Forex Trading - Requirements to Start Forex Trading

Just heard of Forex for the first time and probably asking “what do I need to start Forex? How much would be sufficient to start? Where do I start from……?” Well this is every beginner's heartache. Unfortunately important requirements are most times not included in the list of items required for Forex Trading in most answers to the questions above.

A lot of Forex Traders got very far in Forex without the required tools and they got to find out very late especially when series of losses began to occur. This is one of the reasons why beginners in Forex fail because they either ignored or never knew about certain vital tools or requirements they should have acquired when they started Forex.

We will state the required tools needed for Forex startup in order of importance and other relevant aspects. We will also explain the essence of these tools and why you would need them.

KEY
M = minimum; U = upwards; O = optional; N = novice; E = expert; I = intermediate; ** = must

S/N	ITEM	QTY	REMARKS
1	Fund**		This is an investment business which involves buying and selling of currencies therefore funds are the most essential. However funds required for Forex goes beyond the trading funds. You need extra funds for purchasing other materials like the ones listed below. For guidelines on the right funds for opening an account see this topic: http://fxtradecity.blogspot.com/2013/06/how-to-open-forex-live-account.html
2	Computer ** (Laptop or desktop) laptop is preferable for mobility reasons.	1(N,I) 2-3(I,E)	A minimum system specification with 1.7GHz(U) processor speed, 2.0GB RAM(M), Win XP/Vista/7/8 (latest OS preferable), 15” screen (U) for better view, high Audio/VGA & Accelerator Cards, 3 USB Slots(M), 150GBM hard disk space. Forex requires very good computer processing power to handle multiple charts efficiently and other day-to-day tasks. Adequate hard disk space is essential not just for the trading platform but for storing trading video files, tutorials in audio and document formats, history files, and other Forex materials. Some incidence of slow trading platform performance, crashes & freezing is caused by low computer resources. Fairly used PCs should be avoided except it has been tested to be in very good state. A single computer is sufficient for Forex Trading. However multiple screens or PCs is recommended for those who wish to simultaneously monitor several platforms, use advanced charting tools, and view multiple accounts.
3	Internet **	2 (M,O)	This of course is an important requirement. A single internet connection might not be sufficient especially for regions with erratic or poor internet connectivity. Wireless internet connectivity is preferable due to mobility, and wide variety of options. Internet LANs comes with some disadvantages but speed is fairly better than wireless. Proxy configurations and firewalls are main issues with LANs in corporate network. Most Forex signal services and some EAs/Systems do not work efficiently with Proxy Connections on LAN. It’s better to subscribe for quarterly or yearly internet subscriptions. It’s a good planning method that saves subscription cost.
4	Forex Tools**		This goes further than the tools you’ll find in your regular MT4, MT5, or TradeStation trading platform. You will need the following categories of Forex tools: Analyzing Tools – required to analyze trade results & setups. e.g. spreadsheet apps. Charting Tools – needed specifically for drawing trade setups and analyzing pre and post trade events. Simulation Tools – very essential for designing trading strategies, perfecting trading strategies, analyzing past trades, test trading systems and strategy offers, e.t.c. e.g. Forex EA Analyzer, Strategy Tester, e.t.c. Utility Tools – as the name suggest you need them to ease your trading experience. E.g timers, world clock, e.t.c. Trading Tools – custom indicators, scripts, supplementary chart tools, EAs, news tickers, e.t.c.
5	Smartphone(O)	1-2(O)	If you are the business enthusiast or always on-the-go then a Smartphone  will be a very good handy tool to monitor your trades. Most Forex services and platforms are supported on Smartphone’s especially android operated Smartphone.
6	Satellite/ Cable TV Network	1	This is a must for those who love the fundamental approach in trading Forex. It helps in keeping you updated with the latest economic events in the world that drives the Forex Market. There are mobile gadgets, which has Satellite TV, and streaming news capabilities. You can install satellite TV services on your computer or sign up for online Forex live news as an option.
7	Printer	1	Print monthly statements, Forex software guidelines,  trade results, training materials, e.t.c.

Some of the items listed above are optional but essential; others are more useful for advanced Forex traders.

Visit FXTradeCity’s Forex Resources Page for links on Item 4 and other items you might need.

Do not be so bothered if you are not be able to source for some of these items immediately but ensure you try your best to get some tools on  item 4 (Forex Tools). Also don't compromise with item 1 (Funds) else you’ll find yourself gambling rather trading.

Get more information from your EA backtest & know the true performance	Create your own Expert Advisors or Signal Alert Indicators for MT4	Q Build new automated trading system for any market or timeframe TY	RE A profitable automated strategy for EURUSD MARKS

How to Open A Forex Live Account

Opening a live account in Forex can be a tedious task for beginners especially without a guide for the first time. Opening a demo account is quite easier due to the virtual nature of the account. 

Most brokers adopt the same principle, and requirements for opening live accounts, except for some who request extra documents due to their country’s financial regulations, which demands more verification of the applicant's identity for security purpose. 

Before we go further lets consider an important checklist below. 

CHECKLIST - What you need to verify before considering

opening an account with a broker. 

1. Is my country amongst the eligible countries allowed to open a Forex account with the broker? 
2. Does the broker allow payment options available in my country's financial institution? Can I make withdrawals with the withdrawal options  being adopted by the broker?
   
3. What are the fees required to deposit and withdraw from the broker and its custodian bank?

The checklist above is the first thing to consider before deciding to open a live account with a broker. 

For now we’ll assume you must have decided on the broker you intend to open a live account with. 

The steps below on how to open a live account can be applied to other Forex brokers.  
  
Step 1. What kind of account should I open? 

This is an important aspect you need to know before 

opening a live account. There are three major kinds of Forex accounts available by all brokers. I’ll explain them to help you know, which account is appropriate for you. 

• Micro account

This type of account is best for beginners in Forex. It is ideal for participants who have low capital to trade Forex. Very little risk is involved due to the micro nature of the account. The common leverage size is about 400:1, with a minimum of $100 opening balance. 

• Standard account

This account is meant for traders with significant high capital than the micro account. Experience in Forex is a criteria to successfully trade with an account of this nature. The leverage involved here has a higher impact than the micro account. Most brokers usually request a minimum of $2,000 or $5,000 or as much as $10,000 to $50,000 to open a standard account. The common leverage size is about 100:1 with 100,000 trade size.

• Mini account

A mini account is an account appropriate for both beginners and experts in Forex. It has the capacity to control one tenth of a standard account (i.e. $10,000). It has a common leverage size of 200:1 with $500 or higher opening balance and 10,000 trade size. 

It is important to note that the lot size varies according to each Forex broker. Apart from these common types of account, there are proprietary Forex account designed with unique features, and specific services.

Step 2: The Required Documents 

It is very important to know the broker's required documentations. It would be a waste of time to fill the live account form and get to the documentation stage only to learn that a particular document cannot be produced or is not available in your locality or country. 

The basic documentation most brokers would require are:

Proof of legal identification. Your national driver’s license or international passport are the best for this.

Proof of legal address. House rent receipts, and utility bills stating your house address are acceptable.

Bank statement. Not all brokers require this except for further verification purpose or alternatives.

Utility Bill Receipt. Some brokers require this to further verify your legal identity and proof of social responsibility. 

Step 3: The Live Account Form (Individual Account)

The following details are usually required to be filled in the live account form online or offline. 

Personal Information: Ensure that the information you state here matches with the details in your bank account. Information required here are the applicant's Title, First Name, Middle Name, Last Name, Date of Birth, e.t.c.

Contact Information: Your Email Address, Country, Phone Number, City, Street Name, Postal Zip Code, e.t.c.

Investor Information: Currency type, net worth outside your personal income, your annual income, employment status, your industry, e.t.c. Brokers require this information to advise you and indemnify themselves in case you do not meet the financial requirements to invest in Forex.

Trading knowledge: Your experience level in Forex, CFDs, Options, Futures, Stocks, e.t.c. Brokers use this information for advisory purpose. 

You might be required to download a form containing risk disclaimer notice and other conditions of service or agreements for your signatory. After signing the form, scan it and email it back to the broker. This form serves as a consent form by the applicant indemnifying the broker. 

All other documents should be scanned and sent to the broker as well. The broker will screen your application, and the documents submitted. You will be informed if your application is successful or not. If your application is successful, a confirmation message stating details of how to fund your account would be sent to you. 




DEPOSITING FUNDS INTO THE LIVE ACCOUNT 

The steps here vary from country to country but the principles are the same. The steps can be applied for other banks in other countries. We’ll assume you havealready downloaded the trading platform. The trading platform before now should be on a demo account or blank if it’s a new one. You don’t need to download another trading platform for a live account if you already have a demo account from the broker. When your application gets approved, you will be given details of the live server ip address and login details. 


Step 4: Identify which deposit option is preferable for you.

Each deposit option comes with its attendant fees and hurdles. Some options are faster, some are costlier than others, while some are more secure. The credit card option is currently being banned by some financial  regulatory agencies as a deposit option. I personally will not recommend it. The bank wire option still remains the best and secured option to deposit and withdraw funds from your Forex account. 


Step 5: Open a foreign account (domiciliary account) 

This is required for wire transfer into the broker’s bank where your trading account would be credited from. If you already have one then skip this step. 

Domiciliary account is an account that holds international currency usually in dollars, pounds, or euro. It allows you to make international transactions from your home country. You need to have a current account before you can open a domiciliary account. 

The major requirements needed to open a domiciliary account are:  

1. Duly completed application form.
2. Copies of acceptable means of identification (Driver's License, International passport, National I.D Card, and any other acceptable identification document deemed fit by the bank) Passport photograph.
3. Two (2) duly completed and suitable reference forms.
4. Utility bill issued within the last 3 months.

The account must be funded with the minimum deposit in the foreign currency to activate it for use. 


Step 6: Get the required deposit currency 

Most Forex brokers adopt the universal currency for deposits, which is the US Dollar. Other currency deposits like pounds or euro is also accepted. You need to convert your local fund (i.e. the funds you intend to deposit into your live account) into the deposit currency. You have to get the latest exchange rates before going to the currency market (i.e banks or bureau-de-change) else you might be short changed.  The total bank charge i.e your local bank’s fee and the broker’s bank fee should be added to the total amount you intend to purchase from the currency market for deposit into your live account. Most traders make the mistake of transferring only the capital needed to trade forex but later get lower figures in their live account because the banks would have taken their fees before crediting their Forex account. So inquire from the broker about the fees that will be deducted from the total deposit. Also inquire from your local bank about the necessary fees required to make a transfer.  


Step 6: Get the broker’s bank account details (Wire Transfer) 

This should have been sent to you after confirmation of your application. I strongly recommend you request for the broker’s bank account details from the broker’s account department. Take the account details to your bank and use it to fill the Foreign Transfer Account Form. 

Wire transfer takes less than one (1) working business week or more to get credited to your trading account. 


For further guidance feel free to contact us.

8 Requirements for Developing Forex Winning Strategies

1. HAVE A POSITIVE OBJECTIVE

Objective means “The goal intended to be attained (and which is believed to be attainable)” – TheSage’s English Dictionary and Thesaurus. 

All Forex traders have a common objective – INVEST TO GENERATE INCOME. The reason why most people decided

to invest in Forex happens to be the objective behind their trading strategy. So if you decided to invest in Forex with a wrong objective or motive then your trading strategies will certainly fail. If you want to develop a winning strategy you must have the right objective and mind frame. You must put off all unrealistic and wrong motives behind your intentions as regards the reasons why you got into Forex. Your objective is the psychological force that drives your passion in whatever you do, so it has to be right. A positive objective for a winning strategy must have the following attributes: 

     a. Not in a hurry to get rich quick i.e. gradual but steady

         and upward growth logic. 

     b. Long term approach logic. 

     c. Right motives and intensions. 

Unfortunately most traders have a wrong perception of the returns of investment in Forex before they got in. Many invested in Forex for wrong reasons. Whatever got you into Forex will play a major role in determining the kind of trading strategy you will adopt. This also will determine your success or your failure in Forex. Therefore if 80% percent of traders loose in forex, this could likely mean 80% of Forex trader’s objectives or mindset is wrong.

2. ACCURATE ENTRY/EXIT LOGIC “Eat the pie while it is

    hot and ready to serve”.

What good is a strategy that gets you 20 pips when the rally was supposed to be 100pips because of a late entry? What good is a strategy that gets you as high as 150 pips but exits at 20 pips or negative because of a late exit? An ideal winning strategy should get you in and out at the right time with best profits possible. A winning strategy must have at least 90% Accurate Entry/Exit mechanism. 

Perfection with consistent practice is the key to achieving this feat. Using very good simulating tools to test your strategy will help to fine tune and show you precise entry/exit points that would give you ideal profits. The type of indicators you use would also determine the accuracy of your entry and exit points. Don’t use lagging indicators as the major decider for trade entry or exit. They are very good in trend systems or better when combined with other indicators. You need to know how to combine trend, oscillating and other linear indicators to get an accurate entry/exit system in your strategy.

3. Identify the best Take Profit/Stop Loss Settings 

A winning Forex strategy must have good Take Profit and Stop Loss settings. You must know the highest number of pips a currency pair can get to in a session or at a particular time as well as the lowest. 

Your personal trading goals i.e. how many pips you want to achieve in a day, week or month should determine your TP/SL in your trading strategy. Consistent testing of your strategy with Forex simulating software would help you to get the best TP/SL for a winning Forex strategy development. 

4. Control! Control!! Control!!!

Any forex strategy without a control mechanism will fail someday. You should be able to design control mechanisms against likely and unlikely uncertainties. 

Also for you to benefit and maintain a winning trading strategy the following should be kept under strict control:

a. Emotions (anger, anxiety, excitement, e.t.c) 
b. Fear (of mistakes, losing a trade, uncertainties,
    decisions, e.t.c.) 
c. Impatience (trying to meet a month’s target in one day,

    can’t wait, e.t.c) 
d. Anxiety (panic, worry, nervousness, e.t.c.) 

There are times when certain market conditions toy with your senses, and emotions. At such times fear and anxiety comes in, and if not properly handled, you will likely make costly mistakes through wrong decisions. The ability to control emotions, fear, anxiety and impatience would complement your forex strategy. 

Nothing good comes out from the best trading strategy when you are under the control of fear, emotions, anxiety and impatience. 

5. Currency Pair Choice 

Currency pairs are unique in combinations and reactions. Similar effects are sometimes observed on certain currency pairs during an economic impact despite the differences in the pairs region. 

Every currency pair has a unique pattern, and therefore

should be traded differently. Some patterns are strong during the London Session or Asia Session, other currency pair patterns could be bearish, zigzag, bullish, uncertain or docile at a particular session or duration. 

Currency pairs due to their unique nature cannot fit into all types of strategies. Therefore pick a pair that fits perfectly into the logic of your strategy. You can also test your strategy with all sorts of parameters using the major currency pairs first. Compare the results, and identify the currency pair with the best performance results. Forex simulators and back testing tools can help you to decide the best currency pair that would give you the best performance and less drawdown. 

See: Forex Tool That Analyzes Better Than MT4 Strategy
       Tester

6. Ability to Recover From Loss 

There would always be downtimes in Forex, therefore every winning strategy should have a means of recovering back from loss or series of losses. Some schemes like doubling the lot size, martingale, and hedging are used to regain sharp losses. These schemes are good but can be very dangerous too. Trade mechanism or logic that increase and balance lot size as the need arise is preferable to be included in your strategy. 

7. Stress Test

This is a major requirement for developing Forex winning strategies. You can think of it as the lab or test ground where the strategy would be analyzed for unknown bugs, efficiencies, possibilities, capabilities, reliability, and likely returns on investment. 

A very good strategy written down on paper or your notepad is useless until it is has passed the stress test. There are different testing tools available for developing strategies. Some have the capacity to test and turn strategies into Expert Advisors, some have more advanced features than the regular MT4 strategy tester, while others produce deeper analysis. 

8. Good Broker 

This is the platform where the strategy would be used. It is wise to develop your strategy or get details of what you want to achieve from your strategy before choosing a broker. Your strategy could be in the form of scalping, hedging, martingale, crossover, price action, timeframe combination, news or breakout system. Some of these strategies are restricted by some brokers, and some have been banned or reviewed by some Forex Regulatory Agencies. 

Also some brokers offer proprietary platforms, which could be very good or bad for your strategy. The price feed, and the state of technology a broker utilizea can either affect your strategy positively or negatively. A true ECN broker’s platform could work better with your strategy than an STP broker’s platform (vice versa). 

Talk to your broker about your strategy and find out if their policies and trading platform supports it.

These are the 8 requirements needed for designing a winning Forex Strategy. 

Have a better requirement not listed here, share with us, leave a comment.

About Onyebuchim C. Obike I am an IT specialist in Software Programming, Networking & Telecommunication. My quest for an alternative source of income led me into Forex since 2005. My encounter in Forex over the years made me to develop a site where traders can get reliable and effective Forex Resources & Tools, that would make them successful traders. I prefer combining Technical & Fundamental techniques in trading. Follow me on facebook: www.facebook.com/fxtradecity