Forex Trading Account is a fundamental part of Forex Trading. It is not possible to Trade Forex Currency Pairs without opening a Forex Trading Account. There are many steps in the Forex Trading journey and Forex Trading Account Opening is the second step of the Forex Trading journey. The first step is learning the basic concepts of Forex Trading like buying and selling of Currency Pairs, Stoploss, Risk Management, and Forex Trading Psychology.
It is very important to think twice before opening a Forex Trading Account. A Forex Trader should ask the below questions first before going for Forex Trading Account Opening Process.
Am I ready to open a Forex Trading Account?
Have I understood the basic concepts of Forex Trading?
What type of Forex Trading Account I will be going for?
Who is the best broker?
Which broker suits me?
Why does a Forex Trader need a Forex Trading Account
Forex Trading Account is a personal account of a Forex Trader with a Forex Broker. It is a platform provided by the Broker to do Forex Trading on the Forex Exchange Market. A Forex Trading Account acts as an intermediary between a Forex Trader and Forex Exchange Market. A Forex Trader can’t do trading of Forex Currency Pairs directly on the Forex Exchange Market.
The funds transferred by the Forex Trader to the Forex Broker are deposited in the Forex Trading Account. All the transactions of Forex Trading activities are stored in the personal Forex Trading Account of a Forex Trader. A Forex Trading Account is also used to hold the Currency Pairs while going long in a trade. A Forex Trader can avail services from a Forex Broker through a Forex Trading Account like getting access to technical and fundamental reports, expert Forex Trading Analysis, Forex Trading Reviews, Forex bonuses, Special Promotions and Programs for Forex Traders, and free access to Forex Trading training and learning material.
How does a Forex Trading Account Work?
A Forex Trading Account works by providing a service of trading to a Trader to perform trading transactions on the Forex Exchange Market. The service of trading is provided by the Forex Broker with the help of a third-party trading platform. The most common third-party trading platforms provided by Forex Brokers to traders are Metatrader 4 and Metatrader 5. The Forex Exchange Market determines the value of a Currency Pair by determining the supply and demand of Currency Pairs being traded.
The Trading Currencies are listed as Pairs on the Forex Exchange Market such as EUR/CHF representing EURO (EUR) versus the Swiss Franc (CHF). In this case, EUR is the Base Currency and CHF is the Quote Currency. By using the Forex Trading Account, a Trader can only trade the currencies in lots such as micro lots, mini lots, and standard lots. A Forex Trader can trade as many lots as desired. A Forex Trader can execute many types of orders from the Forex Trading Account such as buy, sell, Stoploss, Trailing stop loss, Market Order, Limit Order, and many other types.
When a Forex Trader places an order on the Forex Trading Platform through the Forex Trading Account, the order is transferred to the Forex Trading Exchange after the deduction of Commission or Broker’s Fee from the Forex Broker. The Prices of Currency Pairs are determined by the supply and demand criteria. Using a Computer Algorithm, as soon as the prices of a particular currency pair match the order is executed on the Forex Trading Exchange between two or more parties.
Requisites of Forex Trading Account Opening
Forex Trading Account Opening seems to be a simple and easy process but this decision to Open a Forex Trading Account should not be made in a hassle because it is a very risky business where you can lose your money as well as your time. A well-thought decision is very important at this stage.
A Forex Trader should be well aware of the concepts and fundamentals of Forex Trading. A Trader should know how trading works, how currency pairs are traded, and how to place orders on the Forex Trading Platform. Forex Traders must understand the risks associated with Forex Trading. Risk and Money Management is an important part of Forex Trading. The Forex Trader should understand how Risk and Money Management Works before starting the process of Forex Trading Account Opening. A Forex Trader should practice different techniques to improve the Trading Psychology and control emotions before the Forex Trading Account Opening.
Lastly, a profitable Forex Trading Strategy is a key to success in Forex Trading. A Forex Trader should develop a Trading Strategy before opening a Forex Trading Account. Ample time should be spent by the Trader to develop different strategies depending on market conditions and practice those Forex Trading Strategies on the Forex Trading Platform after opening a Forex Demo Trading Platform.
Types of Forex Trading Accounts
Forex Trading Accounts are of two main types: Forex Demo Trading Account and Forex Real Trading Account.
a) Forex Demo Trading Account:
Forex Demo Trading Account is a simple and free account where Forex Traders can register themselves for Demo Trading in minutes. The Forex Demo Trading Account is made with a Forex Broker and the Forex Broker provides a Forex Trading Platform for trading Forex Currency Pairs. A virtual fake Cash is deposited by the Forex Broker to practice Forex Trading. Forex Demo Trading Accounts are an excellent source to apply and exercise the Forex Trading Strategies developed by Forex Traders.
b) Forex Real Trading Account
Forex Real Trading Account is a Forex Trading Account where the real money is deposited by the Forex Trader in the account of the Forex Broker. This money is transferred by the Broker to the Forex Trading Account of the Trader which is utilized by the trader for trading Forex Currency Pairs over the Forex Exchange Market. Forex Real Trading Accounts are further categorized by different Forex Brokers such as Classic or Standard, Beginners Trading Account, Professional Trading Account, Managed Forex Trading, Forex Islamic Accounts and many more categories are available depending on Forex Brokers.
How to Open a Forex Trading Account Online
Opening a Forex Trading Account Online is a very simple and easy process that takes only 5 to 10 minutes. Forex Trading Account Opening Forms or Forex Registration Forms are present on the websites of Forex Brokers. A Forex Trader can easily access the Forex Trading Account Opening forms on the brokers’ website. A Forex Trader has to fill out the forms, attach the required documents and wait for Forex Brokers’ approval. A link to the Forex Trading Platform is provided by the Broker where the Forex Trader can log in with the credentials after the Forex Trading Account Opening. In the case of a Forex Real Trading Account Opening a Forex Trader has to transfer money through Credit / Debit cards, Bank Transfer, or any other money transfer method to the Forex Broker Account. This amount is deposited in the Trading Account of the Trader to start Forex Trading with real money.