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Maximize Your Chances of Success By Choosing the Right Forex Trading Account

Apr 27, 2008
If you trade on foreign exchange (or Forex) as a hobby part-time, you can open account in your name. If you intend to trade in Forex full-time, then you need to open a business account. You can use your own account as your business name. Opening a business account will make it easier when you deal with the IRS.

When you do this, you'll also need to decide whether you want to open a standard account, which deals in standards of $100,000. Alternatively, you can open a mini account, which deals in mini lots of $10,000. If available, some brokers also have micro accounts the deal in micro lots of just $1000. Your aim should be to open the smallest account possible when you first begin to trade. If you want to trade with larger amounts, just trade with more than one lot at a time.

Before you begin, read and understand the fine print. You should also open what's called a Forex "spot" account. Don't open a forward or futures account. The goal is to be able to trade in real time.

You'll also need print and fill out paper forms, and then mail or fax them back to your broker before you can start trading. Once your application has been approved, your broker will contact you with instructions on how to set up your account. They will also explain how you can find your account. You also get your username and password so that you can log into your online account easily.

It is very important that you only trade with real money after you've practiced for at least two months with a demo account.

Maximize Your Chances of Success

To maximize your chances of success, be realistic. Yes, you have the potential to make large profits with Forex, but you're not going to get rich quick. In addition, you won't make a profit from every Forex trade you participate in. Even experienced Forex traders sometimes have losses because their predictions don't come true. What you want to aim for is to have more profitable trades than ones that lose you money.

Never trade with money you can't afford to lose. Have at least 10 times your margin in your account. If you lose the money in your Forex trading account, you should not be broke or without the ability to pay basic expenses. It's also unrealistic to expect to open an account with, say, $200 and be a millionaire by next week.

The reality is, only a very small number of Forex traders become successful. Why is this so? Because most traders fail to do the following:

1. They lack the discipline to demo trade it for long enough to learn what they're really doing.

2. They expect that they're going to profit from every trade they do.

3. They're reckless and trade with money they can't afford to lose.

4. They let emotions influence their trading strategy, instead of with careful research and thought.

5. They trade with margins that are too small and have too much leverage.

6. They don't take trading seriously and don't treat it as a business.

7. They take risks they shouldn't in order to try to make bigger profits.

8. They begin to trade with and lose real money before they have done enough demo trading to know what they're really doing.

9. They fail to become competent with just one currency pair before they begin to trade with multiple currency pairs.

It's very important that you become competent in demo trading before you risk even a penny of your own money. Just as you wouldn't expect to become an expert professional in medicine or law overnight, you should also not expect to become competent in Forex trading overnight.
About the Author
Ian Armstrong is an avid Forex enthusiast.

He strongly recommends starting out with "Easy Forex" as a trading platform. You can start trading with as little as $100 USD at 200:1 leverage. Check out an unbiased review of Easy Forex at Easy Forex Unbiased Review
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