10 Things You Should Know Before You Open A Forex Account

Forex trading may seem like an excellent profit-making opportunity at first glance to someone who is unfamiliar with it. While the prospect of trading with leverage sounds appealing, the reality of forex trading differs greatly from the sales pitch you hear. In reality, making consistent profits in forex is challenging, and most beginners lose money while learning the ropes. Educating yourself about what youre about to undertake can instil more confidence while you open a forex account. 

Whether you have decided to open a forex account or intend to do so, there are certainly plenty of factors to consider. You might come across queries like ‘How to choose a Forex broker’ or ‘How much money do you need to start Forex trading’ and so on. The goal of this article will be to answer such questions and outline the 10 most important things you should know before you open a Forex Account.

What is Forex Trading and How Does it Work？

Forex trading involves the exchange of foreign currencies against each other on the foreign exchange market. In everyday life, forex trading pertains to buying and selling different currencies for one another; for example, when you trade USD for JPY, you are engaged in forex trading. But what we are discussing here is the decentralized exchange of virtual currencies on a 24-hour market that is open Monday through Friday. 

In Forex trading, currencies are traded over-the-counter, meaning there is no physical exchange between them. Instead, Forex traders strive to generate profits by speculating on the future direction of prices. Traders who anticipate a currency‘s value would place “buy” and “sell” positions accordingly based on their perception of the currency’s value rising or falling.

How to Start Forex Trading

It is very easy to open a Forex account with AximTrade. Any trader can sign up with AximTrade regardless of their trading experience. Here is a detailed guide explaining how to open a Forex account in simple steps. To start trading Forex, all you need is a computer or a smartphone with high-speed internet access, a regulated brokerage account, and a reliable trading platform. A good way to get started with forex trading is to educate yourself first.  

Forex traders who succeed have one thing in common – they work hard for it. The more effort you put into researching the market, the greater your chances of success in Forex trading. Most people who attempt to jump-start a trading career leave disappointed and unsatisfied due to false motives, unrealistic goals, greed, excessive haste, and lack of information and knowledge. Before you step into the world of Forex trading, be sure you are aware of the following 10 important factors before you open a Forex Account. Lets begin! 

1. All Forex brokers are not created equal

Typically, a Forex broker acts as an intermediary between the retail forex traders and the foreign exchange market (also known as the interbank market). Forex brokers offer financial services that facilitate foreign currency transactions for retail traders.  

Choosing a regulated forex broker is a major decision in your trading journey, as your broker is considered your trading partner. The term regulated signifies that the brokers financial activities are monitored and supervised by financial regulators, whose primary goal is to prevent fraud and significant risks in the forex market. Regulated Forex brokers ensure that the privacy of their clients is protected and that the information disclosed is accurate. Read the AximTrade review to find out what it takes to be a regulated forex broker. 

Be sure to choose a forex broker that offers a variety of trading options and account types to suit your trading style and investment capital. Choosing an ideal forex broker requires consideration of several factors, like regulatory compliance, the brokers trading platform, available currency pairs and trading instruments, and responsive customer support. 

2. Make sure the Broker has a Reliable Trading Platform

Sometimes, even your winning strategy won‘t work if you aren’t able to utilize a trading platform and place orders precisely, or if you use a fraudulent trading platform. Getting to know your trading platform is crucial since it is the only way to avoid mistakes like order placement. MT4 platform makes this relatively simple compared to other platforms. 

Select a forex broker who gives you direct access to trading platforms and full control of your personal area. It is advisable to avoid brokerage firms that do not provide direct access to funds or trading history or are not MT4 or MT5 licensed. Whenever you execute a market order or a pending order, be sure that you are familiar with the buttons. This does not mean that you can start trading immediately. Practising on a Demo account is the best way to gain an understanding of a trading platform without losing real money. 

3. Knowing the Different Types of Forex Accounts

Now that you‘ve gotten a sense of the reliable broker and trading platform, it’s time to figure out the type of Forex account most suitable for you. A reputable Forex broker is likely to offer multiple Forex accounts. You can choose the one that best fits your needs based on your trading experience, risk appetite, and investment capital. Besides these aspects, you should also consider the features offered by each Forex account. Lets examine each in more detail. 

Standard Account – Most Popular Trading Account

A standard account is the primary type of trading account offered by most Forex brokers. Depending on the broker, it may be called a classic account or carry the primary account name. Traders who use standard accounts can enjoy the benefits and features of brokerage firms. For Standard accounts, 1 lot = 100,000 currency units. This type of account requires high levels of knowledge, so it is more suitable for skilled and capital-rich traders.

CENT Account – Best for Low Capital Investment

A Forex CENT account is a trading account with a balance measured in cents. That is, 1 USD = 100 cents. Beginners can use CENT accounts to move from a demo to a real account. The minimum lot size required is 0.01 lot. Thus, anyone can enter the forex market and start trading with relatively little capital. Less capital, however, only yields smaller gains. A CENT account is not the best choice if you want big profits. 

ECN Account – Direct Access to Market

ECN accounts are one of the most popular account types due to their transparency and direct market access. Forex brokers offer an ECN account with traditional accounts offering lower leverage and commissions per lot. ECN accounts are a great choice for professional traders seeking optimal trading conditions. The execution of trades can be quicker with ECN accounts since they are executed without requotes.

Demo Account – Best for Beginner Traders 

If you‘re new to Forex trading and want to explore the Forex market without spending your own money, you’ll need a Demo account. Demo trading mimics real-world forex trading. With demo accounts, users can explore real-world trading functions such as analyzing price movements, testing out risk management strategies, understanding spreads, leverage tools, and using stop-loss and take-profit orders.

4. Understanding Leverage, Broker Commissions & Fees

Successful traders know that leverage is a crucial factor in forex trading. There is no doubt that Forex traders are attracted by leverage, but choosing the right leverage is extremely important, as it is a double-edged sword that can adversely affect your profits. Understanding how leverage works and how to use it responsibly is crucial to remain competitive in the Forex market.

The most common forex trading costs for beginners are spreads, commissions, and swaps. Spread is defined as the implied cost of the trade. Commissions are fixed charges applied to each transaction on ECN accounts. A swap fee is the interest rate charged for holding a position overnight. Failing to consider the Forex trading costs will significantly reduce your potential profit and negatively affect your trading portfolio.

5. Learning the Basics of the Forex Market

Forex trading has its own terminologies that every trader should be familiar with. Having just started out in the Forex market, you may have come across articles or forum posts discussing terms such as ‘pips’, ‘cross-pairs’, ‘margin’, etc. There are a few basic terms every trader needs to know before they open a Forex account so that they can make the most out of it. Here weve compiled a list of the most important Forex trading terms to help you get started. 

Having an understanding of currency pairs is also critical to getting started with Forex trading. The forex market offers more than 200 different currencies, however, not all of them are profitable for traders. The best way to decide which currency pair is best to trade is to analyze different currencies using your trading strategy. 

6. Advantages of Copy Trading for Beginners

Copying trades is becoming increasingly popular as it allows traders with minimal experience to grow forex account balances more quickly. Copy trade enables Forex beginners to copy the strategies of successful professionals and helps them utilise their expertise to generate profits. Individuals to increase their capital but lack the time or experience to do so by themselves just need to open a Forex account to reap the benefits of this trading method.

You should, however, follow an expert trader before copying their trading positions. An important aspect is finding a trader with strategies and plans that are compatible with your own. If you dont want to copy trades on your own, you can use a copy trading platform that allows you to select a specific trading activity to mimic. 

7. Importance of Technical & Fundamental Analysis

Technical analysis involves analyzing past market data, including prices, volumes, and trends, and predicting future price movements accordingly. Analyzing data is the key to better predicting the direction of the market. To make an informed decision in Forex, it is crucial to understand the price-based indicators, volume-based indicators, and moving averages. This is something you can learn from technical analysis.  

Unlike technical analysis, which relies on charts to identify patterns, the fundamental analysis examines economic data reports and news headlines. Fundamental analysis involves analyzing economic, social, and political forces that may affect currency prices. To stay informed on the forex market and make intelligent decisions, learning both analyses is crucial.

8. Benefits of Time Management in Forex Trading

Forex traders cannot overlook the importance of time management. Forex Trading requires a strong grasp of time management, as this will allow you to decide when to enter a trade, when to cut losses, and when to exit your trading positions just as they are reaching their peak. Time management will also give you peace of mind, enable you to identify more opportunities, and help you prioritize your work. 

Newbie Forex traders often rush into buying and selling currency pairs in order to maximize their profits but end up missing greater returns as they fail to time their trades properly. Trading at the best times requires efficient time management.

9. Identify the type of Forex Trader you are

Before you open a Forex account, it is crucial to identify whether you are you short-term or a long-term trader. Understanding the market and acting according to your financial objectives is the best way to choose whether to be a long-term or short-term forex trader. Regardless of the timeframe, Forex Trading is suitable both for long-term and short-term investment goals. 

Short-term forex trading involves holding positions for a few minutes, hours, or even a day, normally no longer than seven days. Consequently, there are fewer gains within a shorter timeframe. While it looks attractive and lucrative, it also comes with a dark side that doesnt always work in your favor, which is a risk. Scalping and Day trading are the two popular short-term forex trading strategies. 

On the other hand, long-term strategies have proven to be one of the most effective methods of success in forex trading. Trading long-term can take several weeks to months, even years, between positions. It is crucial to identify price trends over the long term, excluding short-term price fluctuations that can be misleading. Position Trading and Swing Trading are the two popular long-term forex trading strategies. 

10. You can trade a variety of Instruments on MT4 Platform

While it is well known that you can trade Forex on the MetaTrader 4 platform, besides currency pairs, you can also trade CFDs, indices, futures, commodities, and even cryptocurrencies alongside the USD currency. AximTrade MT4 platform allows you to trade all types of currency pairs including Major, Minor and Cross currency pairs. You can also trade precious metals such as Gold and Silver, trade oil like Crude and Brent, trade multiple indices and last but not least, you can trade 36 top cryptocurrencies with the AximTrade MT4 platform.

AximTrade MT4 provides tools for price analysis with a set of inbuilt technical indicators and charting tools. The moment you open a Forex account with AximTrade MT4, you will be able to execute trades directly from the chart with one click thanks to its quick trading features. The MT4 platform is available in different versions for both Mobile and Desktop. 

How to Open a Forex Account with a Reliable Broker

Hopefully, now you have a clearer idea of what to know before you open a Forex account. Now, lets move on to the advantages you receive when you open a Forex account with the trusted broker AximTrade. AximTrade provides a variety of trading options tailored to each individual in the Forex market. 

Traders using AximTrade have the freedom to choose between multiple account types based on their trading strategy, experience, and capital designed for investment. The account types include a Standard account, CENT account, ECN account, Infinite Leverage account and a Demo account. Members of AximTrade can manage up to 15 active trading accounts, including 7 Standard Accounts, 2 Cent Accounts, 5 ECN Accounts, and only 1 Infinite Account per Member Area profile. 

Forex traders can take advantage of one of the best leverage levels in the Forex market while they open a Forex account with AximTrade. The leverage levels range from 1:1000, 1:2000, 1:3000, and up to Infinite leverage. The advantage of using AximTrades leverage is that you can make significant profits by starting with a very little investment of 1$.

Offering a highly advanced MT4 execution and Copytrade platform, the company has achieved regional and global recognition for its competitive trading conditions, low spreads, minimum balances, reduced financial commitment, diverse account types, and lucrative forex bonuses. With AximTrade, you can trade 49+ Currencies, Indices, Metals, Energies, and Cryptocurrencies.

Original Article: 10 Things You Should Know Before You Open A Forex Account

Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers' personal circumstances, investment experience, or current financial situation.