Opening a new online foreign currency trading account involves a simple procedure. It is not so much an “account opening” in the conventional sense as “registering for trading”. The registration process involves the following steps:
- Select the type of account you wish to open
- Register your user_id as a foreign currency trader.
- Get your Account activated
The type of account to open is quite simple as Foreign currency trading sites offer only two options i.e. Individual accounts or Corporate accounts. Individual foreign currency trading accounts are for users that aren't working with any trading company. However, the two types of accounts do not differ materially. In case you have large amount of funds to invest you may be designated as a preferred costumer account by the service provider.
Another option some sites ask for is whether you will be placing your money in the spot transactions account or a futures account. The difference is that in the spot trading account your transaction will be implemented there and then reflecting real time changes in the market. This is the option most invertors choose since it is easier to manage and keep track of and you get an idea of your profits and losses continuously and in real time.
The second step is registering yourself as a foreign currency trader. For this you will need to fill in, online a Foreign Currency Application Form which will ask for some basic information and details like name, address, size of account and password. Every currency trading site has its set of terms and conditions for allowing you access to trading. You will have to give your consent for the same. The terms and conditions include the consent to conduct business electronically and risk disclosure. Some sites will also ask you to fill in another form which is in the shape of a trader account letter and a trader agreement. This may include agreement details between trader and broker.
The next step is confirmation of Foreign Currency Trading Account. After you enter your email_id and password, the foreign currency trading site needs to confirm it by sending you a link to your email and having you clicking on the link. This makes sure you entered the proper email and details so your foreign currency trading account can be validated.
After registering your foreign currency trading account form with your private details, you also need to send the broker one identification form through fax or scanned email. This can be a signature page of passport, a driver's license, or other photo ID card. The site will then open your account and send you payment details so that you can transfer money to your account for starting trading in forex.
A word of caution here:
As in any payment through the internet, you need to exercise a little caution and verification. Especially since this is the last step to operationalising your account. A checklist of some points that you could keep in mind before submitting your credit details to the foreign currency trading site are:
- Make sure the margin of the foreign currency trading is not too high.
- Ensure there are no hidden commissions or fees for foreign currency trading.
- Evaluate the ease of foreign currency trading in the site.
- Check out the technical analysis services in the site.
- Check the value of the major currency pairs that are offered for exchange in the site.
- Find out what are the broker's opening hours of operation.
- Find out what are the re-quoting policies for foreign currency trading in the website, and how are the quotes managed.
Of course there will be many other issues to think about when you actually start trading in foreign currencies. You would do well to study the working of the market before investing any money so that you do not loose money. Actually the foreign currency trading market is a great place to invest if you know how to do it.