Stocks Trading Account Explanation

2 Types of Stocks Trading Accounts

In recent years retail stock trading has grown hugely in popularity and the demand for different types of stocks accounts has grown. There are many different stocks trading account types available to any stock trader who wants to invest in the online stock market - Stock Trading Account Explanation.

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

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

How a Real Stock Account Looks Like

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

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

1. Standard Stocks Trading Accounts Discussed

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

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

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

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

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

Micro Stocks Trading Accounts Types Described

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

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

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

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

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

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

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