So you have thought about it, and you have finally decided you are to start investing in Forex trading? Well, Forex trading can be a fascinating business, and nowadays, there is much puff about it online.
But how exactly can you get started with Forex trading?
Decide on the best Forex broker
This is the first and most important step in opening any forex account. You can choose the best forex broker by looking for such factors as the credibility of a broker, their trade execution, low spreads, regulation, trading platforms and styles, account types, and leverage options, among other factors.
Related: Most Trusted Forex Broker 2020
However, deciding on the best broker doesn’t stop here. It is extremely important that you play with multiple forex demo accounts offered by different brokers. Opening demo accounts with various trading platforms will give you the chance to learn forex trading properly before investing your hard-earned money. Again, you should consider making paper trade until you start making consistent profits before committing real money. Often, newbies jump into the forex trading market and end up losing significant amounts of capital because of leverage.
So, again, it is strongly advisable to open multiple demo accounts with different brokers before opening a live account. This will not only help you choose the best broker, but it will also help you get ready for real trading.
After choosing your forex broker, the next thing is often a standard bureaucratic process which is just like opening an account at a bank:
Choose your preferred forex account type
You will be required to select your preferred forex trading account. There are 3 major types of forex trading accounts-the mini, standard, and managed accounts. Each has its pros and cons. You will need to choose your account type depending on such factors as your tolerance risk, how much time you will have to trade daily, and your size of starting investment, etc.
Standard accounts are the most common. Since they need sufficient up-front capital for you to trade on full lots, many brokers often offer better perks and more services for investors with a standard forex account. However, most forex brokers require a standard account to have at least $2,000 or sometimes $5,000-$10,000 as the starting minimum balance.
Mini trading accounts allow investors to make transactions by using mini lots. You can open this type of account with as low as $250-$500, with leverage of, sometimes, up to 400:1. However, it comes with relatively small rewards.
In managed accounts, the broker (or hired account manager) makes the buy and sell decisions. You will set your objectives (like your profit goals, and risk management) and your account manager will work to meet the objectives. This account type requires large minimum deposits.
Again, regardless of the type of account you decide to open, it is wise to begin free demo accounts first to familiarize yourself with various trading aspects.
You will be required to give a lot of personal information during the forex account registration process. Various countries have different regulations on forex trading to protect investors, and so brokers will ask you for some personal information to comply with the law. Here is what is typically required;
• Your name
• Contact information-your address, phone number, and email
• Date of birth
• Tax ID or Social Security Number
• Your national ID number
• Employment status
• The type of currency you want to use
• Net worth
• Annual income
• Country of citizenship
• Your trading account password
• Trading experiences and objectives, etc.
It is highly unlikely to find a broker that does not ask for this information, and in case you find one, be suspicious.
After giving all the required information for processing, the broker will typically require you to send them some verification documents like copies of your national ID, and perhaps a utility statement so that they can verify your address and name.
In the final steps opening a forex account, you should see risk disclosures (which you need to take very seriously). Forex trading can be a very dangerous business, and brokers are required to remind you this.
Activate your account and start trading
After your broker has received the required paperwork and information, you will receive an email directing you on how to complete your account activation. After completing this step, you will receive another email with instructions on funding your forex account, your username, and password.
Then all that is left is just logging in to your account and start trading!