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Over the past few years, forex brokerages have witnessed a surge in new accounts. Indeed, the deregulated nature of forex trading, in conjunction with tight spreads and the leverage tool, has whetted the interest of various traders. No joining fee is required whilst the registration is fast and straightforward. However, to conduct transactions in live conditions, traders need to fund their accounts beforehand. There are many deposit ways you may consider, depending on various criteria.
Facts About Depositing Money in Forex Accounts
Right after successfully registering for an account at no cost, you may then open multiple real and demo accounts. No monetary requirements are imposed on paper trading as it just simulates real-life market conditions to help you get accustomed to the market and test trading strategies. When opening a demo account, you will choose from available amounts of virtual money and leverage.
Meanwhile, live accounts need a certain deposit so that traders are eligible to participate in the market. Various brokers even request clients to verify their accounts before funding by submitting personal credentials as follows:
- A photocopy of any given identity documents (e.g. passport or national identity card);
- A photocopy of any documents proving the client’s residential address (e.g. utility bill, bank statement or certificate of residence);
- A photocopy of both sides of credit/ debit cards if the client finances his account by those cards.
Other brokerages still allow their clients to send these credentials when they would like to withdraw profits from trading accounts.
The deposit process is instant and simple. Going to the Deposit page in the Personal Account section, you might choose a desired deposit amount and currency in which you prefer funding – commonly USD, EUR and GBP prior to picking a payment method. Finally, you only need to wait for receiving the money. Depending on the chosen deposit method, the time for money reaching your forex account can be long or short.
Another consideration is the fees. Multiple brokers often cost you nothing to fund your account. Any incurred expenses may come from payment providers; for example, if you wire money, the local bank may impose some fees of currency conversion or money transfer. So please note that you should contact providers to obtain further information before making any deposit.
How much to fund the trading account is of great concern to numerous traders. Forex trading activities are not under the regulation of formal exchanges or clearinghouses, but rather the over-the-counter (OTC) market. The forex-related legislation is mostly enforced on brokerage. In the meantime, there have not been stringent policies to control the currency speculation of retail traders in the forex market. Accordingly, no minimum capital is required. This means speculators may invest their desired amounts and use the leverage tool to augment their trading capital.
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In reality, forex brokers differently set the minimum deposit. Several companies regulate at least US$250 whenever you fund your account. The amount can be lower, for instance, at US$100. However, legitimate brokers now advise their clients to make an adequately large deposit to make their trading more flexible. No beginner ensures they will obtain financial returns in the first trades. Therefore, a reasonable amount will secure their reserves against depletion.
Furthermore, many brokerages now provide different account types with accompanied benefits based on their trade size. Particularly, a micro account at FiNMAXFX starts from US$250, whereas the minimum deposit of a standard account is US$5,000. The amount even reaches US$100,000 for a VIP account.
How do I Deposit Money in Forex Trading?
Most brokerages now support their clients to deposit money in forex accounts by bank transfer, credit/ debit cards and e-wallets.
By Bank Transfer
Adopting this method to fund accounts, you will be contacted by an account manager to obtain the broker’s bank details that involve the beneficiary name, the account number, the bank name, IBAN and SWIFT code. Depending on the trading account currency, the broker’s representative would send you different pieces of bank information.
After receiving such particulars, you may ask the depository bank for either giving you a wire transfer form or guiding how to conduct money transfer on their online banking system. As long as the brokerage collects the fund, that amount will be credited to your account and kept segregated from the broker’s money used to manage business activities. Although it takes a little time for the broker to process your deposit request, it does not mean your trading account will immediately receive funds afterwards. Primarily based on the processing time of the chosen bank, the deposit procedure may take 3 to 7 business days for completion.
Though, not all banks are accepted for money transfer. Several forex brokers would decline banks with low credit ratings. Thus, you had better contact your account manager to ensure your bank is qualified. Besides, transactions from the third party are not permitted, which implies your bank information must be identical with that of the trading account.
Again, you may pay no charge for funding the account but other arisen expenses should not be overlooked. Some brokerage companies now may offset transaction fees if deposits reach their required amount. All you need to do for reimbursement is submitting a photocopy of your bank statement or other proof to confirm your transferred money via email and awaiting the refund.
By Credit/Debit Cards
Another payout method is credit/ debit cards. Unlike wire transfer, funding forex accounts by those cards will link speculators to another page for writing up their card information entailing the card owner’s name, the card number and CVV. Besides, the time for executing transactions by cards can be shorter than by bank transfer, depending on the processing speed of card issuers.
Despite the safety of this option, not all cards are accepted. Normally, Visa and Mastercard are commonly allowed to finance trading accounts by most online brokers. Meanwhile, American Express or DinersClub International is much less prevalent. Beyond that, you should consider whether the broker charges any fees for credit/ debit cards or any documents are required for this payment method.
Various brokers only allow credit/ debit cards from trading account owners to foil money laundering. Nevertheless, the minority of companies still enable customers to borrow credit cards owned by others for the deposit and withdrawal purpose although this act may impose traders to financial identity theft. Hence any customers are suggested to use their own cards for funding accounts.
The introduction of digital payments has facilitated money transfer more than ever before. Today, forex brokers give customers a wide selection of e-wallets including Paypal, Skrill or Neteller. Provided you choose to deposit money in forex trading via e-wallets, they also lead you to a separate page where you may provide private information to process your deposit request. Those digital methods are considered fast and convenient. They shorten the time for money to be electronically delivered.
Determinants of Choosing Deposit Methods
There are various considerations before you fund your account.
When it comes to money transfer, security is always the top priority. Of all mentioned methods, bank transfer is highly recommended by online brokers and also a favoured option for traders in light of its safety and credibility.
Wiring funds occurs between banks of speculative traders and brokers. Usually, banks are prominent for their heightened security measures to hinder customers’ accounts from financial hijacking. Accordingly, when clients use their online banking services, they will be secured by multi-factor authentication, anti-virus programs, SSL (Security Socket Layer) encryption and other methods. Besides, as clients conduct face-to-face transactions, their bank records are also strictly confidential. This is because banks are obliged to stringent policies and regulations by governmental bodies.
Credit/ debit cards are also a safe option because card providers also adopt different measures to secure their clients’ online transactions. However, if you carelessly disclose your card account (e.g. CVV or the card number) to others, you will be vulnerable to financial crimes.
With the support of biometric authentication, passcode and advanced encryption, digital payment methods can guarantee the safe deposit of your money in forex accounts. Compared to two given methods, e-wallets are less secure though. Completely relying on the online platform, digital payment apps can easily become the target of cyber-attacks.
As earlier stated, funding accounts by e-wallets is obviously faster and more convenient. Conversely, it takes more time for banks or card issuers to process deposit requests by wire or credit/ debit cards.
Two types of fees you should concern entail deposit costs and incurred expenses by payment providers. Most forex brokers do not charge their clients for funding their accounts. Nonetheless, transaction fees for currency conversion or money transfer by banks can be higher than by credit cards or e-wallets. Even when your depository bank uses the service of any intermediary bank, the fees may accelerate.
Convenience for Later Withdrawals
You may choose multiple payment methods for financing accounts. Still, please bear in mind that brokers merely allow clients to take out incomes by the way they used to fund their accounts.
For example, you make the first deposit by the credit card and then wire funds for the following investment. When you have some winning trades and wish to draw profits out, the withdrawal by the card will be processed first before the wire option is reviewed. Should the card be cancelled or lost, it will take time to receive a new one from the card issuer. Plus, you cannot take out money by bank transfer until the execution of bank transfer. Therefore, you should choose a deposit method convenient for withdrawing money afterwards.
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