How To Open A Trading Account Online 2018 – The Steps

A trading account is used as a way for an investor to purchase stocks or to make investments. A trading account can also hold cash, securities and many other types of investment. Before opening a brokerage account, it’s important to ask yourself what sort of investment you want to own. If you want to buy stocks and exchange-traded funds, you may need to open a trading account. Online trading accounts vary in fees and can charge little or nothing at all. This is a good option for those who want to be in charge of their own investing strategy as opposed to using a personal broker.

  • Criteria to open a trading account
  • Steps to open a brokerage account
  • Types of Trading Accounts
  • What makes a good online trader/investor?
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How to Open a Trading Account – Assessing The Criteria To Open A Trading Account

Every broker operates on the rule: “Know Your Customer”. It is important that the brokerage firm determines the investor’s ability to handle risks.

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It is important that you know your risk tolerance level before you trade. It is usually divided into four basic concepts:

Aggressive Growth:  This means that the investor is willing to take extra risks in order to achieve extra rewards and willing to trade or invest in unpredictable securities.

Simple Growth:  This level means that you want to grow your money in the trading account while preserving the initial capital as much as possible and you can get to set particular levels of risk.

Income Risk Level: This level shows that you intend to use the profits that you have gained from the account as an income source. Traders and investors will pool in small amounts of money towards the end of the month which means that the account balance will remain the same.

Capital Preservation: The most conservative level and it involves the investor using the account for only saving and protecting the existing assets. There tends to be very little risk at this level and may even consist of guarantees.

Top 3 Forex Broker Comparison

1
of 5 Forex Broker Forex.com
Currency pairs 80 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 50
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
2
of 5 Forex Broker TD Ameritrade
Currency pairs 80 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 0
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
3
of 5 Forex Broker Interactive Brokers
Currency pairs 100 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 10.000
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.

How to Open a Brokerage Account – Choose Broker or Firm

To open a trading account, the first thing you do is find a good broker who will take your orders in time. This is because even a few minutes can change the market price of the stock is crucial. Therefore, a broker who acts on time is most efficient to work with. A firm with a good trading platform that is easy to operate is also a feature to be considered. A good trading platform is one that is reliable and well regarded. Also, the trading platform should have useful features like a live market watch, stocks technical analysis stock screener, and advanced portfolio tracker among others. Some give discounts on the basis of the number of trades conducted. The fees charged when the firm processes your order should be fair, however, good quality services may need higher than average charges which makes it important to compare the brokerage rates. The trader needs to register with the firm by signing their agreements or accepting terms and conditions set by firms. Knowing the type of brokerage account you need, will play a great role in determining the type of broker or firm you will open an account with. Also, know what features matter to you.

Choose the Type of Account

When opening a brokerage account, the trader has to identify the type of account they are going to open it depends on the amount of investment and skills; there is a real account and a demo account.

  • A demo account is mostly used by new investors to allow them to understand the platform and its various features, and to also start learning by testing strategies in real conditions. The transactions made through this account will not allow you to generate real gains, but you will also avoid real losses. The account is fictitious but the prices displayed and their evolutions are those of the market displayed in real time. Hence the trader does not risk exhausting his capital with a losing position. Some are time limited or have fixed and nonrenewable virtual capital.
  • The real account is opened when a trader has fully decided and has acquired enough knowledge of the market. Thereafter, a first deposit is made to activate the account. There are different types of real accounts. The premium account is suitable for large investors because it requires a large amount of first deposit. It’s also suitable for experienced traders who invest a large amount of money. For small investors, there is a mini forex account which requires minimum capital to open. It can also be used to learn the trading strategies from the experienced traders without having to involve a large amount of money while learning the from real market.

Consider the Services Offered

Apart from the price, there are other things that you must consider when picking the right broker. These steps will help with that consideration:

  • Access to Research

Many brokers offer stock ratings as well as access to third party research from other firms.

  • Foreign Trading

There are some brokerages accounts that can allow you to convert money in your account into foreign currencies thus you can trade on international stock exchanges. If you consider this as being important, make sure that your broker allows for this feature.

  • Trading Platforms

The different brokerages offer a wide variety of trading software and mobile applications and most of these allow people to test out their platforms before they can open an account. It is important that you read some reviews of broker’s mobile apps if you consider being able to access your account on the go as being important.

  • Convenience

Some brokerages have large networks of local branch offices you can visit and get one-on-one investment guidance. Others don’t have this feature. Also, brokerages operated by banks provide customers with the ability to link their brokerage and checking accounts, making money transfers between accounts in real-time and others will even offer some type of relationship discount for this.

Form Registration and Authentication

The fourth step on how to open a trading account is the registration of forms and authentication. The trader is directed to a registration page after choosing the type of account they want. They then complete their personal details like names, country, phone numbers, date of birth, citizenship, email address and approximate annual income or net worth. Other additional information may include market experience and job position. It’s important to provide the correct information in terms of investing experience, as this will have an effect on the risk rating. If you provide wrong information when opening a brokerage account you could expose yourself to more risk than you can manage which could lead to losses of the funds. Banking data is also required for the authentication of the account to be done. Some platforms sometimes ask for copies of identity documents. After completing all the information and submitting the required documents, the trader is asked to set a security code to secure the account. Your application will be verified by the brokerage to ensure the information and supporting documents tie up. Final verification might take place with a phone call or through video conferencing on Skype or a similar app.

Funding the Account

To allow you to trade, your trading account must be activated by making a deposit. This is done after clearing everything you need to know with the brokerage firm. The amount may differ depending on each broker or the type of investment the trader wants to engage in. The type of account the trader has can affect the figure because some accounts require a large deposit, such as premium accounts. Others, like a mini forex account, require less. Most brokerage firms offer this service during business hours and traders can send a check to fund the account. If it’s going to be a personal check it has to have your name on it. To open an account, you can use existing stock bond certificates or a bank deposit. This is usually done through a form called the Automated Customer Account Transfer (ACAT). Credit cards can be used by making a transfer or through an online payment solution. The trader should have enough risk capital to invest. It’s also advisable to the trader not to give up easily but take time to learn the market trends. After making the first deposit you may choose what you want to happen to the balance of your account. This is called the idle cash, which may also remain after the purchase of stock. Consult with the broker to have it put into different fund types in order to earn interest and generate some income. These funds should not remain idle.

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Try out the tools and services offered

The final step on how to open a trading account is trying out the different tools and services that a brokerage offers. Take time to learn the major tools and pages on the account. Work out to see your current position as a total and individually. Before making a purchase you should do research to make sure it’s a sound investment. When you are ready, make your first order and wait for the broker to complete it. Some of the services that a brokerage firm provides include offering information on current quotes, selling stocks at the highest price possible, continued real time stocks update as well as dealing services.  Under the dealing services, the services are divided into three sectors. There is the advisory dealing service, where the brokerage provides their client with advice on their stocks and transactions. Also, the brokerage can offer discretionary services whereby the brokerage evaluates their client’s investment goals and based on this information, they transact on behalf of the client. And finally, there is the stock brokerage firm accounts. Accounts are a crucial aspect of any trade as they keep the investor updated on the state of their investments.

Characteristics of a Good Trader

Before you can open a trading account, there are some basic traits of a good trader that you must possess without which your success at online trading will be less likely. Here are the basic qualities of a good online trader:

Learn from Losses

Every trader loses money and it essential that you learn to accept this without panicking. Everyone who chooses online trading loses money but what sets apart a successful trader from those who aren’t is the ability to keep going and learning from the incurred losses. You should use the loss as a learning opportunity to determine where you can move your strategy on, or adjust to reduce future risk.

Open to Learning

The market changes every day, and new trends, strategies and ideas spring up from the industry. Ensure that you keep up with these changes and that you can adapt and learn new things on how to open a brokerage account and trade on a daily basis. Also, sign up to relevant news and blog sites to have the latest details about the market at your fingertips.

Follow an Individual Trading Plan

Learn to think for yourself when it comes to trading. While knowing what is going on in the news and media, you must make sure that you are making your decisions and not be influenced much by what is going on around you. Learn for yourself and be accountable for your choices and actions.

1
of 5 Forex Broker Forex.com
Currency pairs 80 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 50
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
2
of 5 Forex Broker TD Ameritrade
Currency pairs 80 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 0
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
3
of 5 Forex Broker Interactive Brokers
Currency pairs 100 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 10.000
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
4
of 5 Forex Broker Oanda
Currency pairs 60 Currencies
Max. Lever 1:50
Trading size Micro-Lot
Minimum deposit $ 0
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
5
of 5 Forex Broker Ally Invest
Currency pairs Currencies
Max. Lever
Trading size Micro-Lot
Minimum deposit $
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Risk warning: Capital can be lost. Terms and conditions apply.
1
of 14 ETF Broker Placetrade
ETFs w/ discount 0
Custody fee $0
Min. deposit $ 5.000
Trading from $1,50
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Risk warning: Capital can be lost. Terms and conditions apply.
2
of 14 ETF Broker Betterment
ETFs w/ discount 0
Custody fee 0.25%
Min. deposit $ 0
Trading from $0
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Risk warning: Capital can be lost. Terms and conditions apply.
3
of 14 ETF Broker Lightspeed Trading
ETFs w/ discount 0
Custody fee $0
Min. deposit $ 10.000
Trading from $2,50
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Risk warning: Capital can be lost. Terms and conditions apply.
4
of 14 ETF Broker Robinhood
ETFs w/ discount 3,000
Custody fee $0
Min. deposit $ 0
Trading from $0
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Risk warning: Capital can be lost. Terms and conditions apply.
5
of 14 ETF Broker Firstrade
ETFs w/ discount 700+
Custody fee $0
Min. deposit $ 0
Trading from $0
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Risk warning: Capital can be lost. Terms and conditions apply.
1
of 11 Stock Broker TD Ameritrade
National fees $6,95
Custody fee $0
Intl. fees
Dep. Protection $500.000
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Risk warning: Capital can be lost. Terms and conditions apply.
2
of 11 Stock Broker SogoTrade
National fees $2,88
Custody fee $0
Intl. fees
Dep. Protection $500.000
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Risk warning: Capital can be lost. Terms and conditions apply.
3
of 11 Stock Broker Placetrade
National fees $1,50
Custody fee $0
Intl. fees $1,50
Dep. Protection $500.000
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
4
of 11 Stock Broker Ally Invest
National fees $3,95
Custody fee $0
Intl. fees
Dep. Protection $500.000
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.
5
of 11 Stock Broker Firstrade
National fees $2.95
Custody fee 0
Intl. fees $0
Dep. Protection As per SIPC guidelines.
Go to Broker
Risk warning: Capital can be lost. Terms and conditions apply.

Conclusion:

How to Open a Trading Account Online

Traders, especially those who are new to the market, should not time the market. This is because more people invest whenever there is an increase in price, and when booking profits sale is ongoing, the price falls quickly. Also, before investors start online trading, acquiring some form of technical knowledge and fundamental analysis will benefit and help the trader understand oscillators, averages, and pattern and trend lines to make informed decisions. It should be noted that investors should avoid selling the stock immediately the price starts to decline. It is equally important that an investor has reasonable expectations. This is because in trading, a lot of patience is required and you don’t expect to see the results of your investment overnight. There are ups and downs of this investment type and thus the need for investors to be familiar with how it operates. Trading can give you great returns as long as you take the time to learn the market tends and do a good analysis before opening any trade.

 

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