What are the requirements for market participants to trade Forex?

The introduction of the so-called Forex mini-trading and the appearance of Forex brokers as intermediaries have positively changed the requirements of investors for participation in the Forex market. The wide range of leveraged products puts market participants in a good position to operate effectively on the international currency market. They no longer need to invest large sums of money to benefit from relatively small price fluctuations with the short-term oriented financial products. In order to participate in Forex trading, traders must be of full legal capacity and usually of legal age.

In addition, they must have a forex account with one of the numerous operating forex brokers. Market participants usually open their Forex account via the Postident procedure. This prior identification is done to prevent money laundering and other crimes. Some Forex brokers require the deposit of a certain minimum amount to open an account. However, these minimum deposit amounts are usually the rule only in real credit institutions and banks. Internet trading platforms usually do not require a minimum deposit. If market participants meet these requirements, they can participate in international foreign exchange trading with even small amounts.

Is foreign exchange trading based on legal requirements?

In many countries, foreign exchange trading is not regulated by law. The exchange rates are based on the supply and demand relationship. Consequently, they are not set by a governmental authority. In principle, it is possible for the same currency pair to have different exchange rates in different places. Credit institutions also trade currencies among themselves and set their own exchange rate. These in-house currency rates may well differ significantly from the rates on the financial market. Trading partners are free to negotiate their currency rates among themselves.