An online forex trading account is your access to the global currency trade. Enter the world’s largest market and engage with the industry’s movers and shakers! Thanks to the buzz on the grapevine investors are on a rush to trade FX online, and you too probably want a piece of the action. Fueled by the trade’s ease of access, liquid nature and low barriers of entry, the currency exchange market is now the world’s largest financial market.
Why Do You Need An Online Forex Trading Account?
The foreign exchange market does not have a central location. All players are connected via electronic communication networks, allowing the trade to thrive globally, 24 hours of every day, five days a week. At the heart of this communication network lies the online forex trading account.
This fantastic FX trading feature opens the doors to global trade and holds your funds for trading purposes. With it, you can make profits from the comfort of your own home and pay fewer commissions and fees while at it.
An online forex trading account allows a trader to make a small deposit to a broker and make very high returns due to the power of marginal trading and leverage. This potential of making a good income without tying up large sums of initial capital in it makes forex trading a desirable investment vehicle for the individual.
How Do You Open An Online Fx Trading Account?
To open an FX trading account, the first step would be to settle on a dealer of your choice. All foreign exchange trades are managed by brokers as per market regulations. Now, brokers are a dime a dozen and some may not have your best interests at heart, so you have to be very careful before settling on any broker.
Being a relatively new retail money market it has been a wild west of sorts with lots of shadowy brokers running scams on hapless investors. Ensure that you work with brokerage firms of high repute or those who are for example members of the National Futures Association or any other regulatory body.
To open an account with your brokerage firm, you will need to submit some financial as well as personal information the firm may require. Nothing much of course, you can liken this process to that of opening a bank account. It might feel a bit bureaucratic, but it serves a worthy purpose; the safeguarding of your investments.
Types Of Trading Accounts
- Standard trading account
The most common online forex trading account is a standard account. With it, you can trade various currency lots worth $100,000. This is a hefty amount for most beginners, so if you are beginning to hyperventilate; calm down. Remember the leverage and margin factor mentioned earlier? With this account, you have a high margin to leverage ratio, which allows you to trade with much lower amounts. Watch out though; the forex market will eat you for dinner if you use leverage flippantly.
- Mini trading account
A mini account allows you to trade small lots and can be opened by beginners who only have a few hundred dollars as capital to spare. They are low risk and very flexible concerning trading.
- Managed trading account
While the capital in this account belongs to the investor, the decision making is left to professionals. All you need to do is set your accounts goals and take a peaceful back seat. The downside is that you will have less flexibility of trade with it.
Tip: Beginners should always drive test their accounts in demo form before diving in to avoid losing their capital in this very volatile industry.
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