One of the most common complaints about Forex is the high barrier of entry. With a value of a standard lot being 10 000 USD, a lot of traders prefer to skip the market entirely. However, there is no legal minimum for day-trading Forex — unlike with stocks and most other commodities. In fact, you can start trading Forex completely for free.
On the other hand, it doesn’t mean that you should. There are lots of risks attached to the low-capital accounts, and they require a lot more skill to remain profitable. So let’s review the different Forex account types and see how much you really have to spend to start using each one.
You should never put into a single trade more than 1% of your starting capital.
Cent accounts have been made specifically for the traders with the low starting capitals. They “multiply” all investments by 100 and divide all the payouts by the same amount. At first glance, it seems like a gimmick, but that gimmick allows you to trade more freely and better calculate your strategy.
The Cent accounts are the cheapest among all the real-money accounts. They are also the only ones that allow you to trade without leverage from 100 USD — which becomes 10 000 USD, or the price of a complete Forex lot, as far as the trading terminal is concerned.
Of course, the profits will be rather small too. And not only due to the size of your trading capital but also because of the larger spreads on the Cent accounts. So, while it is technically possible to enter the Cent accounts with 10-20 USD, the best entry point would be around 100 USD.
Spread is the difference between the buying and the selling prices: the tighter the spreads, the more profit the Forex trader can make.
Practice Demo Account
It’s obvious that nobody likes loosing money. But what about those who are willing to try Forex trading as a side job, or an additional way to make money part-time. In addition to lack of experience, there are also lack knowledge of trading platform, for instance, such as MetaTrader 4.
The solution is invented already. Forex brokers have Demo accounts for beginners, where it has become real to trade with no investment. It’s a kind of a simulation with real conditions, existed markets, currencies, and real-time changes in the currency rates only with virtual money on it. Anyone can easily open practice Demo account simply by entering your email address, for instance, here.
Standard accounts are what they sound like. They provide the standard conditions for the traders and offer some advantages compared to the Cent accounts. The largest one is the tighter spreads — while the lowest spread on the Cent account is 0.3, the Standard accounts go down to 0.1 spreads on the major currency pairs.
While this might not seem much, consider that the most profitable trading strategy — scalping — requires you to close orders with only 0.5 pips of profit. Switching from the Cent account to the Standard account reduces the losses from 60% to 10% and allows scalpers to make twice as much profit.
On the downside, Standard accounts require larger investments. There is no multiplication, so you will need larger orders. The minimum deposit is 100 USD, but profitable trading with such low amounts will be rather hard. If that’s all you can afford to invest — you’d feel much better on a Cent account. For Standard, you should have at least 500 USD.
ECN Zero is a special case — these accounts are created specifically for the scalpers and have 0 pips spreads. On the other hand, they carry a significant fee for each transaction and have a 500 USD minimum deposit.
ECN Zero accounts are meant for professional traders and aren’t recommended for the newcomers — even though they are more suitable for scalping, the risks and expenses are way too high. However, if your average order is 1000 USD or more, ECN Zero will provide you with better profit margins than any other account type.
It doesn’t actually matter how much money you have — you can start trading on Forex. And the best place to start is JustForex. Broker offers all account types, reliable analytics, and friendly support.