One of the first steps in Forex trading is opening a Forex trading account. Account gives you entrance into trading world where you will be one of the traders on the biggest market.
I will show you what you need to do to open account with broker.
How to Open Trading Account
In order to continue you need to have broker. If you do not have broker even then you can continue to inform yourself about opening an account. It is not bad to know more if you want.
To open trading account, demo or real, necessary steps are:
- selecting trading account type
- activating trading account
This is global overview but I will get into more details further in this text. Be sure to open first demo account and then after demo trading, real account.
Choosing Trading Account Type
This post is about opening real account. If you are looking how to open demo account check this:
Step by Step Guide: Admiral Markets Demo Account
When opening account, real account, you need to decide which type you want to open. Brokers offers a lot options for any trader and before deciding please read as much as you can so you do not get scammed.
Broker can offer you few account types:
Some brokers have account where you can deposit money and then let broker to trade for you. These kind of accounts are known as managed account. If you want to trade on Forex market by yourself then do not choose this account type.
By the way they charge fees through profit they make on your account and there is minimum amount on deposit which can be different by brokers. Deposit amount is mostly several thousands dollars which can be to high for individual investor.
Be sure that you open Forex spot account and not one of the other accounts like futures and forwards.
Trading Account Size
Between account sizes you will need to choose small or large accounts. Small account is for trader with small amount of invested money. Large account is for trader with high amount of invested money.
Small accounts with every pip move will bring you smaller profit but also small loss if market moves against you. At start it is best to have small loss if you make a bad trade. In time how your progress through Forex market you can deposit more money and have large account. With large account every pip move will bring you more money on your account.
For beginners it is recommended to use small account until they master trading and afterwards they can continue on the larger accounts. This way they will protect heavily earned money from fast losing on Forex market.
During account opening process sometimes you will encounter three types of account that broker offers you. They are:
- Mini account
- Micro account
- Standard account
There is difference between them as their name suggest it but in general there is no to much complicated differences.
What is Micro Account
Micro account is account mostly intended for novice traders but it is not mandatory that he is novice.
This account requires smaller amount of deposit and that is between $10 – $250. Minimal deposit depends on the broker with which you have trading account open.
Every trade/contract that you open you control $1,000 on the market. Every pip move gives $0.1 difference on trading account. If trade goes in your favor you will earn $0.1 and if trade goes against you then you lose $0.1.
As you can see 1 pip move does not bring a lot profit or loss. If you open a trade and wait until market moves in one direction for 100 pips then this amount will be $10. $10 can be a lot if you have invested $50 on your trading account.
If you are able to invest more money on you account it is best to do it because this way you will avoid possible margin call. With higher amount on the account you will have wide space to trade if trade becomes a bad trade.
Margin call happens when you have bad trade active and without enough money to sustain further loss. When critical level is reached broker automatically close your trade.
What is Mini Account
Similar to micro account mini account is for traders who wants to invest money in range from $100 – $500. It is a little bit higher then micro account but it gives you possibility to earn $1 with every pip move.
Every trade/contract that you open you control $10,000. Every pip move gives $1 difference on trading account.
It is 10 times more than micro account and for new traders this is more then enough. Same as for micro account here is better to have larger amount of money on account.
What is Standard Account
Standard account is account mostly intended for experienced traders but it is not mandatory. Novice traders sometimes use standard account for trading.
This account requires larger amount of deposit and that is from $1000 and above. Minimal deposit depends on the broker with which you have trading account open.
Every trade/contract that you open you control $100,000. Every pip move gives $10 difference on trading account.
Which Account to Open
Micro, mini or standard account depends on you and your preferences. Do you want to earn more money with 1 pip move or less money with 1 pip move.
Those who have more money and know how to trade they will go for standard account. For novice it is the best to go with mini account. With every pip move novice will earn $1 which is a good profit.
Advantage that you can have with mini account over standard account is when you have high amount invested on trading account you can open several trades. If you have 10 orders on mini account it is same as you have 1 order open on standard account.
On mini account each trade gives you $1 for pip move. If something goes wrong and your margin starts to become red you can close one of orders and rest of them leave open. This way your margin will not be overloaded and you will stay in the game with other orders. If market moves in your direction open orders will bring you profit.
As a conclusion mini account gives you more flexibility in trading over standard account but enough profit for 1 pip move. Choose wisely which account is best for you and your trading preferences.
Another thing to watch out when choosing account is leverage on that account. Leverage is ability to control large sum of money using small amount of your invested money.
You can choose different leverage like from 1:50 up to 1:500. This is different from broker to broker. 1:50 means that with one 1$ you can control $50 on the market. Broker lends you rest of the money so you can trade on the market and make more money. But also lose more money if market goes against you.
After you have decided which account you want to have, personal/business or small/large you need to decide to open
- live or
- demo account
As said earlier, for beginners it is best to open demo to test and later on to open live account. On demo account you should at least learn how to open and close a trade.
From my experience I can tell you that I have started immediately with live account because demo account could not give me what I wanted and that is – Live experience.
When registering real/live account you will need to do some paper work in order to open it. Those papers could be
- your ID number
- utility bill not older than 3 months with your personal address on it, so they can verify that it is really you and data you have provided are accurate
They need this information to comply with the law. Regulatory agencies wants to protect you so they have set requirements for broker to open an account for you. If you are not required to give them these information’s you should be suspicious because that is minimum what they should ask you to provide.
During registration broker could ask you several information about your trading experience, your trading intentions or how much you will invest. They like to get know you(KYC – Know Your Customer) and your trading intentions.
Please read all what is written in their documents so you are familiar with all costs that can arise, if there is any. Also, pay attention when depositing money over wire transfer how much does bank charge for their services.
Trading Account Activation
When registration of your live account is done you will receive confirmation mail with account details. Information that trader receives in e-mail can be different because not all Forex broker sends same e-mail.
- account number
- password for trading platform
- server on which to connect
In order to activate trading account open your trading platform and follow further steps.
In the MT4 platform right click on the “Accounts” menu which is located under “Navigator” menu. After right click you will select “Login to Trade Account“.
Use those information’s and enter them into new window that appears, like the picture below this text.
If everything is fine with data entered your trading platform will start to show you real information about trading pair price. If not, you will hear sound that indicates you have entered incorrect data.
Possible cause you did not connect to trading platform with information from broker is:
- wrong login data – check information from broker
- wrong trading platform – use platform from your broker
- no internet access – check can you open some other website in your browser in order to verify is internet connection ok
If you have entered all data as shown above and you have tested possible source of the problem and even then you are not connected then please call broker support.
Password is possible to change immediately after you login into trading account. You are not obligated to leave same password you have received from your broker. You can change it to your desired password where you need to fulfill certain requirements.
Go into MT4 menu “Tools” and select “Options” with which you will open new window.
In “Options” window under tab “Server” you will see option to change Password. All other parameters you can leave as they are.
Select “Change” and window “Change Password” will appear where you need to enter new password details. Enter your current password you have received from broker and enter new password. There is 2 places where you need to enter password, “New password” and “Confirm“.
Please pay attention to fulfill all necessary conditions for new password.
- at least five symbols
- at least two of the three character lowercase, uppercase and digit
After all above is done you will have account on MT4 platform ready for trading. If you are using real account then you will need to fund it with real money.
Transfer of real money on the trader account is done in trader room. I cannot show you steps because trader room is different on each broker. But mostly they have instructions how to transfer money from your credit card or bank account or any other possible channel.
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