How to Trade Forex in Layman’s Term (Part 2 of 3)

Part 2 of 3: Opening an Online Forex Brokerage Account

A. Research different brokerages. Take these factors into consideration when choosing your brokerage:

  • Look for someone who has been in the industry for 10 years or more. Experience indicates that the company knows what it’s doing and knows how to take care of clients.
  • Check to see that the brokerage is regulated by a major oversight body. If your broker voluntarily submits to government oversight, then you can feel reassured about your broker’s honesty and transparency. Some oversight bodies include:
    • United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
    • United Kingdom: Financial Conduct Authority (FCA)
    • Australia: Australian Securities and Investment Commission (ASIC)
    • Switzerland: Swiss Federal Banking Commission (SFBC)
    • Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
    • France: Autorité des Marchés Financiers (AMF)
    • Singapore: Monetary Authority of Singapore
  • See how many products the broker offers. If the broker also trades securities and commodities, for instance, then you know that the broker has a bigger client base and a wider business reach.
  • Read reviews but be careful. Sometimes, unscrupulous brokers will go into review sites and write reviews to boost their reputations. Reviews can give you a flavor for a broker, but you should always take them with a grain of salt.
  • Visit the broker’s website. The website should look professional, and links should be active. If the website says something like “Coming Soon!” or otherwise looks unprofessional, then steer clear of that broker.
  • Check on transaction costs for each trade. You should also check to see how much your bank will charge to wire money into your forex account.
  • Focus on the essentials. You need good customer support, easy transactions and transparency. You should also gravitate toward brokers who have a good reputation.

B. Request information about opening an account. You can open a personal account or you can choose a managed account. With a personal account, you can execute your own trades. With a managed account, your broker will execute trades for you.
Forex Account Opening Form
C. Fill out the appropriate paperwork. You can ask for the paperwork by mail or download it, usually in the form of a PDF file. Make sure to check the costs of transferring cash from your bank account into your brokerage account. The fees can cut into your profits.
D. Activate your account. Usually, the broker will send you an email containing a link to activate your account. Click the link and follow the instructions to get started with trading.

Continued: How to Trade Forex in Layman’s Term (Part 3 of 3: Starting Trading)

This article consists of three parts:

  1. Learning Forex Trading Basics
  2. Opening an Online Forex Brokerage Account (You are on this page)
  3. Starting Trading

See my article documenting my own experience first hand in the Forex Trading world! See it here.

This article, How to Trade Forex, published with permission from wikiHow, a wiki that is building the world’s largest and highest quality how-to manual. Content on wikiHow can be shared under a Creative Commons License.

Best,

FRUSTRATEDBILLIONAIRE

 

FrustratedBillionaire