Forex or Foreign Exchange Market can now be opened by the individuals. After the 1990’s internet connection, retail investors started to open their accounts in this trading sector.
Forex is an old market and it’s the largest one on this planet. Nowadays opening an account in Forex may seem as easy as opening a bank account.
But, you may have to follow some rules. If you don’t know everything, then you may not trade successfully in this currency market. So, follow the below steps and open a Forex account properly.
Step One – List All The Documents That You Will need
At present, you can easily open a Forex trading account through your computer. Gone are the days when you had to go here and there with loads of documents in your hand.
But, Forex authorities will need some basic information from you. You have to provide your name, address, phone number, e-mail ID, country name, and tax ID. They may verify all these documents instantly. Hence, your trading account application can get accepted or denied within some minutes.
The source of your income and your financial condition matter a lot. Because Forex trading account brokers can give you margins. In that case, if you lose the money, you may have to cover the losses. So, the brokers may want to know about your financial condition. Apart from that, trading account authorities may also question you about your experience regarding Forex trading.
Step Two – Choose A Reliable Broker
In reality, you can’t open a Forex trading account without a broker. Now, there are hundreds of brokers in the market. But, not all of them are licensed. So, you should always go to a licensed and legitimate broker.
Some brokers are fraud and they dupe their customers in various ways. That’s why check your broker’s background before selecting it. Your national regulatory website can help you to find information about your broker. You should know the broker’s history and complaints filed against them.
A broker may have different types of packages. Now, a broker that’s offering you great information is a truly helpful one. Some brokers focus only on money and they never help you to trade. You should avoid such brokers. So, compare the services of a broker.
Forex Brokerages may have hidden charges. Moreover, a broker may overcharge its services. They may add unnecessary fees while buying and selling currencies. That’s why you should compare the pricing of brokerages. You should always choose a licensed broker that helps to profit more.
Step Three – Know About The Types Of Forex Accounts
After opening a Forex trading account, you have to choose the type of account. But, if you know about these accounts beforehand, then it would be easier for you to choose them. There are three types of trading accounts – 1) mini account 2) standard account, and 3) managed account.
Mini Account
Mini account is for beginners. The best part of this account is that you don’t have to invest a lot of money to open it. On the other hand, you may not see a high amount of profits in these accounts. However, mini accounts allow you to understand the Forex market with a minimum risk. You can try new strategies of trading and you can become an experienced trader.
Managed Account
This account is also for beginners. But, it’s a little different. A managed account means a manager will be there to take decisions on behalf of you. So, you don’ have to worry about buying or selling currencies. A manager will manage your account and he will follow your target.
But, this account can be a little expensive. Because you may have to pay the manager to manage your account.
Standard Account
Standard accounts are the most popular accounts. A broker will offer all of its services with these accounts. You can gain a good amount of profit from these accounts. But, you can lose too. These accounts come with good leverages. However, you may have to keep a high amount of money to keep these accounts running.
Step Four – Follow The Correct Procedure To Open Your Account
A trading account can be opened easily. You just need to have the right documents in your hand. At the end of opening your account, you need to fund it. So, you should be ready to transfer your money from your bank to the broker’s website.
- First of all, you have to visit the broker’s website. Then, you have to choose – what kind of trading account is good for you! There will be accounts that require minimum opening funds. You can also open a standard account with a high opening balance. However, you should choose an account that comes with great services.
- After that, an application form will appear. Now, fill up the application form. You may have to provide your personal details and tax ID to complete it.
- Next, you will get a password and a user ID. You should note down them. Because, without them, you can’t log into your trading account.
- Thereafter, you have to enter your trading account. Now, you have to transfer funds to your account. Each account type requires a minimum balance. You can use electronic payment transfer systems, debit cards, credits cards, or checks to transfer funds to your account (from your bank).
- Before you start trading, you may want to follow your broker’s guidelines. Your broker may have some rules regarding ‘first trading’. So, follow them. Moreover, if your broker offers ‘demo trading’, then you should also practice it.
Step Five – Margin or No Margin
‘Margin’ means a certain amount of money your broker is ready to lend you. Now, it depends on the leverages offered by the brokers.
Margins are optional. So, you can use it or deny it. Brokers can offer you a huge sum of money. This money can help you to win big. But, you can also lose a good amount of money. So, you should think twice before using your broker’s margin.
For example – you may have $1000 in your trading account. But, your broker may lend you $50,000 (margin money) for trading. In that case, you may lose or gain. If you lose, you have to cover the losses. Hence, it’s completely up to you – whether you want to take any unnecessary risk or not!
Leverages are not always good. If you are a beginner, you should not choose this option. Because beginners can make mistakes and they may lose money.
A good Forex broker is always licensed. They will provide you with useful information and they will help you to trade. Hence, choose a reliable broker and open a Forex account safely and easily.