Currency Trading Account

Have you fallen prey to Forex or Currency’s charm and likewise wish to try it, the first thing you’ll require is a Currency Trading Account. 

Currency Trading is quite an appealing prospect and reportedly sees a daily trade of nearly $5 Trillion. The significant increase of currency trading brokers has resulted in a reduction in costs to manage an account.

Currency Trading Account Meaning

A Currency Trading Account serves the purpose of holding the stock of your foreign currency for trading. 

By and large, Currency Trading Account is employed with the motive of making money by trading currency for another depending upon the need or demand in the country of their choice to conduct trade.

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Forex Trading Account Types 

Largely, there are two types of forex trading accounts in India.

• Standard Account – Also, known as Personal Accounts, this type of forex trading account is managed by an investor on his own. An investor acts upon his own will for participating in any trade. 
• Managed Account – These are accounts managed by brokers for clients with huge investment capital. Managed accounts are managed by a broker on behalf of an investor. The account holder doesn’t have a say in the trading decisions.

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Open Currency Trading Account

To start forex trading in India, you need to open a forex trading account for which you have to find a broker. Subsequently, brokers will require certain documents to complete the registration process. 

Once you have a broker, next comes choosing the type of account you wish to set up. Choose from the various options at your disposal. 

Micro/Mini trading accounts are the safest bet for a new entrant depending upon the investment capital, while one can always opt for a managed account, the downside of which would be the deprivation of liberty to transact on your behalf.

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Currency Trading Account Requirements

Setting up a Currency Trading Account requires documentation, which can vary from broker to broker. However, the process primarily requires submission of the following documents: 

• Account Opening Form
• Identity Proof – Aadhaar Card / Driving License / Passport / Voter Card / PAN Card
• Address Proof – Can be same as Identity Proof where the address is mentioned / Electricity Bill / Ration Card / Telephone Bill / Registered Rent Agreement
• Six months bank statements or copy of annual accounts/copy of ITR / current 1-month salary slip

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Forex Trading Account Login

Further, upon submission and In-Person verification of the required documents, you will receive an email intimating you the instructions to activate your account. 

Once you follow the steps to complete the activation process, you will receive a final email containing your login credentials—Username, Password, along with instructions to finance your account.

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Forex Trading Brokerage

There are certain charges involved in setting up a Currency Trading Account, of which account opening charge is the first and foremost one. The charges aren’t standardized and differ among various DPS.

Generally, Currency Trading Account can be opened for a fee of around ₹600 -₹800, and similar to the case of Demat Account, and then there could be annual maintenance charges involved as well.

The charges per transaction can again vary depending upon the Depository Participant. 

Furthermore, Brokerage charges levied are different and decided based on the type of trade.

But, in general, the Intraday trading charge in the market would be something around 0.03% to 0.05%.

Delivery trade charges pretty much range in and around 0.5%.

0.03% – 0.05% is charged per Currency Futures, whereas 0.03% to as high as 1% of the premium is conceived normally for Currency Options.

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Currency Trading Account Advantages

Following are the advantages of a currency trading account:

• Easy Uninterrupted Transactions – Since, the trading is internet-based, transferring funds from one account to another is fairly effortless. 
• Comparison Purposes – You can run a glance to make comparisons between trade, expenses/ losses incurred, and the profits from various trades, all in one go. You can review your sales, profits, losses to develop a better strategy.   
• Flexibility – The biggest charm of a forex trading account is the flexibility it possesses in terms of accessing it across various devices. Then, there are hundreds of apps to notify you of the trends, assist your decision-making, etc. 
• Easy To Track – Since the trade is online and can be accessed from pretty much anywhere, anytime, all the activities, transactions can be tracked easily.
• Transparency – The information on all the transactions, deals are out in the open view. That is, any unwarranted activity can be traced to its roots. 

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Currency Trading Account Disadvantages

While it’s easier to get swayed away by the advantages, it’s even more essential to educate you about the challenges that you may encounter in due course of the process.

• Brokerage Costs– Brokers can occasionally charge unreasonable costs, and largely these lack transparency.
• Internet Literacy– Since the entire process is online. Internet Literacy is imperative.
• Susceptible To Fraud– The current Currency Trading market sees the prevalence of fraudsters in dumbfounding quantities. It could be scary to trust someone else with your hard-earned money.
• Requires Fair Understanding– The process seems pretty straightforward but can prove to be a tricky prospect. 
• Unpredictability– The same unpredictable nature of the market that may help you make quick money can also lead you to lose it just as quickly.

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Conclusion

Currency Trading Account is the prime mandate for venturing into the forex market. A lot of thought needs to be poured in choosing the type of account that best fulfills your requirements. 

You will need to dole out money from your pocket even before you start trading as the setting up process requires hiring the services of a broker. Truly, the importance of finding the right one for your cause can’t be stressed enough. 

Again, we consider it important to caution you against falling prey to the fraudsters looming at large in this specific region of the market. 

Frequently Asked Questions

Next, we move on to cover some of the most commonly appearing questions concerning the topic :

1.  How to open a currency trading account?

To open an account, you will first need a broker, then choose the type of a trading account you wish to open. The broker will provide you the list of documents they deem necessary.

      2. What are the documents required to open a currency trading account?

Documents required for opening an account may differ across brokers. But, generally would require the following :

• Account Opening Form
• Identity Proof 
• Address Proof 
• Financial Proof

      3. What are the various currency trading charges?

There are account opening charges and, in some cases, annual maintenance charges. Then there are the brokerage charges which are determined by the type of trade undertaken.

       4. How to register a forex trading account?

You register your account with a broker by completing the application form. Upon completion, you will receive an email containing your Username and Password that you will require to access your account.

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