Commodity Trading Accounts

2 Types of Trading Accounts

In recent years retail commodity has grown hugely in popularity and the demand for different types of commodities accounts has grown. There are numerous different account types available to any trader who wants to invest in the online market - Commodity Account Explanation.

The market is a highly leveraged market for speculating on commodity instrument valuations. traders can purchase big amounts of commodity units using leverage - Commodity Trading Leverage is what makes commodities trading attractive to many online traders - with leverage a trader can make more profits or losses because they use less of their capital and borrow the rest.

There are different types of accounts available to help investors better manage their account capital as well as their trade transactions.

How a Real Trading Account Looks Like

It is therefore important that the traders consider what they want to get out of their commodity, before deciding on the account type to open.

Below is a comparison of the two types of accounts commonly used to trade commodity. The account types review below explains the different features of each of the types of accounts.

1. Standard Accounts Explained

Commodity Account Meaning - Standard Trading Account. A Standard Trading Account is denominated in US Dollars and trade transactions are placed using standard lots. One lot is also known as one contract. Minimum opening capital - at least $10,000 USD.

1 contract refers to the minimum size of a single trade transaction. This account option is the most suitable for traders with enough capital to invest in commodity - this account option requires $10,000 to $50,000 dollars in starting capital, For this standard account the trader will not be undercapitalized and with good commodity money management guidelines and commodity money management strategies, this standard account option has the best chance for profitability because it is not undercapitalized. Under capitalization is what makes most traders in commodity not profitable.

It is not recommended to open a standard account unless you have an account balance of at between $10,000 minimum and $50,000.

Professional Money Managers advice $50,000 Dollars minimum to open this standard account and only opening trades with only 2% of the trading capital you have in your account. However, most online brokers will still open this standard account for you if you have more than $10,000.

With leverage of 100:1, you'll borrow from your broker (with leverage of 100:1, your broker gives you $100 dollars for every $1 dollar that you have in your account, therefore if you have $1,000, the online broker will give you $100 of leverage for each $1 dollar you have, meaning after leverage you will have $1,000*100=$100,000 which you can then use to trade commodity trading).

2. Micro Commodity Account Explained

Commodity Account Meaning - Micro Trading Account. Micro Commodity Trading Accounts use lot sizes of only equivalent one-hundredth that of a commodity standard lot. These Micro accounts are often appropriate for traders without a lot of commodity capital and can sometimes be opened with only a $5 minimum balance.

This Micro account option allows the trader to open trades in micro lots. 1 commodity micro lot is one-tenth of a commodity mini lot and one-hundredth of a commodity standard lot.

This Micro account option is generally best suited for account equity balances that are between $1,000 and $5,000

In commodities trading, one commodity standard lot is the standard transaction minimum of a given commodity instrument traded in the market. But many brokers offer fractions of this commodity standard lot to enable more retail traders to access the market. Being able to offer commodity micro lots reduces the minimum trade transaction size thus giving the beginners and also those traders without a lot of commodity capital to start trading and get a feel of the market without investing a lot of commodity capital.

There are learn commodity online tutorials that a trader can read even before opening a real account, and to get extra practice in commodity before opening a real account a beginner trader should open a practice Commodity practice trading practice account with a broker - so as to practice placing trade transactions before opening a real account and investing with real money.

During the commodity training period using the practice trading account, the beginner trader will learn the key factors needed to succeed in commodity such as: commodity education, commodity money management, commodity plan and commodities systems.

The types of commodities strategies used and the skills required for any of these 2 accounts are essentially the same - those commodity skills and commodity strategies required for the Standard account or Micro account are the same the only difference to be adjusted are the commodity money management guidelines for each account type.