Real Trading Accounts

Opening a Live Account

Once you’ve set yourself up with a live trading account, the first committed step toward a future in binary options or forex trading has been taken. Even in this early phase, it is important to remember that you can put yourself in the best possible position to start, simply by understanding which key elements matter and how the may affect your experience. It is also imperative that you set some realistic expectations regarding what trading is and what it can offer, as well as focusing an objective eye on the possibilities that your trading account can provide you with.

In a live account the difficult, risky part is learning to understand the difference between your balance and your equity, as well as paper profits and swaps when dealing with the forex market. Traders will also want to consider the conditions of accepting welcome bonuses, and any accompanying restrictions or subsequent trade requirements that may further affect their account. Hopefully this article will serve as your guide through some tricky terminology.

What to Expect with a Real Account

When depositing with your broker (in order to fund your trading account), the account should display the this initial transaction as your balance.

For this example, let’s imagine we are using a MetaTrader terminal. On this occasion we have deposited one thousand dollars, with the balance located under the Terminal button at the top left of the menu (as in the picture below).

This amount is registered as our balance because it represents our current account total, and will act as a reflection of realised profits and losses. For now, the Equity bar will also show the same amount. However, when a trade is opened, the first thing a broker will do is take its commission and this will automatically be deducted from your equity stake.

If the market trends in your favour, the amount shown in the Equity tab will rise, becoming larger than your balance. However, this only represents paper profits, showing what the balance would be if all positions were closed at the current price, and is therefore unrealised until the trade is finished. Once the trade is closed, after any swap and commission fees have been applied, the balance and equity figures should match, but only if there are no other positions open.

A common mistake is to focus only on your balance total and not to consider the open trades reflected in your equity sum, when in reality this is the figure that really matters.

When trading the forex markets you need to take into account swap rates (interest rate differential) for the currency pair traded. Should your analysis comes from the daily chart and you’re looking for a triangle to break higher, the market may remain in consolidation for a month or two. If the swap is negative, you should know that with each trading day, until the turn towards positivity, your account will pay a negative swap and your equity amount will become shrink.

With binary options trading, keeping track of your account is more straightforward in the sense that swaps are not involved and margin is not an issue. What matters most is the expiration date that a broker is capable of offering. As you will quickly discover, most of these times and dates are set during fixing times in London and New York, with some options – like One Touch or Boundary Options – available for short term expirations only.

Trading with a live account is an experience that is miles apart from experimenting within the risk-free environment of a demo. As emotions start to kick in, greed and fear soon become the primary obstacles to becoming a successful trader. The catch-22 is that trading psychology can only really be learned through participation, which means trading in a real account and living its ups and downs, learning by your mistakes.

Bonus Terms and Conditions

When trading, it should be understood from the start that brokers are the intermediaries, or the middle-man, facilitating access to the financial markets, and for that they are require some form of commission. This commission is usually deducted automatically from your trading account at the moment of opening a position (with forex). Brokers will therefore have a keen interest in their clients trading as much as possible, with each and every trade bearing commission. In order to stimulate trading, many brokers run a variety of promotional campaigns, with the most popular a trading bonus.

Trading bonuses are traditionally offered when a client deposits for the first time, at least in the case of forex markets. However, most of the time they are offered in partnership with specific campaigns.

For example, say a forex broker offers $100 as a welcome bonus if a deposit is made in the next two weeks. Should a potential client choose to do this, beside the money they deposit, another one hundred dollars will appear as available for trading as part of their balance total.

Unfortunately, nothing comes for free and this is why it is essential that you read the fine print on any offers. Whilst this extra money would be available for trading (and can be very useful to start out), you cannot necessarily withdraw the sum whenever you like, even if you make a profit from it’s use. Conditions for withdrawal are stated on the agreement to be signed when accepting a bonus, and more often than not these come with specific trading turnover requirements.

It has been argued that only mediocre brokers offer welcome bonuses as a means of acquiring new trader clientele. Other brokers offer variable style commissions in order to offer support. These are often adjustments to the commission system, based on lowering the overall spreads, and charging a fee based on the the volume traded each month. You may be charged a specific corresponding commission for trading one lot on the FX market the previous month. It may work out that a particularly active month of fifty lots traded, sees this commission rate for the period significantly decreased. For a broker, this has the potential to secure a trader’s interest, whilst increasing their activity on the market.

For binary options trading it’s not so much about commissions as it is about winning and losing. It’s a pretty simple and faster paced method of trading. Accepting a cash bonus under such circumstances will usually serve to complicate any future withdrawal of funds. Particularly as the conditions of these bonuses tend to state a very high turnover or number of trades before the withdrawal of any of your money is permitted, as it is now considered to be mingled with the broker’s own.
To conclude, the implications of accepting a trading bonus are critical and may be limiting to your personal financial movements. Your overall balance may appear healthier than it is in actuality. Always read the fine print.
NOTE: Recent changes to financial regulations by independent regional authoritative bodies have seen a number of bonus types highly restricted under their revised guidelines. TradersAsset will always endeavour to keep their readers informed with the latest key information, but traders are encouraged to regularly check for relevant updates.