Trading Accounts Types Explained

Accounts Examples

In recent years retail stock indices has grown hugely in popularity & the demand for different types of stock accounts has grown. There are numerous different account types available to any trader who wants to invest in the online market - Account Meaning.

The market is a highly leveraged market for speculating on stock indices instrument valuations. Traders can purchase large amounts of stock indices units using leverage - Leverage is what makes stock index trading attractive to many online stock traders - with leverage a trader can make more profits or losses because they use less of their capital & borrow the rest.

There are different types of accounts available to help investors better manage their account capital as well as their stock trade transactions.

How a Real Stock Indices Account Looks Like

It is therefore important that the traders consider what they want to get out of their stock indices, before deciding on the account type to open.

Below is a comparison of the two types of accounts commonly used to trade stock indices. The account types review below explains the different features of each of the types of accounts.

Standard Stock Indices Accounts Types Explained

Account Meaning - Standard Stock Indices Trading Account. A Standard Stock Indices Trading Account is denominated in US Dollars and stock trade transactions are placed using standard lots. One lot is also known as one contract. Minimum opening capital - at least $10,000 USD.

1 contract refers to the minimum size of a single stock trade transaction. This account option is the most suitable for stock traders with enough capital to invest in stock indices - this account option requires $10,000 to $50,000 dollars in starting capital, for this standard account the trader will not be undercapitalized and with good stock indices money management guidelines and stock index money management strategies, this standard account option has the best chance for profitability because it is not undercapitalized. Under capitalization is what makes most traders in stock indices not profitable.

It is not recommended to open a standard account unless you have an account balance of at between $10,000 minimum and $50,000.

Professional Money Managers recommend $50,000 minimum to open this standard account and only opening trades with only 2% of the trading capital you have in your account. However, most online brokers will still open this standard account for you if you have more than $10,000.

With leverage of 100:1, you will borrow from your broker (with leverage of 100:1, your broker gives you $100 dollars for every $1 dollar that you have in your account, therefore if you have $1,000, the online broker will give you $100 dollars of leverage for every $1 dollar you have, meaning after leverage you will have $1,000*100=$100,000 which you can then use to trade stock indices trading).

Micro Stock Indices Accounts Types Explained

Account Meaning - Micro Account. Micro Stock Indices Accounts use lot sizes of only equivalent one-hundredth that of a stock indices standard lot. These Micro accounts are often appropriate for stock traders without a lot of stock indices capital and can sometimes be opened with only a $5 minimum balance.

This Micro account option allows the trader to open trades in micro lots. 1 stock indices micro lot is one-tenth of a stock indices mini lot and one-hundredth of a stock indices standard lot.

This Micro account option is generally best suited for account equity balances that are between $1,000 and $5,000

In stock index trading, one stock indices standard lot is the standard transaction minimum of a given stock indices instrument traded in the market. But many brokers offer fractions of this stock indices standard lot to enable more retail stock traders to access the market. Being able to offer stock indices micro lots reduces the minimum stock trade transaction size thus giving the beginners and also those stock traders without a lot of stock indices capital to start trading and get a feel of the market without investing a lot of stock index capital.

There are learn stock indices online tutorials that a trader can read even before opening a real account, and to get extra practice in stock indices before opening a real account a beginner trader should open a practice demo trading practice account with a broker - so as to practice placing stock trade transactions before opening a real account and investing with real money.

During the stock indices training period using the practice trading account, the beginner trader will learn the key factors needed to succeed in stock indices such as: stock indices education, stock indices money management, stock indices plan and stock index systems.

The types of stock index strategies used and the skills required for any of these 2 accounts are essentially the same - those stock indices skills and stock indices strategies required for the Standard account or Micro account are the same the only difference to be adjusted are the stock indices money management guidelines for each account type.