When you decide that you are ready to trade, remember that you have to create a Forex account firstly. This is for you to be able to trade currencies, and for this you should be aware of some factors before taking this step. As you can figure out, like the equity market, each Forex account and its services differ, so it is essential that you find the proper one. So here are some important elements you should consider when you choose an account.
Firstly, you must analyse the leverage, which is your ability to control large amounts of money using very little of your own capital. But remember that the higher the leverage is, the higher the level of risk. Depending on the account type, the amount of leverage is different, but the most commonly is 50:1. This means that for every dollar you have in the account, you can control a maximum amount of 50 dollars. So if as a trader, you have in your account $2 000, the broker can lend you $100 000 to trade on the market. Leverage is one of the best benefits in Forex market, but don’t forget it can cause you losses if the market moves against you. So choose wisely the amount of your leverage, because it determines the level of risk you are exposed to.
Secondly, you must know about fees and commissions. Another great advantage is that trading Forex si commission-free because you deal directly with the market, without asking for brokers help and intermediation. You probably ask yourself how market makers are still earning money each time you trade. It comes from the bid and ask, more exactly from the spread between these two. They capture the difference and when you open an account, try to find out the price moves spread that it has on foreign currency pairs you want to trade.
Another thing you must know about are the differences between Forex firms and their characteristics. They offer different accounts and services and they practice different fees above and beyond actual trading costs. So it is important for you to choose a reputable trustworthy company to go with.
These would be the main factors you should know when opening a Forex account. Furthermore, if you think you are not ready to open an account with real money, try firstly a simulator, a demo before trading for real.