How To Trade & Open A Forex Account

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So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other factors that you should be aware of before you take this step. We will then discuss how to trade forex and the different types of orders that can be placed.
Opening A Forex Brokerage Account
Trading forex is similar to the equity market because individuals interested in trading need to open up a trading account. Like the equity market, each forex account and the services it provides differ, so it is important that you find the right one. Below we will talk about some of the factors that should be considered when selecting a forex account.

Leverage
Leverage is basically the ability to control large amounts of capital, using very little of your own capital; the higher the leverage, the higher the level of risk. The amount of leverage on an account differs depending on the account itself, but most use a factor of at least 50:1, with some being as high as 250:1. A leverage factor of 50:1 means that for every dollar you have in your account you control up to $50. For example, if a trader has $1,000 in his or her account, the broker will lend that person $50,000 to trade in the market. This leverage also makes your margin, or the amount you have to have in the account to trade a certain amount, very low. In equities, margin is usually at least 50%, while the leverage of 50:1 is equivalent to 2%.

Leverage is seen as a major benefit of forex trading, as it allows you to make large gains with a small investment. However, leverage can also be an extreme negative if a trade moves against you because your losses also are amplified by the leverage. With this kind of leverage, there is the real possibility that you can lose more than you invested - although most firms have protective stops preventing an account from going negative. For this reason, it is vital that you remember this when opening an account and that when you determine your desired leverage you understand the risks involved.

Commissions and Fees
Another major benefit of forex accounts is that trading within them is done on a commission-free basis. This is unlike equity accounts, in which you pay the broker a fee for each trade. The reason for this is that you are dealing directly with market makers and do not have to go through other parties like brokers.

This may sound too good to be true, but rest assured that market makers are still making money each time you trade. Remember the bid and ask from the previous section? Each time a trade is made, it is the market makers that capture the spread between these two. Therefore, if the bid/ask for a foreign currency is 1.5200/50, the market maker captures the difference (50 basis points).

If you are planning on opening a forex account, it is important to know that each firm has different spreads on foreign currency pairs traded through them. While they will often differ by only a few pips (0.0001), this can be meaningful if you trade a lot over time. So when opening an account make sure to find out the pip spread that it has on foreign currency pairs you are looking to trade.

Other Factors
There are a lot of differences between each forex firm and the accounts they offer, so it is important to review each before making a commitment. Each company will offer different levels of services and programs along with fees above and beyond actual trading costs. Also, due to the less regulated nature of the forex market, it is important to go with a reputable company. (For more information on what to look for when opening an account, read Wading Into The Currency Market. If you are not ready to open a "real money" account but want to try your hand at forex trading, read Demo Before You Dive In.)

How to Trade Forex
Now that you know some important factors to be aware of when opening a forex account, we will take a look at what exactly you can trade within that account. The two main ways to trade in the foreign currency market is the simple buying and selling of currency pairs, where you go long one currency and short another. The second way is through the purchasing of derivatives that track the movements of a specific currency pair. Both of these techniques are highly similar to techniques in the equities market.The most common way is to simply buy and sell currency pairs, much in the same way most individuals buy and sell stocks. In this case, you are hoping the value of the pair itself changes in a favorable manner. If you go long a currency pair, you are hoping that the value of the pair increases. For example, let's say that you took a long position in the USD/CAD pair - you will make money if the value of this pair goes up, and lose money if it falls. This pair rises when the U.S. dollar increases in value against the Canadian dollar, so it is a bet on the U.S. dollar.

The other option is to use derivative products, such as options and futures, to profit from changes in the value of currencies. If you buy an option on a currency pair, you are gaining the right to purchase a currency pair at a set rate before a set point in time. A futures contract, on the other hand, creates the obligation to buy the currency at a set point in time. Both of these trading techniques are usually only used by more advanced traders, but it is important to at least be familiar with them. (For more on this, try Getting Started in Forex Options and our tutorials, Option Spread Strategies and Options Basics Tutorial.)

Types of Orders
A trader looking to open a new position will likely use either a market order or a limit order. The incorporation of these order types remains the same as when they are used in the equity markets. A market order gives a forex trader the ability to obtain the currency at whatever exchange rate it is currently trading at in the market, while a limit order allows the trader to specify a certain entry price. (For a brief refresher of these orders, see The Basics of Order Entry.)

Forex traders who already hold an open position may want to consider using a take-profit order to lock in a profit. Say, for example, that a trader is confident that the GBP/USD rate will reach 1.7800, but is not as sure that the rate could climb any higher. A trader could use a take-profit order, which would automatically close his or her position when the rate reaches 1.7800, locking in their profits.



Another tool that can be used when traders hold open positions is the stop-loss order. This order allows traders to determine how much the rate can decline before the position is closed and further losses are accumulated. Therefore, if the GBP/USD rate begins to drop, an investor can place a stop-loss that will close the position (for example at 1.7787), in order to prevent any further losses.

As you can see, the type of orders that you can enter in your forex trading account are similar to those found in equity accounts. Having a good understanding of these orders is critical before placing your first trade.

If you want to read more, see these frequently asked questions How does the forex market trade 24 hours a day?, Why is currency always quoted in pairs? and What is the value of one pip and why are they different between currency pairs?
 

StuartLaw

Newbie
Nov 19, 2015
135
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Mere khayal se ya broker pay depend karta ha account kholwana. Maine OctaFX join keya hua ha aur yahan sab kuch boht asan ha jis mai account open karna bhe shamil ha. Maine ECN account select keya ha jis mai sirf 5 dollar minimum ki requirement ha jo maine aram se puri kardi ha aur ab mai aram se kam kar rah hon low spread 0.1 pips, high leverage up to 1.500 aur aisr boht sare aur faido k sath.
 
Jan 8, 2016
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Kisi bhe broker k sath account kholwana boht hi asan ha magar muskil kam to ache broker ko dhundna hota ha aur yahan hi akar zada tar log galti kar bethte hain. Maine khud bhe FXCM ko join kar k galti kari thi past mai kiu k in logo ka tarika itna muskil ha k sirf expert hi shayad yahan bach sake warna naye logo k lia to boht hi muskil hojati ha trading karna in k sath.
 

StuartLaw

Newbie
Nov 19, 2015
135
2
68
Mai bilkul agree karonga Farhan ap ki baat se kiu k acha broker mil jai to sab kuch asan hojata ha to is hi lia mai to OctaFX ka hi batata hon sab ko kiu k ya mera khud ka tested broker ha aur itni achi service deta ha k in logo ne abhe tak 12 awards jeete hain sirf 4 saal mai jo boht hi bari achievement ha aur mere lia sab se achi baat ha k in k sath mai bank deposit kar sakta hoon asani se kiu k in logo ne SCB se allow kara hua ha khas tor pay Pakistani logo k lia.
 
Jan 8, 2016
280
0
716
Hume sirf wohi broker k sath account kholna chaiya jis se hum comfortable ho aur jis ki koi value ho market mai. Humne kuch time pehle dekha ha k Iron FX ne kitne logo ko scam keya to phir hume ise sikhna chaiya aur sirf ache brokers ko hi join karna chaiya.
 

StuartLaw

Newbie
Nov 19, 2015
135
2
68
Account kholna bari baat nahi ha magar ache broker k sath kholna ya main baat ha aur mere lia ya baat muskil thi magar jab se OctaFX ko join kara tab se ya bhe asan hogaya yahan hum aram se jis tarike ka account kholna chaiya kholwa sakte hain Micro se ECN tak sab yahan ha aur sath mai kahin aur facilities bhe hain to in sab se trading karne mai aur bhe asani rehti ha aur maza bhe boht zada ata ha.
 

DavidPiccolo

Newbie
Sep 13, 2015
198
1
318
Sahi kaha apne Stuart, ya to sirf 2-3 steps ka kam ha k hum broker ki web site pay jain aur register karlein ise hum phir trading kar sakein gay magar hume pehle demo istemal karna chaiya aur tabhi hi hume pata chale gi asli baat broker ki aur is hi waja se mai bhe OctaFX broker k sath kam kar rah hon jahan boht zada faida hota ha khas tor pay in ki conditions jese apne kaha aur is k ilawa sab se bari baat ha in ka 50% deposit bonus jo boht hi ala ha.
 
Jan 8, 2016
280
0
716
Forex mai sirf account kholna bari baat nahi ha magar kis k sath kholna woh sab se zada zaroori cheez ha dhyan mai rakhnie k lia aur is hi waja hume dekh k kam karna chayia warna scam ho sakta ha jese mere dost ko hua tha FMtrader k sath.
 

StuartLaw

Newbie
Nov 19, 2015
135
2
68
Mai bhe ya baat se agree karta hon k broker k sath account kholna Forex mai boht hi asan ha kuch hi dollar se ho sakta ha magar hume puri tara se prepare ho kar account open karwana hoga. Filhaal mai OctaFX broker k sath kam kar rah hon jo boht hi ala company ha aur yahan mujhe guide bhe keya in logo ne educational section se to ise mere lia trading karne mai aur bhe asani hogaye ha aur mai acha profits kama raha hon.
 
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