Standard Forex Trading Accounts: Advantages & Disadvantages

The standard account is one of the types of Forex accounts that you could potentially open with a broker. Here are some of the pros and cons of standard trading accounts.

Pros

One of the biggest advantages of this type of account is that you will have more of a potential for gain. With a standard trading account, you are going to be using leverage of 100:1. You will be trading with standard lots, which means that you are going to be controlling 100,000 units of currency with each trade that you make. For every pip that you earn with a trade, you are going to get $10. Considering that some currency pairs move hundreds of pips everyday, you can see that there is a large potential for gain.

Another advantage of trading with a standard trading account is that you will receive perks in service. Forex brokers prefer customers to open standard trading accounts. Because of this, they are going to give you better service and additional perks along the way. For example, most of the time brokers are going to get better spreads to traders that are using standard trading accounts. This means that you will be able to increase your profit on each trade and increase your overall returns. Many Forex brokers will also have a special trading desk or phone number that you can call if you have any questions or problems. Sometimes if you are a mini account holder, you will not be afforded these privileges.

By trading with a smaller amount of leverage, you are going to be able to avoid the fluctuations in the market. By using higher amounts of leverage, you are going to amplify every movement in the market. By lowering the leverage, you will be able to trade without as much volatility.

Cons

With this type of account, you are going to have a greater potential for loss. This means that you are going to have to risk a large amount of money when you are trading. Every time that you place a trade, you could potentially lose $10 per pip. If the market moves even 10 pips, you could lose $100. Unless you have a large amount of capital to trade with, this could potentially cause you to lose quite a bit of money in a short period of time.

Another disadvantage of this type of account is that you are going to have to have a large amount of capital in order to get involved. With most mini trading accounts, you only have to come up with $200 or $300 in order to open your account. With a standard Forex trading account, you are going to have to come up with a much larger initial investment. Depending on the broker, you are going to be forced to deposit somewhere between $2000 and $10,000 just to open your account. This means that you are going to be risking a large amount of money to trade the market.