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How to Choose the Best Forex Trading Account

October 25, 2020 16:30 UTC
Reading time: 12 minutes

Before you open a live Forex trading account, as well as ensuring you choose the right broker, it is also very important to make sure you choose the right type of account, as it can have a direct impact on your profit and loss. As the financial markets are full of a diverse range of people, there are many different account types on offer. So how do you choose the right Forex trading account for you?

In this article we will discuss everything you need to know about choosing the right Forex account!

What to Consider Before Opening a Forex Trading Account

There are many things to consider when opening an online Forex trading account. Many of your decisions will be influenced by things such as your experience, starting capital and trading style. However, there are some core considerations that apply to choosing the best Forex account, no matter the level or status of the trader. They include:

  1. Transaction costs, spreads and commissions
  2. Trade routing: Straight Through Processing (STP) or Electronic Communication Network (ECN)
  3. Trading software and platform
  4. Range of markets available

Let's discuss each of these in more detail before we summarise the different account types that are available.

The Importance of Transaction Costs

Most individuals are trading the market to make a profit. However, while making the right trade to turn a profit is important, holding on to that profit is even more important. That's why your transactions costs, spreads and commissions are an important thing to consider when you open a Forex account.

The 'spread' is a cost of trading that is defined by the difference between the buy price (or ask price) of a market and its sell price (or bid price). For example, if the quote of EUR/USD is 1.1500/1.1501 then the spread would be 1 pip. If you were to buy the currency at 1.1501 and sell it immediately at 1.1500 you would be down 1 pip. The spread, therefore, is a transaction cost. Spreads vary throughout the trading day depending on liquidity and the supply and demand of the instrument you are trading.

Simply having the right account type can help an individual trader stay ahead of the game.

STP vs. ECN

Dealing desk brokers, which are also referred to as 'market makers', often have business models that may not act in the trader's best interest. That's because in this type of execution the broker usually takes the opposite side of your trade. Therefore, they have a vested interest in seeing you lose on the trade.

However, both STP accounts and ECN accounts are referred to as non dealing desk accounts. This means they route your order straight through to their liquidity provider (usually a top tier bank) or straight into the interbank market. The benefit of this is that they are simply matching your orders with other orders in the market, rather than taking the other side of your trade.

So what's the difference between an STP account and an ECN account, and why does it matter when deciding which Forex trading account to open?

  • STP, or Straight Through Processing, is where all orders are routed directly to the broker's main liquidity providers. These tend to be the big banks, hedge funds, and so on. In most cases, the STP broker will have their own internal system which links to their different liquidity providers who compete for the best prices (bid/ask orders). This helps the individual trader get the best possible price.
  • An ECN, or Electronic Communication Network, is similar to the STP technology. However, the biggest difference is how trades are routed. Essentially, the ECN network is a place where individual Forex traders can trade directly with the liquidity provider, without any intermediaries.

Accessing the Best Trading Software and Platform

The last thing any trader wants is to spend time researching their trade, wait patiently to execute it and then have their trading platform let them down. That's why most brokers offer to use MetaTrader 4 and MetaTrader 5 as their trading account format.

Both platforms offer charts and broker integration for one-click trading, as well as many other features such as:

  • Free indicators and charting tools
  • Real-time market data
  • Volatility protection settings
  • Expert advisors for customised indicators and automated trading strategies
  • Mobile trading
  • MetaTrader Supreme Edition add-on (exclusive to Admiral Markets) including a built-in economic calendar, market analysis tools, advanced order types, correlation matrix and more

Admiral Markets offers trading on both MetaTrader 4 (MT4) and MetaTrader 5 (MT5), as well as MetaTrader WebTrader which allows trading direct from your browser. One of the main differences between MetaTrader 4 and MetaTrader 5 is the range of markets available to trade.

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Range of Markets Available

Accessing international markets has never been easier. More and more traders diversify their Forex trading account by accessing other markets such as trading CFDs on indices, stocks, bonds, commodities as well as direct investing in Stocks and ETFs. All of this can be done by opening an account with Admiral Markets.

While the Trade.MT4 account offers 64 major Stock CFDs, the Trade.MT5 account offers access to over 3,000 Stock CFDs and 300 ETF CFDs.

Whereas, our Invest.MT5 account allows you to use the MetaTrader 5 platform to invest into more than 4,000 stocks and over 200 ETFs, making it a great way to diversify as a trader.

In the following sections, we will make a comparison of the main features of our Forex trading accounts, the markets they cover and how much money it takes to open an account.

The Trade.MT4 Account

The Trade.MT4 trading account is a popular account type for those wanting to trade multiple asset classes on one of the most secure and reliable trading platforms on offer - MetaTrader 4. Here are some more details:

  • Minimum deposit:100 EUR
  • 100 USD
  • 100 GBP
  • 100 CHF
  • Account balance currencies: EUR, USD, GBP, CHF, BGN, CZK, HRK, HUF, PLN, RON
  • Markets available:Currencies (37)
  • Cryptocurrency CFDs (5)
  • Spot Metal CFDs (4)
  • Spot Energy CFDs (3)
  • Index Futures CFDs (3)
  • Cash Index CFDs (16)
  • Stock CFDs (78)
  • Bond CFDs (2)
  • Spreads: From 0.5 pips
  • Commissions:Single Share and ETF CFDs from 0.01 USD per share
  • Platform: MetaTrader 4, MetaTrader Web Trader, MetaTrader Mobile Trading

The Trade.MT5 Account

The Trade.MT5 trading account is another popular account type for multi asset class traders. One of the biggest differences is that the range of markets available on MetaTrader 5 is far bigger than that on MT4. There are some additional benefits as described below:

  • Minimum deposit:100 EUR
  • 100 USD
  • 100 GBP
  • 100 CHF
  • Account balance currencies: EUR, USD, GBP, CHF, BGN, CZK, HRK, HUF, PLN, RON
  • Markets available:Currencies (37)
  • Cryptocurrency CFDs (32)
  • Spot Metal CFDs (5)
  • Spot Energy CFDs (3)
  • Spot Agriculture CFDs (7)
  • Index Futures CFDs (24)
  • Commodity Futures CFDs (24)
  • Cash Index CFDs (19)
  • Stock CFDs (over 3,350)
  • ETF CFDs (over 300)
  • Bond CFDs (2)
  • Spreads: From 0.5 pips
  • Commissions:Single Share and ETF CFDs from 0.01 USD per share
  • Platform: MetaTrader 5, MetaTrader Web Trader, MetaTrader Mobile Trading
  • Market depth: Exclusive to MetaTrader 5, you can view the order book to assess the liquidity of the instrument you are viewing

The Zero.MT4 Account

The Zero.MT4 is a unique offering for those who want to elevate their trading level. The account is based on Admiral Markets' own STP technology so traders can trade directly with top-tier liquidity providers. Access to this advanced offering also comes with additional benefits:

  • Minimum deposit:100 EUR
  • 100 USD
  • 100 GBP
  • 100 CHF
  • Account balance currencies: EUR, USD, GBP, CHF, BGN, CZK, HRK, HUF, PLN, RON
  • Markets available:Currencies (45)
  • Spot Metal CFDs (3)
  • Cash Index CFDs (10)
  • Spot Energy CFDs (3)
  • Spreads: From 0 pips
  • Commissions:Forex & Metals - from 1.8 to 3.0 USD per 1.0 lots
  • Cash Indices - from 0.05 to 3.0 USD per 1.0 lots
  • Spot Energies - 1 USD per 1.0 lots
  • Platform: MetaTrader 4, MetaTrader Web Trader, MetaTrader Mobile Trading

One of the major differences with the Zero.MT4 account is the fact the spreads start from 0 pips, which means you can also trade inside the spread value with no requirements on minimum volume (order can start from just 0.01 lot).

Additional Beneficial Features

On top of the offerings above, all three of the above types of trading account offer:

  • No requotes - get the price you want
  • Hedging allowed - execute and hold trades in opposite directions on the same trading instrument
  • Expert advisors - use automated trading strategies and customised coded indicators
  • MetaTrader Supreme Edition Add-On - access advanced tools such as a built in economic calendar, advanced order types, correlation matrix, market session maps and more
  • One-click trading - enter the market without any additional confirmations to speed up your trading process
  • Volatility protection settings - access a unique set of advanced tools to help you minimise risk while trading
  • Negative balance protection policy - this means you are covered in the event your account moves into a deficit on an abrupt market move on leveraged positions

The additional features of the four different accounts can be extremely useful. The negative balance protection policy is also available for retail and professional clients across all account types.

Which Account Is Right for You?

Choosing which Forex trading account to open depends on a number of factors, such as your trading style, level of experience and capital. While all four accounts discussed have unique benefits, Forex traders may want to consider the advantages of Zero.MT4 due to the spreads starting from 0 pips, low commission costs and lightning fast execution.

However, all accounts offer something slightly different and many traders will hold several different types of account for different purposes. For example:

  • If you are a short-term Forex trader who enjoys scalping and day trading, and want to transact direct in the interbank market with the lowest spreads available then the Zero.MT4 account is worth considering.
  • If you are a trader looking to trade multiple asset classes like Forex, Index CFDs and Commodity CFDs then you may want to consider the Trade.MT4 account.
  • If you are looking to diversify your trading into over 3,000 different Stock CFDs from around the world and access more Commodity CFD markets, then the Trade.MT5 account is worth looking into.

As the choice is yours, you should review your trading goals to make sure you start your Forex trading journey the right way.

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About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.