You have refined your trading strategy after diligently rehearsing the steps of trading the foreign exchange (FOREX) market through your demo account. Now, he would like to open a real account to trade with real money. He has identified a source for his venture capital, but isn’t sure what to do next. This article will guide you through that process.
choose a broker
First you need to decide which broker you will use for your live account. This may or may not be the same broker that hosted your demo account. Ideally, you will have tried the demo platform of several brokers to familiarize yourself with the pros and cons of each. Just because a platform might be easy to use doesn’t mean the sponsoring broker is the best overall for parking your live account. Has the corridor been around for a while? Is the broker financially strong? Does the broker have a reputation for honesty and fairness? Is his order likely to be completed to his satisfaction, even in volatile times? 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 that you must decipher before deciding on the broker. Once you’ve decided, your chosen broker will ask 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 USA Patriot Act? Well, the brokers have to cover their tails in case you turn out to be a money launderer drug dealer or a bit involved in terrorist activities.
get your money there
Most brokers make it easy for you to fund your live account. That’s 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 direct you to the various options available for you to fund your account. Using a credit card is perhaps the easiest and most convenient way to transfer funds to your broker. Once you make your initial deposit, the process of adding more funds whenever you want becomes even easier, especially with a credit or debit card that displays 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 traditional means of writing a check or money order and sending it by post or courier service. Naturally, your account will not receive funds immediately, as funds must arrive first and then checks must be allowed to clear before you give the green light to operate. Brokers won’t let you trade your real money while your “check is in the mail” or while your NSF check is bouncing around the world. So make sure you have the funds in your own checking account when you present the payment at your bank.
Once your funds arrive
When the broker receives your funds, you will be notified immediately. This notice can be sent via email, allowing you to start trading immediately. When you start trading with your real money, you may experience some trepidation. But do not worry. The smart trick is to stick tight to your training and trading plan. Don’t let your emotions take control. If you are trading on an online platform, you will be allowed to view a current balance of funds in your account, adjusted for the results of your trades. 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, Juris Doctor, Copyright 2007
