What is a Forex Trading Account?
A Forex Trading Account is an account owned by a person or by a legal entity (company) which it is used in order to trade and hold foreign currencies. That means that you deposit money on your local currency and use them to trade other currencies. You can buy or you can sell a currency at the current price and speculate towards future market developments and conditions. Generally speaking a Forex Trading Account is working like a common bank account.
If you start trading currencies, the total value of your account will fluctuate according to the sum of your trading positions. At any given time your account holds:
(1) Your Trading Positions
(2) Your Unused Funds (cash)
Forex Account FAQ Questions
Here are some common questions and answres regarding opening a new Forex Account
Who can open a trading account?
Anyone can open a trading account as long as his country is not excluded from the Forex Broker’s policy. US traders for example are accepted by only a few Forex Brokers, because of the strict online trading US legislation after 2008.
What is the minimum amount of deposit required?
Usually the minimum deposit is about $100-$500. If you are a beginner, make sure your broker offers a mini-lot account so that you will be able to trade small currency sizes.
How can a Forex account be funded?
The most popular fund methods are supported by most brokers including Debit / Credit Cards, Bank Wire, MoneyBookers and Paypal.
Will I pay Deposit or Withdrawal Commissions?
No broker charges deposit commissions but some brokers (about 1/3) are charging withdrawal commissions. You can use the Live Chat support to learn about any broker’s fund policy.
How a Forex Broker is paid?
A Forex brokerage company can make profits:
1. by charging a spread between the bid & ask price,
2. by charging trading commissions (usually $15-$30 per 100,000 USD).
How do I actually Trade?
You are executing orders and manage your account through a trading platform. Online brokers offer today many different trading platforms, like the popular MetaTrader which enables automated trading and Forex Robots.
Can I take advantage of a Forex Bonus?
Yes, almost all brokers are offering a bonus for new customers. First time bonuses are between 10% and 100%. Keep in mind, the bonus policy of is important but it shouldn’t be your first concern when choosing Forex brokers.
What should I take into special consideration when Choosing a Forex Broker?
You should open a real trading account only in a high-regulated Forex Broker. Regulation ensures in a high extend the safety of your funds. Using reviews and the live chat service of each Forex Broker, you can find out about his status of regulation.
How my Funds are leveraged in Forex Trading?
The greatest advantage when trading Forex is the ability to leverage your funds. Your funds may be leveraged up to 500 times (500:1 leverage), or even more in some cases. A Forex account provides you the chance to execute trades by using only a small fraction of the total value of the trade (usually 1% of the value). That fraction of the trade value is called the margin. Trading on margin sounds great but actually it increases your trading risk, so it is highly recommended to trade small amounts if you are a Forex beginner.
Demo & Real Accounts
A Forex account includes 2 types of accounts: Demo and a Real account.
Opening a Demo / Practice Forex Account
Opening a Demo account before a real account is wise, and here is why:
1) Demo accounts are free.
2) They provide a good understanding about how things work.
3) They provide a reliable way to test important performance issues like the platform’s efficiency, spreads, execution, orders, slippage etc.
4) They offer you the chance to measure your trading performance before start trading for real money.
The next step –Opening a Real Forex Account
After the testing of a Demo version, a trader has two options: to register a Real Account or to search for another Forex Broker. Suppose a trader decides to open a real account, here are the most common types of real accounts:
1) Mini / Micro Accounts,
Minimum Deposit: $100-$200
Mini Lot size: 10,000USD
2) Regular Accounts,
Minimum Deposit: $500-$1,000
Regular Lot size: 100,000USD
3) VIP accounts,
Minimum Deposit: $2,000-$20,000
VIP Lot size: 100,000USD
4) Managed Accounts (trading using 3rd parties)
What is a Forex Account