How to Open a Forex Trading Account – To those who are hearing about forex trading for the first time, it appears to be an exciting financial opportunity. The prospect of trading large sums of leveraged money piques the interest of many, but those who find the prospects of this market appealing will quickly discover that they are surrounded by online hype and hyperbole.
The reality of trading differs greatly from the sales pitches that most people hear. This is because it is difficult to be consistently profitable, and most traders lose money in the beginning stages of their careers.
Opening a brokerage account, on the other hand, is not difficult. Choosing a brokerage becomes more meaningful after a beginner has used several different forex demo accounts.
How to Open a Forex Trading Account
Typical Start-Up Requirements
The first step is to open an account with a forex broker. To get your account set up, you’ll need to provide a lot of personal information, including the following:
- Phone number
- Account currency type
- A password for your trading account
- Date of birth
- Country of citizenship
- Social Security Number or Tax ID
- Employment status
You will also be required to respond to a few financial questions, such as:
- Annual income
- Net worth
- Trading experience
- Trading objectives
Compliance in the Industry
You may be wondering why forex brokers require so much information. The simple answer is to obey the law. The forex trading environment is relatively unregulated, but in recent years, more regulations have been put in place to provide some level of protection or assurance to account holders. Furthermore, forex brokers must ask these questions to protect themselves from loss. They want to ensure that customers who overleverage themselves can still cover any unexpected losses.
It’s unlikely that you’ll find a broker who will open your trading account without these questions being answered. If you come across one who isn’t asking many questions, you should be wary. If you have any concerns about a particular broker, you can check their status with the National Futures Association.
Risk in Forex Trading
You will see risk disclosures during the final steps of opening your account. Please take these warnings seriously. For beginners, forex is a difficult business. If they aren’t careful, it will eat them for dinner. On average, there are more losers than winners. The broker must remind you of the forex risks.
Once you’ve submitted all of your information for processing, the broker will verify it and typically request that you send in some verification documents, such as a government-issued ID and possibly a utility statement to verify your name and address. The back-and-forth process can slow things down by a day or two, but it’s nothing to worry about.
You can fund your account and start trading once your information has been verified. One piece of common advice for new traders is to never deposit money into a trading account that you cannot afford to lose.
It may seem like common sense, but some people start out believing they know more than they do and take unnecessary risks. Begin with a reasonable amount of money and trade in small increments. Nothing can prepare you for the emotions that you will experience when your money is truly at risk, so take it slowly at first.
Forex Should Be Exhausting
Forex appears to be very exciting, but in reality it should be boring and straightforward. Be cautious if you experience a lot of anxiety when making trades. It’s common to become overly excited about winning trades or to become a destructive trader as a result of losing trades.
Learning to trade using research and systematic logic will benefit you far more than trading based on emotion. Forex should feel like simple, methodical decision-making with fail-safe measures in place. While that may sound tedious, if you approach the market in this manner, you will fare much better.
Maintain Your Calm
If you find yourself making common forex mistakes and feeling frustrated, stop trading and go over the fundamentals again. Forex trading is one of those industries where you must periodically re-evaluate your methods to ensure you are meeting your objectives. Keep your approach scientific and unemotional, and try not to become too frustrated.