With the massive growth of the foreign exchange market that trades foreign currencies globally (Forex) has attracted the interest of many brokers and investors. With a multitude of available currencies and trade volumes that reach trillions of dollars. For handsome returns, foreign markets provide a convenient way to take advantage of leverage and volatility in Forex.
Many brokers began to open Forex accounts in foreign jurisdictions, due to favorable tax means these places and to overcome excessively restrictive regulations in their own country (such as the Foreign Account Tax Compliance Act, or FATCA in the US). Watch how an investor living in the US can open a Forex account.
Choose a good Forex broker
The first step to open a Forex account is to select a qualified broker. There are numerous websites that provide a ranking to rank the best international brokers Forex. It must have a few things in mind when choosing a broker for your buck. This includes fees and commissions, beyond the minimum balance required to operate and fund the account. Also evaluate the work of staff skills and customer service.
It is important to ensure that the broker meets all the requirements and standards set by the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Moreover, it must comply with local laws. This will help to avoid causing regulatory problems later.
Opening Forex Account operations
The documentation involved in opening a Forex account is relatively simple these days, with slight variations according to the regulations of the chosen country. Most brokers will ask customers to complete a term which establishes conditions for negotiations in the foreign exchange market.
Usually companies realize the confirmation of residential address of the client, and ask for other identification documents. Some brokers offer the flexibility to operate the Forex account with a minimum amount of $ 100.
Alternatives to invest in Forex
For investors with a considerable amount of investment ($ 100,000), may be a more cost effective option open a large bill at the International Business Corporation (IBC). IBC is one of the most flexible and safe methods to invest in Forex.
Establish an IBC is a bit expensive, but worthwhile since it frees the investor more onerous reporting requirements. In addition, the costs can be recovered through tax savings. It also allows an investor to trade Forex in the way you want.
Attention the legality of the negotiations
It is very important to check if the selected broker and the types of Forex
transactions which the investor intends to hold in the chosen jurisdiction, are all in accordance with the rules of the legalized and regulatory authorities of the country of origin.
For US investors, the Foreign Account Tax Compliance Act Treasury (FATCA) regulates investment banking. As FATCA, foreign financial institutions (FFIS) are required to provide information to the Internal Revenue Service (IRS) on US citizens who invest in non-US accounts.