Opening a Futures Trading Account
You’ve learned the theory, you’ve trailed a few demo accounts and you’ve scouted out a suitable futures broker for getting started. Now what? The process of opening a futures trading account is one that is slightly more involved than opening other forms on online accounts, and you will be required to provide a variety of information to the broker in order to have your application accepted. Application times can vary, as can the requirements of individual brokers, but you will nevertheless usually find a few key components that you will need to address before your trading account is set up.
As you might expect, applying for a futures trading account requires certain personal information in order to set up the account, such as name, address and contact details. What you might not appreciate is that there are also further identification requirements necessary, which often requires you to send off or upload ID documents to the broker’s site, similar to opening a bank account. This could include passport information, photographic driving license details and the usual accepted forms of proof of address, which are designed to establish and prove the account holder’s identity.
This is a requirement in line with FSA obligations on the part of the brokers, and you should factor in these requirements and the respective processing timescales to give you an idea of when to expect a fully set up account.
In addition to supply a raft of personal details to your broker, you will also be required more often than not to undergo a credit check in order to establish whether or not the broker wishes to accept your business. This is, of course, a necessity for futures brokers to guard against the risks of default, particularly when such considerable leverage amounts are in question. Be prepared to undergo a credit check and to supply the relevant information to the broker – these are essential components of getting your account set-up.
You will also need to deposit something into your account to get off the mark, and different brokers will have different levels of required deposit, and indeed wholly different deposit requirements. This may also provide the opportunity to put a credit card on file for automatic deposits, although it is worth noting that this should be approached with caution in terms of the potential losses that can be sustained through futures trading. Many brokers will also accept direct bank transfer deposits as a means of funding your account, so you may have to await bank clearance before you can get things fully set up and ready to go.
Beyond that, you should receive confirmation within a few working days of your successful account setup, paving the way for you to get started trading. Provided you satisfy all the ID and credit checking requirements, you should be in a position to get started trading as soon as your account comes through.