3 Things to Take into Account Before Opening an Fx Trading Account

by Susan Paige on July 11, 2018 · 0 comments

A trading account is the first step in your forex trading journey. It is every bit as important as formulating a trading plan.

A forex trading account is only opened via a broker, and before doing so, it is essential to take some crucial factors into account.

1. The Broker

Arguably the most critical step of opening an fx trading account—choosing your broker. It is a fair assessment to say that your trading success will depend 50% on you and 50% on your broker. Therefore, choosing the right broker is vital.

You should only open an fx trading account with a broker you trust a hundred percent. When opening a trading account, a lot of personal information is required. The information includes

  • Social Security number/tax ID
  • Your annual income
  • Personal financial information
  • Phone number
  • Address
  • Net worth

Giving this kind of information to anyone who is not trustworthy can open you up to vulnerabilities such as fraud. Vet your chosen broker not once but twice. Check with the regulatory body in your country to verify the broker is registered, and they have a good reputation.

Also, check online to determine what others say about that broker. Once you have considered all these and you are satisfied the broker is trustworthy, then go ahead and open the trading account, for instance, a Rakuten trading account.

2. The Extra Services The Broker Offers Once You Open a Trading Account

Once you open an fx trading account, there are two essential services a broker offers—a trading platform and brokerage facilities.

However, before opening an account with any broker, you ought to determine if the broker offers any extra services. Some of the additional services a broker may provide include,

  • Educational Materials and Resources: These educational materials on finance and trading help a trader fill in the gaps in trading knowledge even as they continue trading. The resources could be e-courses, webinars or video tutorials.
  • Social Trading and Copy Trading: A tool build on the foundation that new traders can learn from experienced traders when communication is facilitated through a social network. Social trading is derived from social networks where through a network of traders, a new trader can either copy an experienced trader or get an idea of what others are trading.

Depending on your level of expertise, the extra services might be irrelevant, but for a less experienced trader, these additional services might prove to be the difference between success and failure.

Therefore, before opening an account with any broker, find out all the services they offer and if those services are of benefit to you.

The Types of Fx Trading Accounts

Trading accounts differ depending on specification, usage and finding requirements. There are three types of trading accounts available to a trader

i. Standard or Full Accounts

The most common type of forex trading account. The account allows a trader to trade in lots of currency each worth $100,000. It does not mean you need to have $100,000 in your account because the rules of leverage and margin will always apply. If you have $2000 initial capital, you can trade with a standard account.

ii. Mini Account

Similar to a standard account the difference being they allow a trader to trade with smaller lots of currency each worth $10,000.

Offered to new traders who are reluctant to invest the amount of money needed for full accounts. The most significant advantage of a mini account is that it is low risk.

iii. Managed Account

With a managed account, as a trader, you only put up the investment or capital, and then you leave the buying and selling decisions to a professional, for instance, an account manager.

However, the profit margins and risk management are always determined by the investor. The benefit of a managed account is the access to professional guidance.

Final Word

Understanding the above three factors are crucial if you are to open a Rakuten forex trading account that will prove profitable in the long run.

 

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