New traders need information. Many jump in and start trading without enough knowledge. That leads to strategic financial mistakes. Online brokerages offer many ways to learn about trading. They make information accessible for everyone.
To improve your trading experience, these are the basics of an important and misunderstood term.
What is a Trading Account
Because of the broad nature of the term ‘trading,’ it is used to describe different things, including tax-deferred accounts. A trading account is notable by the amount activity, the purpose of that activity, and trading risks involved. Trading accounts refer to an activity called ‘day’ trading.
Trading accounts look like investment accounts. They hold cash, securities, and other assets. They are used to purchase stocks, futures, forex, and investors deposit money to invest in new assets.
The main difference is ‘day traders’ engage in multiple sales and purchases each day. The Traders Account is a day trader’s primary account. Day traders buy and sell assets frequently and within the same trading session. As a result, they are subject to special regulations. Assets held in a trading account are separated from those part of a longer-term buy and hold strategy. Trading Accounts have higher levels of activity and risk.
Best Trading Accounts?
There are different account types. Each based on trader knowledge level, assets traded, and personal preference. Here are our favouirite accounts based on trading assets and platforms.
#1 Best For Options Trading: IQ Option
#2 Best For CFD Trading: Saxo Bank
#3 Best For Social/Copy Trading: eToro
#4 Best For Forex Trading: XM
Best for Binary Options: IQ Option
IQ Option is the best online broker for options trading They have low spreads, a sophisticated trading platform, free demo account options, and responsive customer support. It is a great choice for options traders, using a feature-rich and easy-to-use trading platform. IQ Options is excellent for traders at all levels from beginners to advanced. With 16 million accounts and 3.6 million trades per day, IQ Options offers a transparent trading platform for trading forex, stocks, binary options, and cryptocurrencies. The trading experience on their proprietary web, desktop, and mobile platforms is easy to learn and navigate. It offers a variety of charting tools that help traders predict future market movements.
IQ Option is a trustworthy online broker subject to the highest standards of regulation and safety in the industry. It is a CySEC authorized company with a 100% clean regulatory history.
Best for CFD Trading: Saxo Bank
Founded in 1992, Saxo Bank is a low risk, bank regulated by the FCA (UK), FINMA (Switzerland), ASIC and FSC (Australia), and JFSA (Japan). They are an excellent forex and CFD broker known for their intuitive SaxoTraderGO platform, competitive pricing, and more than 40,000 trading instruments. The overall user experience is great. The minimum account opening deposit is USD 10,000 (GBP 500 for the UK, SGD 500 for Singapore). Saxo Bank combines high-quality in-house research with top-tier third-party providers to offer an outstanding research experience. Their customer service is outstanding.
Best for Social/Copy Trading: eToro
eToro is a safe online broker regulated by top-tier financial regulators. They are known for a multi-asset, features-rich trading platform, and advanced social copy trading features. This lets users copy trades and portfolios from other traders. Built-in a forum-like way, it allows for engagement between peers through a comment section. eToro offers a range of CFDs over stocks, currencies, crypto, indices, and commodities. They have 1,600 financial instruments. Trading spreads are wide. Deposits are free. There are conversion and inactivity fees. eToro provides a comprehensive list of technical tools, charts, and newsfeeds. Their customer support is available through email and live chat.Established in 2007, eToro is FCA, CySEC and ASIC regulated. It has 13 million registered users in more than 100 countries.
75% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Best for Forex Trading: XM Group
XM.com is the best broker for trading forex and CFDs. They offer Social Copy Trading opportunities through their full suite of MT4 and MT5 web, desktop, and mobile platforms. XM Forex tools and accounts are suitable for both beginning and experienced traders. Their minimum opening deposits range from $5 to $100 based on account type. XM Forex supports clients with a risk-free Demo account. They provide auto-trading, fast order execution, multiple order types, and no hidden commissions.
Their research group Tradepedia offers courses aimed at all levels. XM Forex customer service group is top-rated with e-mail, phone, and live chat 24/5. They have more than 1.5 million clients in 196 countries. XM’s Forex Global Web-trade is regulated by CySEC, ASIC, IFSC. They are a safe broker for trading forex and CFDs.
Trading Account Regulations
The Financial Industry Regulation Authority (FINRA) defines day trades as the purchase and sale of an asset within the same day. Day traders are subject to specific rules and criteria:
- conduct at least 4 trades over a 5-day week
- ensure day-trading investment activity accounts for more than 6% of their total investment activity during the week.
Firms allow day trader customers to open margin or cash accounts. They rely on these margin accounts for their trading.
Trading Account Margins
FINRA enforces special margin requirements for day traders. Cash maintenance requirements for pattern day trading accounts are higher than those of non-pattern trading. The base requirements for margin investors are outlined in US Federal Reserve Board’s Regulation T. FINRA includes additional maintenance requirements for day traders in Rule 4210.
Day traders must maintain a base equity level of $25,000 or 25 percent of securities values, whichever is higher. Traders can purchase up to four times any excess over that minimum requirement. (Equity in non-trading accounts is not eligible for this calculation.) Traders failing to meet these requirements receive a margin call from their broker. Their trading is restricted if that margin call is not covered within five days.
Managed Forex Accounts
Managed forex accounts are used by investors to place their money in the hands of a different trader, trading on their behalf. This account is recommended for investors without either skill to trade on their own or time. Investors have several managed account options. We recommend Oak Valley Investments or Fibo group.
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