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Different Types of Forex Accounts Explained 2021

Forex trading offers vast opportunities that can help you to launch a secure life with financial independence. However, it is risky too. That's why learning about the forex broker's account types is essential. It becomes complicated for novice traders, and they usually don't get away to start. Forex brokers keep the new traders in their minds and give them an opportunity by offering a forex demo account. However, anyone can open a forex trading demo account regardless of the experience level.

It is the best way to know a broker before start funded trading. Furthermore, the forex demo account is a deal-breaker as it can show you the path to other forex broker accounts such as Cent Accounts, MAM, PAMM, LAMM, Micro & Mini Accounts, IRA Accounts, Rollover Free Accounts, Scalping Accounts, Islamic Accounts, and Segregated Accounts.

Throughout this article, you will get to know each of these account types in detail. So, without any fuss, let's see the details.

If you want to learn with real money instead of a forex trading demo account, Cent account is the best choice for that. Let's see the details about it.

Forex Brokers Primary Account Types

The fundamental forex broker account types are categorized into two. The first one is the forex trading demo account, which is usually a practice account to get acquainted with forex trading. The second type is the live forex trading account that is the real account with real money. However, you have to deposit money to trade in a live account. The following are more details about these two types of accounts.

Forex Demo Account

A demo account lets a trader trade with virtual money and tests their trading strategy. It is also a way to evaluate a brokerage firm, which eventually helps in deciding whether to invest or not through that broker.

Almost all the brokers will allow you to open a forex trading demo account without any obligations, without even the credit card info. However, these demo accounts usually impose some limits such as expiration date, limited virtual fund. On the other hand, if the trader couldn't understand with that demo account, he/she can open another demo account to judge further.

Opening a demo account is free, that doesn't mean that you will open an account with every broker and waste your valuable time to test them. So, from our extensive research, we have found some important things to consider before opening a forex demo account. These are-

  • Check the broker's reputation, whether it is regulated or a scammer.
  • List of the services the broker offers.
  • Minimum deposits.
  • Account opening methods and the information they ask for.
  • They account for the types they offer.
  • Trading platforms.
  • Customer service.

Live Forex Trading Account

When you are satisfied with the forex trading demo account, you are ready to open a live account and join the real trading world. However, you have to keep in mind that you have to deposit a minimum amount of money to start the trade, which varies from broker to broker. The minimum deposits could start from as low as $10. Once you open the live account or convert the demo account to a live account, you have to deposit the amount you wish. However, you have to wait until the deposits are available in the account.

Then, when you see the deposits are there, you can initiate your first trading according to your strategy or strategies you acquired from the demo account.

Now, how much you want to trade depends on live account types. Some accounts let you trade a small amount while other account needs a large deposit.

So, you have to know all the live account types in detail before opening a live account.

Live Forex Brokers Account Types

Other than the forex demo account, all other forex brokers accounts are considered as live accounts. Let's dig the details of other account types.

Forex Micro Account

If we sort the forex brokers accounts hierarchy according to the lowest investments to high, the forex micro account will be on the list after cent accounts.

Beginner traders usually invest through Forex micro account. It is of the common types of account for the newbies that allow traders to access the live forex exchange market with a small investment in terms of lots.

However, experienced traders can also trade with forex micro account, so that they can check the strategies with a new broker before going for a big investment.

Forex micro lots are usually equivalent to 1000 units of a base currency. So, 1 micro lot = 1,000 currency units.

Furthermore, you don't need to deposit a large amount of money to trade with forex micro account. The deposit is nominal such as could be $50, and traders then trade in lots. A trader can buy and sell lots just like a standard account, though the equity stake is smaller.

Forex Mini Account

Forex mini account is another best way to start trading initially. It is specially designed for traders with small capital. It allows them to access the market with a smaller contract or lot size. However, the lot size is bigger than the forex micro account.

Although the lot size is larger, you don't need much capital. Like the micro account, you can start with as low as $50, and it does not exceed $300. The lot size is 1 mini lot = 10,000 currency units. So, whoever is looking for an affordable forex trading start, a mini account should be the right choice.

Forex mini account also named differently on different broker's account such as bronze account or basic account. Although new traders usually signed up for mini accounts, many expert traders also initially traded through the forex mini account to judge a new broker.


As per the money managing system, forex brokers account types are categorized as MAM, PAMM, LAMM. All of these may sound similar, but there are some differences in terms of systems. Before seeing differences, let's get to know the do they stand for.

MAM- Multi-Account Manager

PAMM- Percentage Allocation Management Module

LAMM-Lot Allocation Management Module

So, after you know their full names, you may now assume that they are some sort of management system. Now the question is how they function. Following is the description of each type.


It is a sort of investment method that allows traders to invest in an account and let the managers assign high leverage on someone's account in real-time. However, on the MAM account, the investor can see the orders; they even open and view it from their account.

On the other hand, the manager will have access to all those MAM accounts open by different traders. It helps the investors to avoid high risk.

So, all the investments are operated through MAM, and the manager place orders as a whole. And, end of the transaction profit or losses is distributed among the MAM account as per their investments.

However, the manager is not all in all. The investor contains the full right to make any decisions about his investments. If an investor wants to take greater risk, they can ask the manager to do so and change the applied leverage.


On PAMM accounts, the manager distributes the trade sizes as per allocation percentage. Besides, an investor can access the funds and allocate the percentage of his funds to different managers. As a result, investors distribute the risk. However, distributing to different managers has both positive and negative sides. Either you gain most profits or lost all. Besides, there are chances to profit on some percentage and loss of some percentage.

All the deposits through the PAMM account go to a large manager's account, which is the total of all the PAMM investments. On the other hand, each managed account has consists own ratio. Typically, on a PAMM account, managers do the trading on behalf of all sub-accounts from a single account. Therefore, the manager also trader his/her amount too. At the end of the transaction, as a whole, the trading will effect on manager's account, not on other PAMM accounts. However, profit and losses will be distributed on all accounts. So, an experienced manager may reduce your risks.


Unlike MAM and PAMM, LAMM does not work like a percentage system. Instead, it is an investment method like copy trading. Funds will be available on investors' accounts, and their accounts will automatically trade by itself.

However, it works through the Manager's account. Whenever the manager buys a standard lot from his account LAMM system would automatically increase a standard lot. However, it works great when an investor's investment is the same as the manager's investment. However, there are a lot of augments about the different investment amounts between the manager and investor. If the manager's portfolio is bigger than the investor's portfolio, the investor might have to talk with the brokers to get a solution.

On the other hand, managers will not take any responsibility for profit or loss. The investor will invest, and the manager's trading will get copied at the investor's risk.

So, it is advisable and wise to check the manager's profile before going for investment with that manager. An investor would also need to look at that particular broker's profile.

IRA Accounts

The full name of IRA is Individual Retirement Accounts, which is applicable for US citizens that allow different tax ramifications. IRA accounts can be opened through a custodian company, along with some paperwork and application. The process is a bit complicated than other account types, but it is a safe and developed way to reduce the tax liability as IRA accounts get numerous tax benefits. Besides, it protects income and makes retirement savings. It is considered one of the useful long-term investments.

Furthermore, IRA accounts help investors to select their preferred mode of investments. The investments could be on bonds, equities, mutual funds, forex, or even on commodities. However, the taxes are calculated according to the types of IRA accounts. Having said that, there are two types of IRA accounts. The first one is the Self-Directed IRA Account, which is opened and managed by individual investors. The other one is Roth IRA Accounts, which are opened through the bank, investment managers, and mutual funds.

However, for the IRA, there is no option to open a forex demo account.

Segregated Accounts

Usually, a broker also trades for themselves; as a result, their funds may get mixed up with the client's fund. To keep clients fund separated from the broker's fund, segregated accounts comes to the work. It is typically opened for the customers, though it depends on the brokers. However, some brokers keep their funds separated with a segregated account. Therefore, the goals of segregated accounts are to keep transparency and provide safety assurance to the trader's investment. If you open a forex trading demo, you don't need to worry about segregation as it a demo ID with virtual money.

Besides, almost all the live forex accounts are segregated.

Rollover Free Accounts

Usually, forex brokers earn commissions through commission or interest, which is also called Rollover. In most cases, interest or commission imposed on traders overnight positions. As a result, the Rollover charge may higher or lower, depending on the changes in long positions.

On the other hand, interest is forbidden for Muslims. As a result, they could not do the forex trading earlier. Besides, some people other than Muslims also find interest as a potential loss. To grab the Muslims, some brokers introduced Rollover free accounts, which is an interest-free account.

As per account types, Rollover free accounts don't charge interest, and it is beneficial for long trading positions. Although Rollover free accounts are popular with the Muslim traders, anyone can open an account.

Islamic Accounts

As we have mentioned earlier, Muslims are forbidden to use interest related things. As a result, forex Islamic accounts are established to serve Muslims.

It is also known as swap-free accounts, which are different from regular forex broker accounts. Additionally, a transaction in Islamic accounts is done by the Islamic finance system.

Trading through Islamic accounts is Halal, and it has four basic principal.

  • It does not incur or pay any interest.
  • It prohibits gambling.
  • Distributes risks and benefits.
  • Immediate exchange for the trading operation.

If you wish to check out the Islamic accounts, you can open a forex demo account and get to know the things before start trading with real money.

Scalping Accounts

Generally, scalping means skimming of small profits regularly through the in and out positions. Scalping accounts in forex trading complete the trading based on real-time analysis. The goal of scalping accounts is to make a profit from holding the position for a short period of time. However, the profit from trading is very small than other account types. However, scalping accounts are not newbie-friendly. As a result, it does not offer a forex trading demo account. Additionally, Scalping is famous for quick liquidity.

Cent Accounts

The good thing about a cent account is that you can deposit a minimum amount, which ensures you less risk. Cent accounts are named after the account types. The amount you deposit will be converted to cents. For example, if you deposit $5, it will get converted to 500 cents. As a result, it looks big, and you may feel comfortable trading with it. Eventually, it will make you ready to trade in significant amounts. Besides, everything will be calculated as cents instead of dollars.

If you wish to trade with real money and confused about which account to choose, cent accounts could be your first choice. It is excellent for new traders. Although it may seem like a demo account, it is different. However, you can use it as a learning purpose like a forex demo account by investing a little amount. You may fail in the beginning, but you will learn for sure.

Many new traders convert their demo account to cent account to get the feel of real trading initially. Besides, it will get you to prepare to trade with a large amount.

Cent Accounts Supported Top Forex Brokers


So far, you have gained knowledge about all the forex brokers account types. However, this theoretical knowledge will just give you an idea. To gain practical knowledge, we suggest opening a forex demo account. So, you can get to know a broker before opening a real account with them. Besides, the forex trading demo account will also give you the confidence to use a particular broker account type.

It is always wise to take time before jumping into a forex broker. So, you should always take advantage of the forex demo account. After that, start trading through cent accounts, micro or mini account.

Meta: To start forex trading, always take advantage of the forex demo account. Besides, get to know the other forex broker account types, which we have discussed.

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