the beginner trader make use of the demo account in order to practice their trading skills. However, there are other types of accounts that can be perused, including a funded account and a managed account.
The forex Singapore demo account
As is mentioned, the demo account is highly recommended for new traders as a means of practicing trading skills. It is an account that simulates trading on the forex live market allowing traders to develop trading plans, master trading strategies and test different types of trading software in a safe environment. It is important to test and practice trading behaviours before entering the forex live market as a means of preparation. Without this preparation the chances of trading losses will outweigh the potential trading profits. The demo account is available via a forex broker.
The funded trading account
This type of account can be likened to a traditional bank account as it holds capital that is administered by your investment broker. The most frequently used funded trading accounts are the managed account, the full account and the mini account.
The mini account is similar to a normal forex trading account. Unlike the traditional standard trading account, the mini account presents with lot sizes of 10,000 which allows of lower profits. This account is recommended for beginners as it shows a reduced risk level.
The managed trading account is one that is handled by a manager whom you have appointed to trade on your behalf. There are various types of managed accounts, and the type you choose will be dependent on your trading strategy and style.
The managed trading account
As is mentioned, the managed trading account involves an appointed manager who will trade the forex market on your behalf. This is not a very popular means of trading as it involves passing control of your trading capital to another individual. However, you do have control in how the trading will be conducted.
Despite the manager completing all the trades, the profit targets and risk management plan is determined by you. This means that all trades will be based on your trading parameters, much like an automated trading system. The fee structure and rate of return will vary greatly on the managed account. It is imperative that you discuss this coordinate the account payment structure before appointing a manager.
There are two different types of managed accounts available to traders – the pooled account and the individual account.
- The pooled account will combine your funds with other investors’ funds into one joint account. This will be managed by one individual, and the profits earned from this joint account will be split between all investors. The division of the profit is generally calculated according to the investor’s risk tolerance.
- The individual account has a broker assigned to your individual portfolio. This manager will make investment decisions for you rather than a group of individuals.
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