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How To Set Up A Trading Account

How to set up a trading account

How To Set Up A Trading Account

 

No matter how good your preferred trading strategy, or how ‘guaranteed’ the returns of your favourite tipster, if you don’t know how to set up a trading account you won’t get very far. This article is a pointer for the total retail trading newbie in how to set up a trading account the quick and efficient way.

 

The first thing is to decide what sort of trading account you need. If you are looking at buying actual shares then this article isn’t for you. But if you are looking at trading Forex, Cryptocurrencies, Commodities or shares CFDs then this is the place to start.

 

If you live outside the UK or Ireland you will need a CFD trading account. If you live in the UK or Ireland you will either want a CFD trading account or a Spread Betting account. To get an idea of which is right for you, you can read our previous article on the differences between CFD trading and Spread Betting and also this article on the comparative advantages of both

 

Whether you want to set up a CFD trading account or a Spread Betting account, the process is largely the same.

Step 1 – Choose a Broker

 

This is probably the most difficult bit, but it is not quite as important as some people pretend. Whatever broker you choose, just make sure you don’t become that trader who blames their losses on their broker. Choosing a different broker won’t turn you from a trader who loses 50% a year into a profitable trader.

 

Nevertheless, it is something that you are going to want to get right. It is no secret that The Two Blokes trade with XTB. We chose XTB as our partner broker because they are a genuine STP broker, have a UK office (which you can visit) and have the best proprietary trading platform around. If you want to trade with XTB then you can try them out (with a unique 15% spread rebate for Two Blokes Trading listeners) by going here.

 

But, you are free to choose your own broker. If you’d like a few other options, then feel free to check out our full broker listing pages.

 

Whatever decision you make, just remember that being fully regulated is the most important thing. If your broker is regulated by the FCA in the UK that is the best, but ASIC and CySec are also good. Sending your money to an unregulated broker based in the Republic of Nowherestan is the best way to lose all your money. Well, it’s that or trading Binary Options…

 

Step 2 – Hand Over Some Personal Information

 

A lot of people seem to have a minor flap when their prospective broker wants their personal information. This is kind of understandable at a time when identity theft is the most common form of theft around. But, what you have to remember is that you are dealing with a regulated business. If they are FCA regulated then that is the same regulator as looks after your bank (if you are British).

 

All this means that there are rules. They simply have to have your personal information in order to be able to open your account – it shows the regulator that they are taking care of their clients. Personally I’d be more worried if my broker asked no questions and just got straight to the bit where they take my money off me.

 

So if your broker wants your name, address, income details, even your national identity number, then you are going to have to be prepared to hand them over. If you want to trade that is.

 

Step 3 – Upload Proof of Identity

 

Similar to the above – you’ve just got to suck this one up. As part of the latest regulations your broker has to prove that they know who their clients are. This is for all sorts of reasons, from anti-money laundering guidelines to client protection.

 

I can already hear the cynics amongst you, and yes I dare say it helps with their marketing metrics as well, but this is not the reason they do it. Ask anyone who works in marketing or sales and they will tell you that the more steps and the more forms you have, the more ‘barriers to a sale’ you are creating and therefore the fewer sales you will make. If it was up to the brokers then this step would be eliminated.

 

Put aside your cynicism and upload a scan or photo of your driving licence or passport and be done with it.

Step 4 – Wait

 

Any good broker will actually have a real human-being checking your forms. It’s the least they can do. But, of course, it means it all takes a bit of time. Usually your broker won’t allow you to open a trading account until they have verified your identity.

 

Step 5 – Practice on Demo

 

Use the time to familiarise yourself with the broker’s demo platform. Place a few trades, draw a few pretty lines on some charts. The pros and cons of demo trading before proper live trading are a never-ending debate that I won’t try to settle here. But, making sure you are familiar with the software before trading your own real money in a live trading environment is probably a sound idea.

 

Step 6 – Deposit Funds

 

The scary bit. Up till now you have been filling in forms and pretending you’re not worried. You’ve had a day or two to cool off while your broker stares at a picture of you trying not to smile and they’ve decided that yes, you are allowed to trade. Well done you.

 

So now you send them some money.

 

Don’t worry, it’s not a scam. Well, as long as you have done your research. If you have chosen a broker from our broker review list then it is not a scam. If you have checked your broker against the FCA (or other regulator) register then it’s not a scam. If you picked a broker that is based in a country you’ve never heard of and is not regulated and has a website that looks like it was made by GeoCities…then, yeah, maybe it’s a scam.

 

Step 7 – Place Your First Trade

 

Start small mate, yeah?

 

That it!

 

Well done, you now know how to open a trading account. Hopefully very soon you will have opened your first trading account and popped your trading cherry. We hope the first one is a winner and that you have a long and successful trading career. Just remember, keep your trade size small, use a stop loss and always focus on managing your risk.

 

Happy trading!

 

 

 

Two Blokes Trading

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