Newcomers often think that all brokers have the same trading conditions. However, this is not the case at all. In reality, trading conditions can vary significantly among different brokers. This is especially true for scalping accounts (a type of trading where execution speed and spread size are particularly crucial).
Without delving into technical details at this stage, we will provide recommendations on which types of accounts are best suited for trading.
So, let's imagine that you have registered on the Forex broker's website and have reached the stage of opening a trading account. Typically, the broker provides you with the option to choose from several types of accounts. In this case, you need to proceed very carefully! This is because the type of account can impact 50% (!!!) of your trading results.
Which account type to choose for automatic trading on the MT5 platform
Netting or Hedging accounts?
If, among the possible account types when opening an account for MT5, you encounter the choice between Netting or Hedging, choose ONLY Hedging. This type of account allows you to open positions in different directions simultaneously on the same asset, among other features that are not available on Netting-type accounts.
Standard account or narrow spread account?
When choosing among multiple accounts, be sure to pay attention to the spread size offered by the broker on that account type. Typically, standard accounts have larger spreads, and if an account has a narrow spread, the broker may label it differently, such as ECN or RAW, etc. We'll discuss what a spread is later. For now, remember that you should always choose the account type with the smallest spread. For example, with ICMarkets, the spread size can be as low as 0.0 pips, meaning it might be nonexistent.
Transactions on accounts with narrow spreads usually come with an additional commission. Don't worry; this is normal and acceptable. Remember - it's better to pay a commission and trade with a narrow spread than to use standard accounts without a commission!
By the way, on standard accounts where there is supposedly no commission, the broker's earnings are hidden in the spread size. With each trade operation on these accounts, instead of a commission fee, the spread size is deducted from your account. Thus, in terms of overhead costs, standard accounts and commission-based accounts with narrow spreads are essentially the same. From a trading quality perspective, accounts with narrow spreads are the best choice!
What leverage size is best to choose?
If you have the option to choose the leverage size, go for the highest available. Some brokers offer leverage as high as 1:1000, and that's excellent. Although American and European brokers have significantly limited this value to 1:50. If there are no other options, choose 1:50 or 1:30, if that's the only choice available. It's better than trading without leverage at all. Remember, the higher the leverage, the greater your trading opportunities, and consequently, the higher the potential profit.
The number of assets for trading doesn't matter. Typically, on any account type, there are enough assets to trade fully in automated mode.
Don't pay too much attention to your broker's marketing tricks. Brokers often lure traders to less favorable account types with additional perks. For example, they might claim that on a certain account, you can trade over 500+ assets. Believe me, you don't need such a large number of assets. Having 15-20 assets, which are available on any account type, is sufficient.
In simple words - for the MT5 platform, choose: Hedging accounts with a narrow spread and the highest leverage.
What account type do you need to choose for the MT4 platform?
As for the MT4 platform, unlike MetaTrader 5, there is no division between netting and hedging, however, for other parameters you must select all of the listed parameters, namely:
- Account type with a narrow spread (the narrower the spread, the better, even though you will have to pay a commission for this function).
- The higher the leverage, the better.
In simple words - for the MT4 platform, choose accounts with a narrow spread and the highest leverage.
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