Since forex investing is not yet widespread in China, many people have not yet been exposed to it. In China, many people who start trading forex—aside from those whose jobs involve it—learn about forex investing passively through their social media feeds or marketing accounts. Furthermore, Chinese investors open forex brokerage accounts through forex brokers, rather than opening them in person at a bank.Chinese investors choose to open forex accounts through forex brokers partly because these brokers provide professional forex services, and partly because they are attracted by account opening incentives. For forex brokers, recommending accounts to clients must be based on a thorough understanding of the client’s situation. The more you understand your clients, the more clients you can attract.When recommending accounts to Chinese clients, we suggest you recommend the following three account types:
1. For beginners, we recommend mini accounts.
Since mini accounts require a low minimum deposit—as little as $15 to $100—with a minimum trade size of 0.01 lots and a smaller position size than standard accounts, they are the most suitable account type for Chinese clients who prefer low entry barriers and small deposits, as they lower the psychological barrier to investing.Trades in Mini Accounts can be offset among the company’s internal clients or absorbed internally by the market maker.
2. ECN accounts are recommended for Chinese forex traders with some investment experience.
An ECN account, or Electronic Communication Network account, is a trading model that facilitates fair matching of trades based on time and price. The most distinctive feature of this model is fairness.
ECN accounts have higher deposit limits than mini accounts and incur some fees, but they offer lower spreads and lower trading costs. Trades are executed by placing orders into the trading market, where the execution price and time priority are determined through competitive bidding.This trading method offers high liquidity and imposes no restrictions on pending orders such as stop-loss or trailing stop-loss orders. For clients with investment experience, it provides better trading prices and a fairer trading environment, enabling them to achieve greater investment returns.
Therefore, for clients with some experience in stock or forex trading, we recommend that you suggest they open an ECN account.
3. STP accounts—recommended for clients opening accounts through agents.
STP stands for Straight-Through Processing. The platform prioritizes matching traders’ orders internally; any remaining orders are routed to banks or upstream brokers to complete the trade.
Opening an account through an agent offers a certain commission rebate, and since STP accounts are characterized by low minimum deposit requirements, this allows agents to better help their clients attract new customers.Furthermore, for resellers, STP accounts route the platform’s hedged orders to upstream brokers for execution. The spreads are variable and, compared to mini accounts and ECN accounts, tend to be wider, which allows resellers to generate higher profits.
We hope this article will help you better understand and segment your clients so you can make more effective account recommendations and drive growth in your foreign exchange business.
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