- Account Types
An account type refers to the different categories of trading accounts provided by brokers. Common types include Demo Accounts, Live Accounts, and Challenge Accounts.
Each account type may differ in terms of leverage, trading conditions, commissions, and specific operational rules.
1.1 Demo Account
A demo account is designed for practice trading using virtual funds instead of real money.
These accounts help traders become familiar with the platform interface, test strategies, and practice order execution without the financial risk associated with real money.
1.2 Live Account
A live account involves real-money trading.
All profits and losses are actual, and positions are influenced by real market conditions, spreads, and commissions.
Performance in a live account provides an authentic reflection of trading outcomes under market dynamics.
1.3 Challenge Account
A challenge account is typically offered by proprietary trading firms, also known as prop firms.
Participants must meet specific profit targets and follow defined risk management rules within a given timeframe.
Successful completion of the challenge may grant access to a funded account, allowing the trader to trade with capital provided by the firm.
1.4 Account Balance
An account balance represents the total funds available in a trading account.
It includes deposits and realised profits or losses from closed trades, but excludes unrealised profits or losses from open positions.
Example:
If an account holder deposits USD 10,000 and later closes a trade with a USD 500 profit, the new account balance becomes USD 10,500.
- Trading Terminology
2.1 Long and Short Positions
A long position refers to buying an asset with the expectation that its price will increase.
A short position refers to selling an asset with the expectation that its price will decrease.
2.2 Lot Size
A lot size determines the volume or contract size of a trade.
Common lot sizes include standard lots, mini lots, and micro lots.
2.3 Order
An order is an instruction to buy or sell a financial instrument.
Common order types include market orders, limit orders, and stop orders.
2.4 Take Profit
Take Profit is a pre-set price level where a trade automatically closes to secure profits.
2.5 Stop Loss
Stop Loss is a pre-set price level where a trade automatically closes to limit potential losses.
