Online brokers come in different forms, some are better than others and many offer different features and services.
There are plenty of reasons why you might want to limit your trading to just one account, but these days, trading accounts are so easy to open that the majority of traders have at least two live forex accounts.
Advantages
There are several advantages to having more than one trading account and the first one comes down to reliability. Put simply, trading with real money is a risky practice so you want to do everything in your favor to reduce that risk as much as possible.
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Since computer servers sometimes fail and online brokers sometimes go down, it is a good idea to have another account where you can make trades. For example, if you have a trade on and your broker goes down, you can easily hedge that trade on your other account.
Another good reason to have a second trading account is for different types of trades. Perhaps you are a day trader who sometimes takes longer term swing trades or currency investments. It doesn’t make sense to have those trades mixed up together as it will confuse your p&l and make it harder to analyse your statistics.
Keeping trades apart, can also help keep you focussed on what you should be doing at any one time and you may be able to take confidence from one account over to the other.
For example, if your day trades are not doing too well you may be able to take comfort from your longer term positions, which are in profit, boosting your confidence on both accounts.
Lastly, a second trading account can be useful when you are looking to trade a more exotic currency pair. Some brokers specialise only on certain, popular currencies, which means there is sometimes a need to ‘shop around’ to find the best spread. Maintaining two accounts, with brokers that offer different pip spreads on different pairs, is one way to get around this.
Disadvantages
The main disadvantage with opening up a second trading account is one of focus. That is, instead of the two accounts helping each other, they actually cause distraction, and this is easily done, particularly if both accounts are used in similar ways.
For example, there is very little use in having two accounts to take the same signals and trades as this will just lead to confusion.
The solution, therefore, is to open up a second account only if you have a real need for it and to keep both accounts separate at all times.
Further reading: 5 most predictable currency pairs
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