Don't fret if you don't know how to get started in forex because, with this article, you'll learn how to open a forex trading account within a few minutes! Here we'll reveal what you need to expect with the account opening process. You'll also find in this page all the needed information, required documents, available account types, account access, and deposit instructions to get you started trading currencies.
1. Choose a Broker
The first thing you must consider before anything else is the broker that you're going to work with because a broker should not have any conflicting interest with its clients.
As you know, many brokers and scam artists are out there are trying to make off with the funds of unsuspecting investors. You've probably seen the pie in the sky ads or the ridiculous claims on social media about forex trading.
Here are a few examples:
"Want to earn $800 in the next 30 minutes?"
"I'll teach people how to earn $1,000 every week, ask me how."
It all sounds silly, but plenty of people are still gullible enough to believe it. Sure, if they have the secret sauce that truly makes money, why offer it to others? Why not just make money on their own?
Cleary, what generates revenue for these "brokers" and scam artists are the people they dupe rather than the powerful money-making system they claim to have.
Go for the regulated broker
The best course of action here is for you to find a well-regulated broker. Go as far as finding one with a sound capital structure (if it's publicly available).
Financial Conduct Authority (FCA) is a regulatory body that oversees financial firms in the United Kingdom. FCA tries to make sure that the firms they regulate are adhering to the standards they set to preserve the integrity of the U.K. financial market.
So, if a new trader decides to work with a U.K. broker, they can check if that broker is regulated by the FCA here: The Financial Services Register.
In Switzerland, the Swiss Financial Market Supervisory Authority (FINMA) is the equivalent of FCA, but the difference is that FINMA is a government body.
In the U.S., there are regulatory bodies catered to specific financial activities; the Commodity Futures Trading Commission (CFTC) is one.
Most countries have a regulatory body to monitor and regulate local financial firms, and it's up to you to do some inspection -- i.e., your due diligence- before choosing your broker.
2. Provide the needed information
The information most brokers need from you are the following:
They might also ask financial related questions, including an estimation of your net worth and the source of funds for your account.
Most regulated brokers also inquire about your currency trading experience or any experience with other financial instruments. These are all necessary to ensure that they comply with anti-money laundering laws and other regulations.
3. Submit the required documents
Then, once you accomplished filling in the online form of your broker with the required information, you need to submit documents like a copy of a government-issued I.D. and proof of your residency; this is a process for them to verify you so they can proceed with opening your forex trading account.
4. Choose the account type
Your application review will come next, which will usually take between two to three working days (depending on your broker since it could be a lot sooner for some), and then they will inform you once your account has been approved. Usually, brokers ask or allow you to choose the type of account you want to open.
The account types, like what FOREX.com offers, vary by spreads, fees, and tradable instruments. Some accounts allow you to trade currencies only while some provide access to shares and cryptocurrencies too.
With some brokers, accounts can be tailored according to your specification and amount deposited.
In some cases, choosing the account type is as soon as you fill up the online registration form.
5. Fund your account
Putting money in your account is the next step after getting your application approved. With your broker, there are perhaps many convenient ways to fund your account, but the two most common ones are the following:
Tip: Check with your broker if they have other options for depositing because some offer funding through PayPal, Skrill, Neteller, and other methods.
And after making a deposit, the amount will reflect in your trading account, typically within 24 hours for most brokers.
6. Access your account
Some brokers offer two login credentials: one for the trading platform (usually the MetaTrader 4 or 5) or a proprietary platform and the other for managing your account on their website.
So, if you aren't familiar with MetaTrader, that is where you can trade the available currency pairs and other financial instruments.
That trading application allows you to view the price movements of those currency pairs via charts and also in that same platform is where you can place your trades. The other account will primarily be for navigating the funding options and accessing any learning tools provided by your broker.
7. Ready. Set. Trade!
There you have it! That's a straightforward guide for you to open a forex trading account, but you should always bear in mind that the broker that you'll choose to work with is your highest priority because that decision will ultimately dictate whether you'll find success in forex trading or not.
The other part of your success will depend on your ability to maintain your composure when trading, especially when the situation calls for it. How you manage your emotions is key to making prudent trading choices.
Here are two brokers that we have reviewed. Both are well-regulated and have been in operation for decades. Check them out.
Minimum Deposit: $50
Spread (EUR/USD): 1.1 with Standard Account
Regulation: FCA, CFTC, FSA, IIROC
BROKER: CITY INDEX
Minimum Deposit: £100
Spread (EUR/USD): 0.69 with Standard Account
Regulation: FCA, ASIC, MAS