Opening a Forex Trading Account
To open an account simply direct yourself to a provider and fill in the signup form. Then complete the appropriate “Client Agreement Form” and lodge the sufficient funds needed to cover the initial margin on positions you wish to open.
The fees vary from provider to provider. One broker I know charges .05% of the transaction size. That is, 1/20 of 1%. Hence, your commission cost for dealing in the minimum transaction size of A$100,000 would be A$50 per deal.
Meeting Your Broker
Before opening an account with a forex broker we suggest that you spend some time to get to know your broker. If you don’t meet with your providers make sure that they are properly regulated preferably with an authorized regulatory authority like the Financial Conduct Authority in the United Kingdom. The broker will need to have the following attributes:
- Experience and knowledge
- In touch with you – how?
- Dedicated to your education
- Financially sound
- What are your needs (advice v execution)
- Would like to meet with you prior to opening an account?
Minimum Account Size
The simple and honest answer is “the more the better.” Anyone who told you that you could make it big with $1000 is not telling you the complete truth. You will need a minimum of $10,000 to open a Margin Foreign Exchange account. Anything less then $10,000 puts you in the lowest odds-of-success category. Those are the facts — like it or not. Should you wish to take currency positions for which the initial margins exceed this amount then of course additional funds will be required. You should always have more than the required minimum initial margin in your account at any one time so as to provide a buffer in case of any adverse price movement. Your client adviser will explain margin foreign exchange to you in detail and you should lodge sufficient funds to cover the initial margin on positions you wish to open.
Distribution and communication of information to clients
Most forex brokers have daily publications about the current currency movements that provide a summary of overnight market action; what is expected on the day; key ranges for the day; and insight into what the market is thinking for the day ahead. Most brokers also provide you with a charting package nowadays and some even provide personal views about the markets if you ask them (don’t rely on them for trading decisions though!).