It’s easy to start trading Forex and CFD’s, but there are a few steps that you need to follow first.
So if you’re wondering how to start online trading, we’ve put together the 5 steps you need to do so you can get started.
This includes important points that’ll help you get the most out of your trades. Let’s begin!
Open an online trading account
It may seem like an obvious step, but opening an online trading account for cryptocurrency of forex, is an important decision for you to make.
That’s because there are many online brokers to choose from, which is why you must find one that suits your needs the best.
Online brokers offer trading platforms where you can open a personal account. From the trading platform you’ll be able to trade Forex and a range of CFD instruments.
Financial CFD instruments available can include:
The instrument and asset range will vary by broker, so this an important thing to check before signing up for an account.
Other important things that are worth checking about a broker include if there’s a free demo account, the minimum deposit amount, and if there are any fees that you should know about.
These are all points that can affect your choice of broker, so they’re worth considering. When you have found a broker you like, the sign up process to open account is usually quite fast.
Most brokers will require you to provide your name and contact info, you’ll also be asked to create an account password. Normally the whole sign up process takes less than 5 minutes, and once your account is created you’ll be able to log in to the platform.
However before signing up for any account, its vital that you check that your selected broker is fully regulated, which brings us to step number 2.
Regulated Online Trading Platform
Regulation is very important because it protects you against financial scams.
Unfortunately there are fraudulent and unregulated brokers online that are looking to take advantage of naive traders.
For example, one common scam of illegal brokers is that they’ll prevent people from withdrawing their money. Instead they keep the money and disappear. It’s an awful thing to happen which is why you must protect yourself when trading online.
The only way to do that is by using a regulated broker. If a broker is regulated it means that they hold licences to operate and that they’re monitored by an official regulation authority.
These regulation authorities also make sure that brokers follow strict rules put in place to protect traders.
For instance, a regulated broker must let users withdraw their money at anytime. A broker must also keep funds in traders accounts separate from the broker’s business costs which are used to run the company.
All these rules are designed to protect you and other investor financially. That’s why when you look for a broker always check which regulation licences they hold.
Popular regulated authorities that you’re likely to see include:
- CySEC – Cyprus Securities and Exchange Commission
- FCA – Financial Conduct Authority (based in United Kingdom)
- ASIC – Australian Securities and Investments Commission
- FSA – The Seychelles Financial Services Authority
- FSCA – Financial Sector Conduct Authority (based in South Africa)
Using a regulated broker is the only way to keep yourself secure against fraud.
For your security all the brokers listed on our site are completely regulated and hold up to date licences.
Online Trading Platform Minimum Deposit
So now we’ve arrived at step 3 of how to start online trading, and we’ve reached a topic that can cause some confusion- the minimum deposit.
The minimum deposit is the amount of money that a broker will require you to fund your trading account with. It’s required because to start online trading you’ll need money in your account to open positions.
Regarding the minimum deposit amount, the figure will be different by each broker. It’s up to the broker to set their own minimum deposit, but normally it ranges from between $50 to $200.
It’s also important that the minimum deposit amount listed is sometimes only for the first initial deposit. For example, some brokers will lower the deposit amount after the first deposit has been made. This is why it’s important to always read the account conditions closely.
To make the deposit you’ll need to be logged into your online trading account. From your account menu you’ll be able to follow the brokers steps to deposit your account.
Steps normally included entering the amount of the money you wish to transfer as well as selecting which currency you want to use.
If you wish to deposit the money using your local currency, the broker will list which currencies they accept on the platform. Finally you’ll be asked to select the payment method which you want to use to make the minimum deposit.
Brokers usually have many payment methods available which can include:
- debit or credit card
- e-wallets (electronic wallets) – for instance PayPal, Skrill or Neteller
- bank or wire transfer
- local banking methods
Online Trading Account Verification
Once you have deposited the minimum deposit to your account, the next step of how to start trading online is the verification.
Verification is a step that all brokers are legally required to do to meet regulation requirements. Brokers need to verify accounts, so they can verify your identity and check that you’re the real account owner.
This helps to protect against fraudulent accounts. Many brokers will have the verification process built into the account creation set up, or their customer support team will get in touch to remind you to do it.
To verify your identity, the broker will need 2 pieces of identification from you:
- 1 proof of identity– this could be a copy of your passport or drivers licence
- 1 proof of address– this document needs to show your current address, so a utility/credit card bill would work
The broker platform will often have a place where you can upload the document copies. If something is not clear, always contact the broker’s customer support team who’ll be happy to help you.
It’s important that you complete the verification process because you’ll then be able to use the full features of the platform. This includes being able to place trades and make withdrawals.
For security reasons, many brokers will not let you make a withdrawal until you have finished the verification steps. This is for your benefit as they want to make sure that your money withdrawal is being requested by you, and not by a fake user.
Online Trading Strategy
So now imagine you’ve opened an online trading account with a regulated broker, paid the minimum deposit and verified your account. Finally your ready to start trading!
However, we wanted to mention one final key step that a lot of beginners forget about, and that is to consider a trading strategy.
Successful traders will use a mix of strategies to help them with their investments. Which is why it’s important that you find one that suits your requirements.
Here you can read about the main online trading strategies
A good way to test and try out your selected trading strategy is by using a broker’s demo account. Many brokers offer free demo account for their clients to use, they’re also a great learning tool.
A demo account will come with a set amount of virtual funds that can be used in the demo. So if you wish to test strategies without risking real money, it’s a perfect way to do so.
Many professional traders will still try out strategies in a demo account before placing a trade for real in the live account.
By following these tips and the 5 steps of how to start trading online, you’ll be well on your way to becoming an experienced trader. Being prepared and staying knowledgable is the key to being a professional investor.