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Opening a Forex Account (learn forex online)

Once the basics of forex trading are understood, you can look at opening an account.

Demo Accounts

The best training method in forex trading is a demo account. With virtual money to practice learning the trading techniques, a demo account allows any trader to improve their skills with no risk of loss. Opening a demo account is usually very simple. Usually, the prospective trader can simply go to a broker's website and apply for a demo account online - and can be trading with the account within minutes. See the Forex Broker List for quick access to many demo account applications.

Types of Accounts

There are 3 basic types of accounts, Full Size, Mini, and Micro.

Full Size or Standard

This account is best suited to the experienced trader, or the trader sufficiently comfortable in trading substantial sums of currencies.

The term standard size describes a common unit of measurement in forex trading. Currency is traded in specific units, described as lots, and the size of a lot is 100,000 units of the currency, as in $100,000 USD.

Full size accounts are often opened only with large initial margin deposits of perhaps $100,000, but they can be available with $25,000, or even $2,000.00. However, a trader must be aware of the risks of leverage.

Mini

A Mini account is usually one/tenth the size of a standard or full size account, or $10.000. Brokers allow lower initial deposits for mini accounts. New traders may be more comfortable with mini accounts, as will experienced traders who prefer to trade in smaller units.

Micro

Micro accounts are usually one/hundredth the size of standard accounts, or $1,000.00. Initial deposits for micro accounts might be available for as little as $25.00, although it might be more reasonable to maintain a balance of $500.00.

Choosing a Broker

The growth of the Internet and the global nature of the forex market has allowed for a large number of forex brokers, each offering slightly different service levels, and many operating under different laws and differing levels of regulatory scrutiny. The variety might be confusing, but it is important to select a broker with careful consideration. The following are some of the main points to consider when choosing a forex broker.
Trading Platform and Charting

Your forex broker will provide a trading platform-either in the form of a downloaded computer application, or in the form of an online service that must be accessed through your web browser. It is the trading platform from which you will monitor the markets and execute trades. This will be the main tool in your forex trading arsenal. Therefore, using a trading platform that is easy to use, and with which you are comfortable is important. This is a factor that should influence your choice of forex broker.

You should find the trading platform to be quick and responsive, and simple to use. Entering and exiting trades should be simple and direct, and the platform should allow you to easily watch your open trades, and quickly exit them. All trading platforms provide charting capability and some provide additional market information. However, the quality of such features can vary greatly from platform to platform; consideration of those features and other aspects of the trading platform should be included in your appraisal of the broker.

Execution Speed

The speed with which trades are processed by a forex broker is an important consideration closely aligned with the question of trading platform. In some platforms, speedy execution can reduce potential for loss, since quick execution can mean that the price at which the trade occurs has not changed between the time of placing the order, and the time that the trade is executed by the brokerage. However, for many trading platforms, the trade price is fixed at the time the order is placed, and does not change regardless of trade execution speed. Either way, this is an important aspect broker selection.

Regulation

Many countries, such as the United States have regulatory bodies which oversee forex trading, and all forex brokers must be registered with those authorities and comply with their regulations. However, the level of regulation and the protection offered by law can vary dramatically from country to country. Therefore, the regulations under which a broker operates must be carefully examined and considered, especially when choosing a broker from outside your own country.
Minimum Account Size

For many forex traders, another important factor in the selection of a broker is the account size offered. Brokers offer accounts with varying minimum or initial account sizes. Account size is affected by the margin requirements. As forex allows trading on the margin, a smaller account balance means less investment for the profit potential, but can come with increased implied risk of account loss, if the account balance is insufficient to handle short-term unfavorable changes in currency price.

Leverage and Margin

Leverage determines are the amount of funds required to be on deposit (in the trader's trading account) in order to trade a certain amount. For example, if the leverage allowed by the broker is 100:1, then trading of a currency pair valued at $10,000 would require a margin of at least $100.00 be maintained in the trader's account.

Selecting a broker that offers higher leverage allows the trader to trade larger amounts of forex with less margin (and therefore, with a lower trading account balance).

Spreads

The spread is the difference between the purchase and selling price of the currency, in other words, the difference between the Bid and Ask prices. Brokers earn revenue by retaining a portion of the spread. Spreads offered by brokers are usually fixed for each currency pair, and can vary substantially from broker to broker. Ensure that the broker you choose offers narrow (small) spreads leaving more profit for you.

Customer Service

This point should be well-known with description. However do remember that, the level of customer service you receive from the brokerage can affect your trading experience and your profits/losses. Ensure that the level of customer service provided by a broker is responsive and effective.

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FOREX GLOSSARY

A
AppreciationArbitrage
AskAsset
At BestAUD
AussieAustralian Dollar
Authorized DealerAutomated Trading System
B
Balance of PaymentsBalance of Trade
BandBank of Canada
Bank of EnglandBank of Japan
Bank RateBar Chart
Base CurrencyBasis Point
BasketBear
Bear MarketBid
Bid/Ask SpreadBig Figure
BoCBoE
BoJBollinger Bands
BrokerBuck
BullBull Market
BundesbankBuy Limit Order
Buy On Margin
C
CableCAD
Canadian DollarCandlestick Chart
CarryCarry Currencies
Carry TradeCash Market
Cash on DepositCBI
CCICentral Bank
Central Bank of IraqChartist
CHFCleared Funds
Closed PositionCommission
Consumer Confidence Index (CCI)Consumer Price Index (CPI)
Conversion RateCopey
CorrelationCounterparty
CPICross Rate
CurrencyCurrency Code
Currency PairCurrency Risk
D
Day OrderDay Trade
Day TraderDealer
Dealing DeskDealing Systems
DeficitDeflation
DeliveryDelivery Risk
Demo AccountDepreciation
Depth of MarketDevaluation
DinarDiscount Broker
Dollar RateDomestic Rates
Donchian ChannelDrawdown
Durable Goods Order
E
ECBECB Conferences
ECN BrokerEconomic Indicator
EquitiesEquity
Escrow AccountEUR
EuriborEuro
European Central BankEuropean Monetary Unit
European UnionExcess Margin Deposits
ExchangeExchange Rate
ExecutionExit
ExoticsExpiration Date
Exposure
F
Factory OrdersFast Market
Fed MeetingsFederal Deposit Insurance Corporation
Federal Funds RateFederal Open Market Committee
Federal ReserveFederal Reserve Board
FedsFill Price
Fiscal PolicyFixed Exchange Rate
Flexible Exchange RateFloating Exchange Rate
Foreign ExchangeForeign Exchange Center
ForexForward
Forward RatesFranc
Full-Service BrokerFundamental Analysis
FundamentalsFX
G
G7G8
GapGBP
GearingGood Until Cancelled
Great Britain PoundGreenback
Gross Domestic ProductGross National Product
H
HedgeHedge Fund
HolderHometrack Housing Survey
I
IMMIndicative Quote
Industrial ProductionInflation
Initial MarginInitial Margin Requirement
Interbank MarketInterest Rate
International Monetary FundIntra Day Position
IQDIraqi Dinar
ISM Manufacturing IndexISM Non-Manufacturing
J
Japanese YenJPY
K
Kiwi
L
Large Retailers SalesLeverage
LIBORLimit Order
Limit PriceLine Chart
Liquid MarketLiquidity
LongLoonie
Lot
M
M-o-MM1
M2M3
M3 Money SupplyM4 Money Supply
Maintenance MarginMajor Currency
MarginMargin Call
Mark To MarketMarket Close
Market MakerMarket Order
MaturityMini Account
MomentumMonetary Easing
Monetary PolicyMoving Average
MXN
N
Narrow MarketNet Consumer Credit
Net PositionNew Zealand Dollar
NZD
O
OfferOne Cancels The Other Order
Open OrderOpen Position
OrderOver The Counter
OverboughtOvernight Limit
Oversold
P
Partial LotPetrodollars
PIPPMI Manufacturing
PositionPound Sterling
PricePrime Rate
Principal ValueProducer Price Index
Profit Taking
Q
QuoteQuote Currency
R
RallyRange
RateRate of Return
Reciprocal CurrencyRegulated Market
ResistanceRetail Sales
Risk CapitalRisk Management
Roll Over
S
Sell Limit OrderSell Stop
SettlementShort
SlippageSNB
SpeculationSpike
SpotSpread
SterlingStop Loss Order
Stop OrderSwiss Franc
Swiss National BankSwissy
T
Technical AnalysisTechnical Indicator
The PoundTrade Balance
Trading PlatformTransaction
Transaction CostTrend
U
U.S. DollarUndervalued
Unemployment RateUnited States Dollar
UptickUS Dollar Index
US TreasuryUSD
V
ValuationVolatility
W
Wholesale Prices WTO
Y
Y-o-YYard
YenYield
Z
ZAR 
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