Stock Accounts

Index Accounts Examples

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

The Stock Index market is a highly leveraged market for speculating and trying to profit from the price valuations. Traders can purchase large amounts of trading units using leverage - Leverage is what makes indices 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 trading accounts available to help investors better manage their trading account capital and also their trades.

How a Real Account Looks Like

Standard Account Example - Live Accounts Types - Account Types

It's therefore important that the traders consider what they want to get from their trading, before deciding on the trading account type to open.

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

1. Standard Trade Accounts Explained with Examples

Index Account Explanation - Standard Stock Account. A Standard Trade Account is denominated in US Dollars and trades are placed using standard lots. One lot also is known as 1 contract. Minimun account opening capital - at-least least $10,000 USA Dollars.

1 contract refers to the minimum size of a single trade. This account option is the most suitable for traders with enough capital to invest in indices trading - this trading account option requires $10,000 & $50,000 dollars as beginning capital, for this standard account the trader won't be undercapitalized & with good indices equity management principles and indices money management methods, this standard account option has the best chance for profitability because it isn't undercapitalized. Under-capitalization is what makes most traders in indices trading not profitable.

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

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

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

2. Micro Account Explained

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

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

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

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

There are learn online trading tutorials that a trader can read even before opening a real account, and to get extra practice in indices before registering a real/live account a beginner trader should open a practice Index demo trading practice account with a broker - so as to practice placing trades before opening a real/live account and investing with real cash.

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

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

More Guides & Topics:

Trade Stock Indices

Stock Accounts

Index Accounts Examples

1. Standard Trade Accounts Explained with Examples

2. Micro Account Explained