You have refined your trading strategy after diligently rehearsing the steps of trading in the foreign exchange (FOREX) market through your demo account. Now, you would like to open a live account for trading real money. You have identified a source for your risk capital, but are unsure of what to do next. This article will guide you through that process.
Choosing A Broker
First, you must decide on which broker you will use for your live account. This may or may not be the same broker which hosted your demo account. Ideally, you will have tried several brokers’ demo platform so as to familiarize yourself with the pros and cons of each. Just because a platform may be user friendly does not mean that the sponsoring broker is the overall best for parking your living 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 get filled to your satisfaction, including times of volatility? Are the spreads reasonable in comparison to others? Does the broker take positions opposite yours, creating possible conflicts of interest? Is the broker responsive to problems and complaints? Is there good technical support for the platform?
These are some of the questions you must decipher before you decide on the broker. Once you have decided, your chosen broker will require you to fill out an application-usually online-and submit identification documents, such as your passport, driver’s license and/or utility bill. Remember the U.S. Patriot Act? Well, brokers have to cover their tails just in case you turn out to be some drug-dealing money launderer or slightly engaged in terrorist activities.
Getting Your Money There
Most brokers make it easy for you to fund your live account. That is not a big surprise. After receiving your application and identification documents for open an account, you will be assigned a username and password for your account. The broker will instruct you of the various options available for you to fund your account. Using a credit card is perhaps the easiest and most convenient way of transferring funds to your broker. Once your initial deposit is made, the process of adding more funds when desired becomes even easier, especially with a credit or debit card displaying a widely-used branded logo. However, this is not the exclusive way of transferring funds.
Another option involves wiring money from your bank to the bank account specified by the prospective broker. This method, of course, involves getting charged wiring fees by your bank. Alternatively, you may utilize the old-fashioned means of writing a check or money order and sending it via snail mail or courier. Naturally, your account will not be funded right away, since these must first arrive and then checks allowed to clear before you will be giving the green light for trading. Brokers will not allow you to trade their real money while your “check is in the mail” nor while your NSF check bounces around the globe. So, make sure you have the funds in your own checking account when it is presented for payment at your bank.
Once Your Funds Arrive
When the broker receives your funds, you will be immediately notified of the same. This notice can be given by email, allowing you to start trading immediately. When you begin trading your real money, you will perhaps experience some trepidation. But, don’t worry. The smart trick is to cling steadfast to your training and trading plan. Do not let your emotions take over. If you are trading on an online platform, you will be allowed to see a running balance of the funds in your account, adjusted for your trading results. A good platform will also have tools such as 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 you used to fund the account. If this is the case, you should be aware that it takes longer by some methods to receive your funds than others. Happy Trading!
Sandy Robinson, J.D., Copyright 2007
Source by Sandy Robinson, J.D.