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Different Forex Accounts Types Explained 2023

An account used for holding and trading foreign currencies is called a Forex account. However, it is also known as a foreign exchange account. It is common for people to trade currency pairs by opening an account in their own currency and depositing funds into it. Forex accounts usually come with different variations. Thus, it is better to know the forex account types before you decide to start trading seriously.

All financial markets are liquid and dominated by the currency market. Nonetheless, it is very rare to find a successful trader. The main reason for trading losses is indiscipline and a lack of a proper trading strategy. That is why not being careful while choosing the right account and the best forex broker can be risky. For that, one needs to know about the types and the functions of the forex accounts correctly.

Importance of Forex Accounts

Forex accounts, or foreign exchange accounts, are used for buying and selling foreign currencies. To open a forex account, you must look for a broker first. Choosing a general stockbroker licensed by the SEC can help you avoid getting scammed by disreputable Forex brokers. Investing activity is highly profitable when brokers' commissions are compared since transaction costs are an essential factor.

Beginners who open forex accounts often lose money because of a lack of proper guidance. They generally lose so much money that they close their trading account within four months of trading. Despite some critics' assertions that the Forex market is a scam, many forex scams can be found. Highly leveraged currency trading poses a challenging challenge for most novice traders, at least in the beginning. At a minimum, novice traders will need to acquire expertise and suitable forex broker account.



We only list licensed brokers that comply with the requirements of prominent regulatory agencies.


The minimum amount you need to deposit in order to start trading.


Leverage refers to the ratio of securities you can buy for a given payment. The higher the leverage ratio, the higher your buying power (and the higher the risk). For example, a leverage ratio of 500:1 means you can purchase 500 securities, but only pay the equivalent of 1 security valuation. The leverage ratio offered can vary depending on the experience level of the trader.

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Why do Forex Accounts Come in Different Types?

Due to the market's decentralized nature, each broker can have different liquidity providers, different numbers of traders indicating a greater or lesser volume, and possibly slightly different prices. As a result, the prices of forex brokers can vary considerably, resulting in both losing and winning trades and also affecting performance if using automated software, trading signals, or advanced analysis tools and perfect forex broker account according to the trading style.

If we drop down to lower time frames, even a 1% difference in price movement between brokers has a more significant impact. For example, the price difference of one pip on an hourly chart is approximately 4.85% of the price range over that hour, about 7.2% on a five-minute chart, and 21% on a one-minute chart. In other words, if the price moves five pips in one minute with most brokers, but six pips or four pips with another broker, that one pip difference represents a 20% deviation from the "real or competitive price" offered by the bulk of other brokers. Because this is an decentralized exchange, there is, of course, some variance among brokers.

In the forex market, brokers offer varying levels of liquidity providers, different numbers of traders, and sometimes slightly different prices. Traders may be compromised by these slight differences, especially if they are following signals or using automated software generated by another party.

Forex Brokers Primary Account Types

The requirements for each forex account types differ from one another. It is highly important to know all the forex accounts type and related brokers before deciding which should be used. Accounts for Forex trading can be categorized into five different types. Although they are known by multiple names, some of them share characteristics and can be classified as a group under the same classification. Choosing a right forex broker account will help you to save lot of trading fees. The types and functions of the different accounts are given below:

Micro Accounts

Micro accounts are the very beginners level forex account types designed for investors who are seeking exposure to foreign exchange (forex) trading but do not want to risk a large amount of money. Traders with basic forex knowledge will benefit most from these forex broker account. For just $25, any trader can open the required micro account regardless of their experience

This smallest amount of currency, or micro-lot, is the amount, or one-hundredth, of a standard lot that is an item on a micro account. Accounts like these usually have a maximum Trade position on the account are set to micro-lots. This can control the risks of a trading account. Brokers usually do not offer micro account holders any benefits.

Beginners usually open these types of forex broker account, but experienced traders can also use them to test strategies in a real market setting. One micro-lot of forex is equal to 1,000 base currency units.

Mini Accounts

Mini accounts are usually the most common funded accounts of the forex account types. In order to learn how to trade profitably, mini accounts are a great way to become familiar with a certain broker's execution paradigm. Mini accounts are offered by most forex brokerage firms, which also let the trader to open standard accounts. An account with a smaller capital is an attractive option for traders who don't have a high level of experience.

Mini accounts have smaller initial deposits, which means lower deposit costs; in addition, they allow for more flexibility in risk management. Anyone can open a mini account for as little as $250-$500. A mini account has a leverage of 400:1. In contrast, a mini account offers a 10-fold lower return than a standard account: For $10,000 in trades, a standard account owner can earn $10 for every pip of positive movement, but a mini account owner will only be able to earn $1.

Standard Accounts or Intermediate Accounts

It is usually the intermediate forex broker account types that vary most in terms of account nomenclature. It is also known as the gold account, Standard Account, the Classic account, etc.

Generally, a forex account of this type requires a $500 minimum deposit. It can even be as high as $1000 on some brokerage platforms. Some platform allow traders to hold positions up to 1 standard lot size on this account type, but generally, mini-lots are the only way to trade this account type. Up until two to three years ago, entry-level capital requirements on this account were higher, limiting access to it to traders with little to no experience. Brokers offer bonuses to intermediate account holders, usually up to 100% on all deposits made with new accounts. In addition to these bonuses, some brokers may offer other incentives.

The standard account offers a competitive spread with no commissions and a traditional Forex experience, for traders looking to trade forex traditionally. It is the spread that determines your cost. This account ensures a transparent pricing structure and superior execution of trades. This allows the possibility of reducing costs up to 15% with cash rebates. The forex trading platforms of a Standard account are sophisticated and state-of-the-art.

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 must wait until the account's deposits are available.

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.

Other Forex Accounts Types

Aside from the basic accounts, there are other forex account types that are also useful for traders. Therefore, we should have knowledge on all types of forex accounts, so that we can maximize our profit. The following account may come in handy for different purposes.

Managed Account

For currency speculators who don't want to spend a lot of time analyzing market trends and conducting trades themselves, in turn, managed forex accounts seem to be the best option. For currency speculators who are unwilling to spend much time to study and understand the market trends or executing trades personally, a managed forex account appears to be the best choice. Account managers handle managed accounts in much the same way stockbrokers handle managed stock accounts. While the funds are owned by the investor (trader), the manager must make all the operational decisions. Brokers are paid monthly or annually a maintenance fee. A minimum investment of $2,000 is usually required when opening a managed account.

A managed account can fall into two categories: individual accounts and pooled funds. When dealing with an individual client, professional managers deal with this individually; when dealing with a pooled fund, a trader's capital is invested alongside the capital of others. Traders seeking steady income should find more stable funds (but with lower risk/reward ratios), whereas an investor seeking higher returns can invest in a fund with a higher risk/reward ratio. Most often, a minimum amount of $10,000 is required for an individual account, higher than the minimum for a pooled fund.


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 with 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. Some brokers introduced Rollover free accounts to attract the Muslims 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.

Premium/VIP accounts

In the case of VIP (or Platinum) forex account types, these correspond to traders who could be considered VIPs. It is meant for high rollers who have the capital to open an account with $10,000 or more. There are many bonuses for VIP traders. These traders always get 100% bonuses from brokers who offer bonuses on VIP accounts.

Account-holders with VIP status are provided with advantaged benefits such as prepaid debit cards, travel benefits, technical and fundamental analyses, and a variety of juicy bonuses. VIP account holders can trade standard lots holders in an unlimited number, which means they have the opportunity to earn some good money.

Final Words

To summarize, forex traders need to calibrate their strategies and decisions based on whichever forex account types they choose. It is possible to adjust short-term strategy slightly to accommodate their broker if the traders bought or developed the accounts based on someone else's work. However, in the study, large, regulated brokers were used. It is likely that unregulated small brokers have fewer liquidity sources, resulting in latency issues and price differences that are higher than other brokers. The traders must carefully examine the specific types of forex accounts based on different forex broker reviews that are suitable for their circumstances before committing to a specific choice.

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