Forex account – which is the best?

A forex account is a colloquial term for a multifunctional investment account that allows you to trade CFDs in particular. With the help of a forex account, a trader can make profits on price movements of various types of financial assets. Forex accounts differ from each other in the size of contracts, and also offer different trading conditions.

Forex account – what exactly is it?

A forex account allows you to trade a wide range of financial instruments from your smartphone, tablet or computer. It allows a trader to use a forex platform, which is used not only to make investments, but often offers an educational section as well. The best brokers that offer forex accounts, offer useful and interesting training materials that can be used as part of using a forex account.

A forex account is simply a trading account that works similarly to a bank account, but its purpose is to make stock trades on stocks, currencies, stock indices, energies and metals. A forex account is offered by intermediaries, or brokers, who also provide forex platforms. Through them, traders can conduct their investments and make transactions in the foreign exchange market.

How to open a forex account?

A forex account can be opened in a few minutes. Most forex brokers allow you to open a forex account online. The best forex account should be able to be opened online. Opening a forex account is associated with signing a brokerage agreement, as well as accepting all the required regulations. The trader should familiarize himself with all the documents.

When opening a forex account, you need to confirm your identity. This is usually done by sending a scan of an ID card. It may happen that the broker will require the investor to confirm his residential address.

In most cases, forex accounts are free, but some brokers will start charging fees if you are inactive on the account. Therefore, it is worthwhile to check earlier in the terms and conditions whether there is such a provision. However, a free forex account is offered by most reputable brokers, whose services are worth using.

Documents required to open a forex account

If a trader has decided to open an account with a forex broker, he will need:

• An identity document, i.e. a valid ID card or passport,
• Confirmation of residence address.

To be sure that the broker will accept the trader’s registration, it is best to include scans of the above-mentioned documents in the appropriate fields during registration. If the trader does not have such an opportunity, then he can send photos of the documents on a white sheet.

What can be a proof of residence address? It can be:

• A photo of the bill for electricity, internet, water,
• Confirmation of a bank transaction in .pdf format,
• A bank document on which the residential address and personal information of the investor are marked,
• A bank letter that confirms that the investor has an account with a specific institution.

If a trader decides to open a forex account with a foreign broker, the document requirements may be different. It all depends on the authority that supervises a particular broker. When it comes to brokers, a better one falls under the KNF, CySEC, FCA or ASIC, the above-mentioned documents will suffice. As for more exotic countries, a Forex broker may require documents that prove identity only when a trader wants to withdraw funds from his account.

Such institutions are better to avoid, and if the registration of a forex account does not require the presentation of documents that prove the identity of the trader, and the broker’s headquarters is located in exotic islands, it is better to abandon the services of such a broker.

Security when setting up a forex account

If a trader has decided to open a forex account, he should make sure that the whole process is safe. First of all, it is necessary to pay attention to whether the website with which the trader will register uses secure protocols, such as HTTPS. This is necessary, especially if you are sending sensitive data, such as a scan of an ID card.

Secondly, with make sure that the link refers directly to the broker’s site and no one is impersonating it. In a situation where the person concerned has already sent the required documents, it is best to permanently delete them from the computer.

Forex account – types

Forex brokers very often present several different offers, which differ from each other:

• available financial instruments,
• the trading conditions,
• leverage,
• minimum deposit.

Depending on the trader’s experience, he will be able to operate with different leverage. If he is just at the beginning of his journey, he should choose low leverage and try to open small positions to gain enough experience.

Forex account – where to open?

Below is a list of the most popular forex accounts that you should consider when choosing the best forex account.

mForex

This is mBank’s proposition and is a platform that allows customers of mBank Brokerage to enter the forex market. This broker has been in business for 20 years, so it enjoys the trust of many customers. The broker is regulated by the Financial Supervision Commission, so especially in the eyes of Polish investors it is very reliable. It operates in the ECN model, which means that it is an intermediary in transactions, rather than taking part in them directly.

It is a good choice for traders who would like to invest in both Forex and CFDs. It provides several different platforms, and also gives its clients the opportunity to open a forex demo account. What’s more, mForex clients have access to a wide educational section, including individual and group training courses.

XTB forex account

This is a Polish forex account, and the broker does not charge for its operation. It operates on the Market Maker model and offers good conditions for trading on a wide variety of financial instruments. It also offers a large selection of real stocks from many different exchanges. It offers a proprietary xStation trading platform, as well as a mobile app (read also: Stock market apps and Apps for investing in the stock market). The ability to invest in cryptocurrencies through CFDs.

TMS Connect forex account

This broker also operates under the Market Maker model, and there is no fee for account maintenance. It offers the possibility to invest in US stocks. No restrictions on deposit size and access to historical spreads. It is a regulated broker that is headquartered in Poland.

eToro forex account

The eToro forex account offers social trading and automatic copying of other traders’ moves. The ability to earn as a “popular player” by sharing moves with other traders. Sports selection of financial instruments and low initial deposit. The downside may be the lack of stocks and contracts from some countries. However, there is no set-up and account maintenance fee, and the minimum deposit is $50.

There are several methods to fund an online Forex account, including bank transfer, debit card credit card, and PayPal. The country of headquarters is Cyprus. It offers gold and silver contracts, oil contracts, cryptocurrency contracts and stock contracts, among others, but does not offer actual stocks.

Forex account – leverage

Unlike a standard brokerage account, a forex account allows you to use leverage. This is a mechanism by which, with small amounts of money, a trader is able to open positions that have a very large nominal value (read also: How to invest small amounts of money). According to the regulations of the National Financial Supervisory Authority, the standard leverage on a forex account can be 1:30.

This means that using, for example, USD 1,000 of capital, a trader can gain exposure to an instrument of up to USD 30,000. Leverage, therefore, allows you to make profits that would probably be impossible to realize in a standard brokerage account.

However, it is important to realize that leverage is also associated with a high risk of losing even the entire capital. Even a small swap in the price of the underlying instrument is enough to incur very high losses.

Protection against negative forex account balance

Until recently, losses could be even greater than the amount a trader deposited in a forex account. In such a situation, a debit was created in the account, which had to be replenished in order to continue trading. However, there have been regulatory changes and brokers are obliged to offer a service known as negative balance protection. This ensures that a trader’s potential loss is limited only to the amount paid to a specific broker. However, it still means the risk of incurring a 100% loss on the investment.

When a trader realizes the existence of leverage, he should properly manage his capital, such as by using defensive orders, investing only a part of his assets. This will reduce the probability that, due to unfavorable circumstances, the trader will suffer a loss.

How to choose a Forex broker?

A Forex broker provides you with the opportunity to open an account and use the Forex platform. Before choosing it, you should ask yourself some important questions.

Is the broker regulated?

If a Forex broker is reputable, it should either be regulated in its country of operation or by another regulator. A Forex broker very often attracts users’ attention through an eye-catching website and interesting promotions, but it is worth paying attention to security as it relates to investing funds.

Is it easy to deposit and withdraw funds?

The important news for investors is whether I can withdraw and deposit money at any time I choose, and whether they will not be bound to the broker by additional restrictions. The ways to deposit should be different and give more options than just a simple money transfer. Withdrawals should be possible without contacting the brokerage house or broker by phone or e-mail. Withdrawals and deposits should also be simple, but should also be done at a fast pace by the broker. If a trader is unsure about methods for depositing and withdrawing money, he or she should open a forex account, deposit a small amount of money and try to make a withdrawal.

Are the transaction costs clear?

When choosing a broker, it is important to understand all the costs that are directly related to investing, as well as depositing and withdrawing money. It is important that the broker has a special section on the website that addresses all fees and costs imposed on the client, so that nothing comes as a surprise.

Is it possible to get support 24 hours a day, 5 days a week?

Forex trading can be a somewhat lonely activity, but traders may need support and assistance. For this reason, it is important to be able to talk to customer service at any time when the market is active. The best forex broker gives customers the opportunity to communicate by phone or chat, as well as by email.

What additional features does a forex account offer?

Some brokers only provide users with the ability to trade. When choosing a broker, it is worth knowing that it offers professional service in the form of a personal tutor who will introduce the trader to the world of the stock market. This type of support should address issues that are related to the offer, as well as the operation of the investment platform, as well as assistance related to the assimilation of training materials.

A good forex account should provide clients with educational support in the form of training courses or webinars. Moreover, the account manager should inform the trader about upcoming promotions that may be of interest to him.

What is the width of the offer?

Every investor should pay attention to the width of the available offer. The more financial instruments a broker offers, the more likely an investor is to find one that will bring him profits. In the case of currency pairs, it is worth looking for such a broker that offers not only the main pairs with the dollar, but also exotic ones, which are based on the Polish zloty or the Hungarian forint (read also: Forex currency trading). Besides, the offer should be enriched with CFDs on stock indexes, as well as other instruments.

Which broker to choose?

This question is often asked by novice traders. There is no right answer to which to choose. It all depends on the preferences and experience of the trader. If the trader has a slightly lower propensity for risk-taking, as well as a poor knowledge of foreign languages, he should opt for a forex broker from his country.

The most popular forex brokers

Below is a ranking of the best forex accounts, or more precisely, the brokers whose services are worth using.

XTB

XTB is a broker that has been operating since 2005 and is supervised by, among others, the Financial Supervision Commission. Since 2016, it has been listed on the Warsaw Stock Exchange. The broker offers more than 5,400 financial instruments, including CFDs on currencies, commodities, indices, cryptocurrencies or bonds. In addition, XTB offers up to real stocks and ETFs, which are listed on 16 major exchanges from around the world. There is no stated minimum deposit and it is regulated by the FSA, but also by the FCA and CySEC.

Ducascopy Europe

This is an account with the Swiss Banking Group, and Ducascopy Bank makes all its commitments to the regulator, and this ensures good liquidity, risk diversification, and capital adequacy. You can choose among 8 asset classes and get access to more than 500 financial instruments. For this Forex account, the minimum deposit is USD 100.

Capital.com

This is a thriving investment and trading platform that gives you access to financial markets. With it, you can trade CFDs on oil, Apple, Bitcoin, Tesla, as well as more than 6100 other assets in markets from around the world. The platform allows you to make liquid trades with a single click, and the minimum deposit is USD 100.

Exante

This is a next-generation investment company that provides access to a variety of financial services. It focuses on international financial markets. It is worth knowing that from a single multi-currency account it offers access to dozens of exchanges from around the world and more than 100,000 financial instruments. It is worth opening a forex account here, as the broker is supervised by the Cyprus Financial Supervisory Commission. In this case, the minimum deposit is 10 thousand euros, and the spread is variable.

Just2Trade

This is an international investment company that provides its clients with direct access to the world’s largest stock markets and currencies. The company employs talented individuals who provide the highest level of service. The minimum deposit is $100.

Instaforex

This is a reliable European broker that offers unlimited trading opportunities (read also: Online trading). It is characterized by reliability, innovation and offers a wide range of InstaForex services. This broker has been awarded many times by prestigious business publications, as well as awarded at international exhibitions. A trader can use a Forex account with no minimum initial deposit. It is supervised by the Financial Supervisory Commission, among others.

Purple Trading

This is a broker that has Czech roots and offers trading on CFDs, stocks, ETF portfolios, as well as investment strategies for its clients in the Czech Republic, Slovakia, Italy and Poland. The broker is regulated by CySEC of Cyprus, and the required deposit is €100.

FP Markets

A forex account with this broker gives access to more than 60 currency pairs, as well as contracts for difference, with more than 10,000 company stocks, commodities, stock indices and cryptocurrencies (read also: What is the best currency to make money on and How to invest in currencies online). The broker provides two platforms – Meta Trader 4 and Iress. In this case, the minimum deposit is €100.

Vantage

This is a global broker that offers clients access to an efficient and convenient service for trading CFDs on Forex, indices, stocks and commodities (read also: How to make money in stocks). It has been operating on the market for more than 10 years and provides its clients with lightning-fast execution of orders, as well as competitive spreads. Traders can use a number of analytical tools, drawing tools, as well as market analysis and educational materials to help the trader make the best investment decisions. In this case, the minimum deposit is $50.

FXopen

This is a CySEC-authorized and regulated Forex and CFD broker that has been in business since 2003. It started in Egypt and now has its main offices in the UK, Australia and Cyprus. The broker operates on an ECN model and gives access to trading in commodities, currencies, stocks and indices. The minimum deposit is either $300 or €300.

XM

This is a broker that offers a forex account, and with it a trader can invest in more than 1,000 financial instruments, which are available on either the Meta Trader 4 or Meta Trader 5 platform, including forex, CFDs on stocks, stock indices with commodities, energy commodities, as well as precious metals. The minimum deposit is $5.

Axi Trader

This broker was founded in 2007. It is currently popular in more than 100 countries and offers the opportunity to trade in all the most popular financial instruments.

Interactiv Brokers

This is an American multinational brokerage company that currently has 24 offices in 14 countries from around the world. It has the largest electronic investment platform in the United States in terms of the number of trades. It brokers options, stocks, futures options, futures contracts, forex currencies, funds and bonds.

NAGA Markets

More than one million traders use a Forex account with this broker. Using it, you can trade a wide range of financial instruments, copy the best traders with a single click, and the minimum deposit is only $1.

Pepperstone

A forex account with this broker gives you access to the lowest spreads in the industry. Orders can be executed instantly with spreads as low as 0.0 pips on Razor accounts. The minimum deposit is $200.

Plus500

This is a leading broker in the financial market that provides CFDs. It offers great trading conditions for forex, stocks, currencies, options, ETFs using state-of-the-art investment technology. The spread in this case is variable and the minimum deposit is $100.

How to get started in Forex?

Forex gives everyone an equal opportunity, both professional people who have a level of education and those who have mastered investment in the currency markets on their own. In order for a novice trader to become a seasoned trader as well, he must have basic knowledge and at least minimal experience.

For this reason, it is best to start your forex adventure by testing your own skills and using a forex demo account, where you can use a virtual account and make real transactions. This allows you to see what kind of profits or losses, if any, a trader could make if he or she were to allocate real money.

The next step is to master the basic concepts and terms that are associated with investing in the foreign exchange market. A trader who does not distinguish between pips and lots, confuses the quoted currency with the base currency, or has no idea what leverage is and is not familiar with types of orders. Specialized terminology allows you to understand how to make money in Forex, how it works and how to make Forex trades.

Forex demo account – what is it?

A forex demo account allows novice traders to see how specific tools work, as well as how transactions are made in the foreign exchange market. To keep your capital safe, using a demo account, you trade with virtual funds.

Why use a demo account?

A trader who is inexperienced, before opening a real account, should open a forex demo account, through which he will test himself in the financial market without any risk of losing funds. Forex demo without registration or with registration (depending on the trader’s preference) gives a lot of opportunities. It allows to get acquainted with all the specifics of the market, as well as the work of a certain broker.

A forex demo account usually works in the same way as the real one, but the trader trades virtual money on it, not his capital. The important thing is that opening a demo account is completely free of charge, so the trader does not lose anything on it, but can only gain. Opening a demo account is associated with many benefits.

Security of money

It is worth emphasizing again that a trader who has a forex demo account trades not with his own money, but with virtual money, so he cannot lose it. Even in the situation when the investment decisions made by the trader are not right, the beginner need not fear (read also: Forex for beginners).

As long as the trader plays on a demo account, he can risk as much as he wants and will not suffer any financial consequences. With most brokers, after making a loss, the forex demo account can be restarted and start playing from the beginning. A demo account is a great solution for novices. A test account allows a trader to see how he will handle trading foreign currency instruments, as well as whether he has enough ability to come out with a profit.

Access to training materials

To trade forex, a trader should get the basics and learn the rules and workings of the forex market. The best brokers offer their clients access to free forex training courses, tutorials, or e-books. An extensive training section is an opportunity to learn the specifics of the market in theory, and this is the best basis to start investing.

Some tutorials provide customers with useful training materials even when they open a demo account. Before a trader opens an account with a selected foreign broker, he should check whether the training materials have been translated into his language.

Opportunity to learn through practice

Theory is, of course, very important, but it is no substitute for practice. Verification of skills with an actual account, can bring very bad results. Especially if the investor plays aggressively and is also willing to take risks. To check whether the investment strategy adopted by the trader is the right one, it is best to set up a free forex demo account.

Opportunity to test the investment platform

When starting an adventure with the forex market, it is worth using a forex demo account. After logging in setting it up, the trader gets access to the investment platforms offered by the chosen broker. Each of them works slightly differently and has different functions. In order to choose the best platform for yourself, it is worth testing several of them. Brokers provide their clients with either proprietary Forex platforms, or ones developed by third-party companies.

If a broker offers more than one platform, when setting up a demo account, a trader can choose one of them. If the chosen platform does not meet his expectations, he can open a demo account a second time. A beginner should keep in mind that the platform must meet all his needs. Before deciding to open a real account, he should make sure that the tool is easy enough to use, and that it offers access to useful analytical tools.

A forex demo account offers a lot of possibilities, and in fact a trader can only gain from it and lose nothing. A demo account can even save a trader from losing his first invested money. It is worth choosing it prudently and paying attention to the issues mentioned above.

What is the Forex market?

The Forex market is global in nature and allows you to trade almost all currencies from around the world. There you can make transactions that determine the rates of specific currencies, or more precisely currency pairs, since the value of a single currency is always expressed relative to another. Forex represents the largest, as well as the most liquid exchange market in the entire world. It is also characterized by decentralization (read also: Forex investments).

This means that it has no specific location. It is only supervised on national currency markets through national institutions. It’s an over-the-counter market, and trading on it takes place through a huge number of individual transactions that are made between many market participants.

It can usually be traded by having a forex account, which can be established with a broker of your choice. In comparison, the equity market is usually a regulated, domestic market, characterized by less liquidity, and internal trading platforms.

Forex trading – currencies in real time

The Forex market is a place where multinational corporations, banks, governments, central banks, as well as individual investors perform currency exchange operations 24 hours a day. On the Forex market, currencies are traded in the form of pairs. The most popular is EUR/USD, as it generates the highest turnover in the Forex market. Real-time currencies are depicted on charts on sites that are dedicated to investment, and especially on the investment platform through which traders make transactions.

What affects the price of a currency?

The exchange rate is influenced in particular by the economic situation in the countries and regions that represent the two currencies. Demand and supply for specific currencies are strongly influenced by political, economic, as well as psychological factors. Economic factors are used, in particular, during the creation of fundamental analysis. Interest rates, the level of inflation, the size of the gross domestic product, as well as the monetary and fiscal policies of a specific country also affect exchange rates.

Political factors include all events that affect the economy, such as political instability. The value of the currency of the countries involved in the conflict is weakened, will not be traded in the forex market. Real-time currencies and their current prices are therefore of interest to millions of traders from around the world.

What are CFDs?

It is worth knowing that a forex account also allows you to trade CFDs. CFDs are derivatives that are based on company stocks, global stock market indices, commodities, currencies, ETFs and cryptocurrencies. Compared to standard stock trading on the spot market, they have quite a few advantages, which make them good instruments for making money on price movements that are short-term. However, one must be careful, as investing in these contracts is associated with high risk.

CFDs are characterized by low margin requirements and relatively low transaction costs, as well as the ability to sell short.

Short selling

This is an opportunity to take advantage of declines in the markets. This type of transaction is entered into in the same way as a buy transaction, and can be executed at the current market price or using pending recommendations.

CFD prices

Depending on the trading model of the platforms, CFDs are concluded either at the current prices of the underlying instrument or with transaction costs charged. Some forex accounts offer the ability to trade without charging commissions.

Leverage

Thanks to the leverage that is available for CFDs, a trader can trade with higher volumes than the money held in the account, allowing to make money even on small price movements of the underlying instruments. For index CFDs, the maximum leverage available at TMS Brokers, for example, is 1:100, and for stock contracts it is 1:50.

Higher dividend yields

Investing in CFDs with leverage allows the trader to earn proportionally increased profits that result not only from price changes, but variously from dividends due. Provided, of course, that the trader has a long position on the stock for which the dividend record date falls.

What is investment portfolio management?

Proper management of an investment portfolio is related to knowledge of the relevant terminology and concepts related to the Forex market. An effective investment strategy should take into account which large trader uses margin. CFDs are one of the instruments that use it.

In the financial market, a trader can be active with little capital. What kind of result he will achieve depends on what financial goal he chooses and how he wants to achieve it. What is certain, however, is that the potential profit is directly proportional to the capital put in.

Forex investment strategies

Still using a Forex account, a trader should pick his strategy and stick to it. There is no universal way to succeed, but the key to succeeding is for the trader to make rational decisions that are supported by decision analysis. Beginning traders sometimes forget this, and then make investments under the influence of emotions. Such action can prove disastrous.

However, there is no such thing as a universal Forex guide. A trader can learn how to read charts, how to play forex, etc., but there will never be a 100% guarantee that he will generate a profit.

A forex account is an opportunity to make investments in the currency market, which has the highest liquidity in the entire world. With a bit of luck, you can generate substantial profits and multiply your savings. Therefore, it is worth spending some time to find the right forex account, which will make it easier to make transactions and effective investment decisions.