Crypto and Forex

Bank accounts for FOREX traders: a great solution

6/2/2020 8:00:00 AM
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Offshore banking is getting harder and harder as time goes by.

High net worth people that have made hard-earned capital and investors looking to secure their assets and do business freely are having a rough time.

Options are even more limited for medium-sized investors. And this is especially true if you are a Forex trader.

Let’s name just one example. In Hong Kong, without a six-digit asset worth, it’s tough to get private banking services.

Furthermore, if you’ve earned your money doing Forex trading, it’s particularly difficult to open a Forex-friendly bank account that is multi-currency and allows you to handle your main operations easily.

Forex is a fantastic trading business, but many investors and traders run away from it because of its lack of transparency. It’s usually unclear how many brokers deal with commissions, which keeps people away from the business.

Moreover, handling your operations and being able to deposit and easily retire your money can regularly give you headaches.

However, there are still top options to have a multi-currency trading account that will allow you to handle your operations in a simple manner with top tax optimization and confidentiality.

There are some banks in non-CRS jurisdictions, which means they don’t immediately report your financial information to the tax authorities of other countries. Likewise, these jurisdictions also boast tax credits and exemptions for foreigners and investors that can lower their income tax rate to less than 10 %.

Moreover, you can open your account with a low minimum deposit (usually around $2,500).

In fact, such a bank account isn’t ideal just for well-established traders, but it can also be a fantastic addition if you’re only starting in the Forex world.

Also, if you’re not only trading in Forex but also with bonds, stocks, and similar financial instruments, this account can be your trading one-stop-shop.

As you may know, Forex is a global exchange market. That means it is a 24-hour, five-days-a-week market. Moreover, it’s a high-liquidity market where substantial amounts of money are moved from one currency to another with small spreads.

Likewise, the Forex trading transaction costs are generally low, which makes it ideal if you’re looking to start in the financial trading world. You can start with small transactions and even use significant amounts of leverage to trade with way larger amounts of money than what you actually have, which gives you substantial leeway from the start.

Yes, Forex is a volatile market, and sometimes people will try to scam you with courses that present it as an easy way to win money. And you know that doesn’t exist. But still, it can be the first step towards a trading and investment career, especially as it comes with low costs and it suits basically every trading style you may have in mind.

Moreover, forex trading doesn’t have one single central regulator. Yes, to be sure, the currencies vary depending on monetary policies imposed by central banks, and they occasionally interfere directly with the market. But these are rare occurrences, which makes forex trading a highly decentralized and deregulated enterprise.

Five reasons why you should open a Forex-friendly bank account 

Friendly tax regime

These jurisdictions generally don’t have dividends tax or capital gains tax. They also have a territorial base for their tax rate, which means they only tax nationally-sourced income. Furthermore, they have plenty of tax credits and exemptions that can lower your income tax rate to less than 10 % in some cases.

Full privacy

It's better to find jurisdictions that aren’t part of the CRS/AEOI, which are reporting standards that demand member countries to exchange tax information with foreign tax authorities.

That means these jurisdictions are perfect for forex traders that want to protect their assets with as much confidentiality as possible and with ideal tax planning.

A one-stop shop

Some banks don’t just offer Forex-friendly accounts, but also regular multi-currency accounts and precious metals accounts fully backed by physical gold and silver. All this means you can find terrific financial services in one single bank, which gives you top flexibility for your operations.

In fact, the trading account will allow you to trade more than Forex, you can also invest in stocks, futures, options, bonds, and many other financial instruments. It’s just the first step for a career in investment and trading.

Low minimum deposit and account balance

Most banks we work with require a minimum deposit of around $2,500. This is significantly lower than in many top-notch jurisdictions. Moreover, the minimum balance you should keep is generally low. That’s fantastic, especially when considering that most jurisdictions that will let you open a bank account remotely usually require high amounts for the minimum deposit and minimum balance. That’s not the case here, generally.

Low fees with full transparency

We know one of the issues of Forex that prevents many investors from getting into it, is its transparency issues. However, there are banks that offer a wholly transparent pricing structure that offers competitive fees and commissions. This will give you both the certainty that you’re not being scammed, and will allow you to keep your earnings almost in full. 

How to open a Forex-friendly account?

So, what do you need to know to open such an account?

Most providers work with a pre-approval system. This is a significant competitive edge as it allows them to have a good idea regarding the success of your application before you actually submit your application to open a bank account.

The pre-approval means the provider will send your profile to their partner banks for a previous check to see if they may be interested in having you as a potential client. If their answer is affirmative, that doesn’t necessarily mean you’ll be accepted, but it significantly increases your chances.

Now, to go through this process, in general, you'll need the following:

Bank form, filled and signed

● Notarized passport copy

● Certified copy of proof of residence

● Banking reference and/or six-month bank statements

Moreover, the bank will probably contact you to schedule a short phone call.

If you pass the pre-approval, the provider will submit your application to the bank and wait for their response. This process usually takes at least 20 days. During this process, the bank may ask for some additional documents. That means the process is incredibly simple:

● You send the documents and forms to your provider

● You have a short phone call with a bank representative to finalize the pre-approval process

● The provider submits the application to the bank

● If everything goes right, you have a Forex-friendly trading bank account

We hope that this article has given you an idea of how Forex accounts work across different banking insitutions. 

Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.

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