Getting started with your Forex trading online account
In order to get started with Forex trading, you will need your own trading account. This allows you to trade with peace of mind knowing that your funds are secure, while meeting all safety and security regulations.
There are a number of trading platforms available worldwide, and it is important to do thorough research before signing up with one of them. While almost all trading platforms look professional and welcoming, they are not all legally compliant. Many difficult situations can be entirely avoided by reading user reviews and confirming the legitimacy of a brokerage in advance.
Once you are satisfied that your chosen broker is legitimate and meets your country’s legal requirements, the next step is to practice trading with a demo trading account. Not all platforms offer this function, but One Financial Markets is one that does.
You can sign up for your free demo account here, and trade with $10,000 worth of virtual funds risk-free. No deposits or cash investments are necessary.
Once you have familiarised yourself with our dashboard and trading platform, you can begin to formulate and test your own trading strategies. When you are confident of your abilities, you can create your free live account and start to trade with real money.
Leverage and margin trading
Many trading platforms offer leverage, or access to margin when opening positions. Forex margins are typically in the form of a ratio, such as 30:1. With a margin of 30:1, for instance, a trader has access to 30 times more than the required deposit to open a trade. In essence, he/she can control $45,000 with only $1500 in his/her account.
Leverage vs. Risk
In Forex trading, risk and leverage are not the same thing, although the terms are often confused. Risk describes the percentage of your capital that you are willing to lose on a bad trade, and leverage should be selected accordingly.
For example, with an account balance of $20,000, you may decide that you are willing to lose up to 1 percent of your total capital, which caps potential loss to $200 per trade. With this in mind, the lot size of your trade needs to be adjusted in line with your stop-loss order, while remaining aware of your selected leverage.
Lot size can be calculated as follows:
$Risk= %Risk*Account Equity/100
Lot Size= $Risk/(PipValue*SL)
When to use leverage on Forex trades
Novice traders often make the mistake of selecting the highest possible leverage with the thinking that it will reap far greater profits. While this can be true in some cases, it more often ends in disaster when inexperienced individuals lose funds due to ill-informed decisions.
The best option for new traders is to avoid leverage altogether – at least until they understand the market well and have developed their unique trading strategies. At this point, small degrees of leverage can be experimented with, provided that the trades in question are carefully monitored.
When to use a stop-loss order on Forex trades
A stop-loss is an order made to the broker or online Forex trading platform to close (sell) a position once it drops to a certain point, in order to minimize the loss carried by the trader. If you aren't sure when to use one, the short answer is: always – especially when you are not closely watching your open positions for the duration that they are active.
If you intend to monitor open positions, however, stop-loss orders are not strictly necessary, as you have the option to close positions manually at any point within the trading window.
While stop-loss orders can and do save traders from painfully large losses, they can also be triggered by a brief but steep dip in value. A trader watching closely may have chosen not to close the position at that stage, fully expecting the market to recover almost instantaneously.
A stop-loss, however, does not have this discretion. A position closed in a sudden but very brief dip will still render a loss, despite subsequent quick market recovery. It all comes down to your goals, risk-tolerance, and trading strategy.
How to open a Forex trading account
If you need a Forex trading account, opening one is a quick and simple process. It usually involves answering a few short questions about yourself and/or providing your personal details such as your name and surname, country of residence and email address. This is most often followed by uploading your identifying documentation in line with KYC requirements.
While some trading platforms have a brief waiting period pending document validation, others with automated onboarding systems allow you to trade immediately after signing up. Should there be any problems with your documentation, they will contact you accordingly.
It is crucial to familiarize yourself with the Forex market before depositing any funds or attempting to make live trades. As mentioned further above, be sure to practise with a demo account for some time before live-trading using your own funds.
One Financial Markets: An online Forex trading platform
One Financial Markets offers a free forex trading account with no initiation fees or monthly account fees.
Kindly check the FAQ section on the right of the application page, where you will find a complete list of required documents per country to open an account.
Note that all documents should be clear and provided in colour where applicable. Both the front and the back of any submitted cards or identification documents must be scanned and submitted together.
If you experience difficulty with the application or document uploading process, or are unable to provide certain documents, kindly contact our client services department for assistance. In certain cases, possible alternatives may be offered.
An important message to remember is that successful traders are careful traders. Never allow sentiment or emotion to control your actions.
Profitable Forex trading requires the diligence of thorough research and the discipline to stay up to date with events, political or otherwise, that may impact exchange rates. Traders who act with clarity of mind on logical decisions are far more likely to be successful than those who take extreme risks or act without information.