How to Open and Set Up a Forex Trading Account

Things to Consider Before Opening a Forex Account

You are interested in opening a forex account, but there are few things to consider before taking the plunge. Not every broker is equal; you should consider the pros and cons before depositing your money.

Even after choosing a broker, that broker may offer different account types. I will discuss the different account types later in the article, so before opening an account, read through the various account types the broker offers and see which one suits your circumstances the best.

Every forex broker will be different based on what type of trader they are tailored to. Some focus on being more user-friendly, some focus more on being low-cost, while others aren’t very good at anything.

Before you open an account, dig around. We have a whole host of forex broker reviews so you can compare which broker suits you. If you are going to trade actively, look for a broker that has:

• Low trading fees
• Low spreads
• Low or no deposit and withdrawal costs
• Payment methods that are easy for you to use/access
• Regulation (regulated brokers are less likely to disappear)

If you are planning on more casual trading, then you will likely be concerned with:

• User-friendly platform
• Low or no deposit and withdrawal fees
• No inactivity fees (if you don’t trade for a while)
• Payment methods that are easy for you to use/access
• Regulation

Notice that no matter what type of trading you’re hoping to start with a broker, you should always check that the broker is regulated by a reputable agency. This will ensure that your funds are safe with the broker, even if the broker becomes insolvent.

You may also want to consider if trading forex is something you really want to pursue, or if you are just hoping to make some quick cash. Making consistent money from trading is more difficult than most people think. There’s only a 5% success rate for traders who attempt short-term trading. Most people deposit money and lose it.

That is not to say you can’t be successful – many people are. The difference is that they are willing to put in work, learn how to trade, and constantly improve. If you aren’t ready to commit to learning how to trade, maybe hold off opening an account until you are.

Before opening a live account, there is also the option to try out a demo account. A demo account is a free account where you trade with practice/fake money. It is a great way to try out a broker without going through the full account opening process. If you are ready to commit the effort it takes to succeed, then keep reading to see how to open your forex account.

What Documents & Information You Need to Open a Forex Account

When you have decided on what forex broker to use, and what type of account to open, you are ready to proceed. The broker is going to ask you for some information in order to open the account. Here’s what you need to have.

Note that account opening practices may vary based on which country you are in, but for the most part, opening a forex account is relatively straightforward and requires providing the same information in most countries. You will need to provide the broker with:

• Your legitimate name and email (where you will receive account information from the broker)
• The amount of leverage you want
• The currency you want the account based in
• Your government-issued identification (screenshots/photos front and back)
• Recent utility bill (showing you live where your ID says you live)
• Your net worth (assets and liabilities), employment information, and trading experience.

These documents and information, along with your password to create the account, is all you typically need to open a forex account. This information is provided as an extra step to prevent fraudsters from creating accounts.

Don’t worry if you have a low net worth or no trading experience. This information is more about the broker knowing its clients. Your account will likely still be opened even if you have a low net worth or no trading experience.

The Process of How to Open a Forex Trading Account

You now have your information ready to open a forex account. Here are the next steps you can expect.

With your personal information, your ID, and a utility bill (needed in most cases) ready, here’s what you need to do.

• Go to the forex broker’s website and click Sign Up or Open Account. Usually, there are prominent buttons situated around the site making it easy to initiate the application process. Make sure you have at least 10 minutes available to complete the process.
• To start the application you will usually need to put in your email, a password, and select your country. This also may be where you select the account you want.
• Then you will be requested to answer some questions or submit photos of your government ID and utility bill (if needed).
• You will then receive your account details, such as your account number, via email.
• Once you have received your account number, the account is open.
• Deposit funds into the accounts, via the methods offered by the broker.

That’s it! You are now ready to trade live. Inputting your information to open a forex account can take as little as five minutes, though it sometimes may take anywhere from several hours to a couple of days for your account to be approved and for you to receive your account number via email.

How long deposits take can also vary by broker and the payment method used. Wires, for example, tend to take longer than credit card or online payment methods.

Different Types of Forex Accounts

Forex brokers call their accounts different names, but for the most part, each forex broker offers similar accounts to cater to different types of traders.

The main types of forex trading accounts are:

• Micro
• STP or Normal
• ECN

Brokers may offer more types, or name them something different, but usually those other types are just variations of these.

Micro Forex Account

A micro account is for people looking to make small deposits. Minimum deposits in these accounts typically start at $10 to $100. There are typically no commissions on trades; rather, you pay the spread on each trade (pay the bid price to sell and the offer price to buy). The broker makes money on the spread, which they determine.

STP or Normal Forex Account

A normal or STP (straight through processing) account typically has a minimum deposit of $100 to $500, or equivalent in other currencies. You can put more if you like, but that is often the minimum allowed.

These accounts don’t generally charge a commission, but you will pay the spread on each trade. Due to the higher deposit amount, the spread is often slightly smaller than on micro-accounts.

ECN Forex Account

ECN stands for electronic communication network, and it basically means the broker is connecting you to other market participants, with no spread markup. Instead, at this level, the broker charges you a commission. For an ECN account, the minimum deposit is often $300 or more.

Commission costs often vary based on how much you trade. If you do a lot of trades each month, commissions will be lower than if you only do a few. ECN accounts, even though they charge a commission, can be cheaper than paying the higher spread on a normal or STP account.

Variations of These Accounts

Some brokers will offer additional perks such as lower spreads, lower commissions, faster withdrawals/deposits, or personalized customer support if you deposit more money, or if you trade a lot. Sometimes these accounts are called VIP or Elite, or something similar. The minimum balance and initial deposit amount are often higher as well, such as $5,000 or $25,000.

Other brokers offer perks based on how much you trade. For example, Alpari offers a cashback program based on account balance and trade activity. Other brokers, like IG, offer pretty much the same account to everyone.