Forex – Financing your trading account
You have refined your trading strategy after diligently rehearsing the steps to trade the foreign exchange (FOREX) market through your demo account. Now, you would like to open a real account to trade with real money. You’ve identified a source for your venture capital, but you’re not sure what to do next. This article will walk you through that process.
Choose a broker
First, you need to decide which broker to use for your live account. This may or may not be the same broker that hosted your demo account. Ideally, you have tried the demo platform of several brokers to familiarize yourself with the pros and cons of each. Just because a platform is user-friendly does not mean that the sponsoring broker is the best overall to park your real account. Has the broker been around for a while? Is the broker financially strong? Does the broker have a reputation for honesty and fairness? Are your orders likely to be filled to your satisfaction, including times of volatility? Are the spreads reasonable compared to others? Does the broker take positions opposite to yours, creating potential conflicts of interest? Does the broker respond to problems and complaints? Is there good technical support for the platform?
These are some of the questions you need to figure out before deciding on the broker. Once you’ve decided, your chosen broker will ask you to fill out an application, usually online, and submit identifying documents, such as your passport, driver’s license, and / or utility bill. Remember the United States Patriot Act? Well, brokers have to cover their queues in case you turn out to be a drug money launderer or a little involved in terrorist activities.
Get your money there
Most brokers make it easy for you to finance your real account. That is not a big surprise. After receiving your application and identification documents to open an account, you will be assigned a username and password for your account. The broker will indicate the various options available to you so that you can fund your account. Using a credit card is perhaps the easiest and most convenient way to transfer funds to your broker. After the initial deposit is made, the process of adding more funds whenever you want becomes even easier, especially with a credit or debit card displaying a widely used brand logo. However, this is not the exclusive way to transfer funds.
Another option is to transfer money from your bank to the bank account specified by the prospective broker. This method, of course, involves your bank charging you transfer fees. Alternatively, you can use the old-fashioned means of writing a check or money order and sending it by post or courier. Naturally, your account will not receive funds immediately, as the funds must arrive first and then the checks must clear before you give the green light to negotiate. Brokers will not allow you to exchange your real money while your “check is in the mail” or while your bad check is bouncing around the world. Therefore, make sure you have the funds in your own checking account when you present for payment at your bank.
Once your funds arrive
When the broker receives your funds, you will be notified immediately of them. This notice can be sent by email, allowing you to start trading immediately. When you start trading your real money, you may experience some uneasiness. But do not worry. The smart trick is to stick firmly to your training and trading plan. Don’t let your emotions get the best of you. If you are trading on an online platform, you will be allowed to view a current balance of funds in your account, adjusted to your trading results. A good platform will also have tools like margin calculator, leverage adjuster, stop loss, trailing stop, etc., designed to help you protect the funds in your account once you start trading.
It is also important to know how to withdraw money from your account. Be sure to read the broker’s instructions on this. Some brokers will allow you to withdraw the funds only by the same method that you used to fund the account. If this is the case, you should be aware that some methods take longer to receive your funds than others. Happy trading!
Sandy Robinson, JD, Copyright 2007