What is a trading account?
In investment terminology, this is an investment account that contains cash, securities and holdings. It’s a day trader’s primary account and typically enables a broker or individual to buy and sell securities.
There are different types of trading accounts and their use is dependent on how much money will be invested.
Before starting to trade, it’s vital to establish investment goals. Decide how much money you have to invest. This should also be the amount of money that you are willing to lose. Trading is a high-risk venture, so you need to be willing to lose money to make money.
Once you’ve opened a trading account and deposited money into it, you can use it to buy investments.
This type of account is opened specifically for the purpose of speculation.
When trading, technical analysis is favoured, rather than making transaction decisions based on emotions.
Mini Trading Account
This type of account is ideal for newer traders who are interested in trying different strategies. In the past, trading was mainly available to private investors, but when the stock exchange became open to everyone, it made it harder for individuals with lower amounts of money to start trading. With the establishment of this type of trading account, however, it has lowered the barriers to entry for traders in a major way.
Standard Trading Account
This is the most common type of account and enables individuals to invest with cash. It requires sufficient upfront capital in order to invest.
Managed Trading Account
Trading goals set on this account are set by the investor and the money is owned by the investor. Trading decisions however, are made by professionals.
Knowing what type of trading account you want to open is important as an investor, because it may determine factors such as investment amounts and how to manage the trading process. Make informed decisions and take the time to do your research.