The initial traders who created accounts were primarily seasoned professional speculators with experience in traditional phone and (even floor) trading in currencies, equities, or commodities in the early 2000s, when popularity of online Forex trading started to soar. Largely older males and (occasionally) women made up this group. Later in that time period, individuals without a background in finance but with a keen interest in online technologies began to emerge. These individuals were captivated by the idea of making money using technology and intelligence without having to deal with the hassle of using conventional offline brokerages. Usually, this group was made up of mature people who worked in IT.
Since the late 2000s, as the Internet and trading platforms have grown in popularity, children have had extensive access to knowledge about the foreign exchange market. Despite KYC/AML regulations and stricter regulation, underage trading has become a trend. Perhaps it has always been a problem, but in a less obvious way. These days, there are numerous conversations on forums and other media sites about children who trade. You might be shocked to learn that many investing products include an age restriction. The minimum age to begin trading forex and investing is examined in this article.
How old must you be to trade forex?
In the United States and the United Kingdom, you must be at least 18 to trade FX. This is as a result of the legal need set forth by authorities. If you are a minor, there is no other option to open a live account. This is the minimum age required because you must present numerous types of identification and proof of residency. Similar to how driving, drinking, and using tobacco are all prohibited until certain ages.
A live forex broker account can only be opened by those who are of legal age (Or any other account with that in mind for investing). Additionally, forex brokers are required to abide by these regulatory requirements; otherwise, they risk receiving hefty fines or being fired. But don’t worry, studying about forex is still a good idea even if you’re under the age of 18. This is because you can prepare yourself for the future when you are old enough to trade, assuming you still want to.
Why do forex brokers not allow anyone under 18?
The majority of FX and CFD brokers have an 18-year-old minimum age requirement for clients. Businesses must adhere to several legally mandated age restrictions on goods and services or face severe legal repercussions, such as selling alcohol or gambling products to minors. Most brokers state in their terms that traders must be of sound mind, of legal age, and of legal competence. It is too risky for brokers to offer their services to those who are under the age of 18 since they lack the competence to enter into contracts.
Although contract law differs from nation to nation, the following idea holds true in most areas where forex brokers are registered. Brokers prefer not to work with clients under the age of 18, as minors are unable to give their consent to enter into a contract and have the right to revoke any agreements they made before turning 18 or, in some cases, even after turning 18. Any contract with a minor is therefore essentially unenforceable.
Are you old enough to trade forex?
As a general rule of thumb, if you are under 18 then no, you are not old enough. You might be able to find a broker that will accept you as a trader, but these are some of the obstacles for trading when not old enough:
- Brokers will find it difficult to confirm a minor’s residence address in accordance with anti-money laundering requirements because they lack any official documentation issued in their name, such as utility bills
- Brokers are not able to use the courts to enforce any of their terms and conditions
- Minors are unable to understand the dangers that brokers must communicate
- A minor might pressure a broker to pay back their losses
The possibility that a minor might complete a few unsuccessful trades in their trading account poses a risk for brokers, even though there are no known case law examples of this ever occurring. They might then claim they did not comprehend the conditions of the contract and withdraw from it, which might require the broker to provide the client a refund.
Is it possible for a minor to trade forex?
Many individuals under the age of 18 have demonstrated a strong interest in trading the foreign exchange markets despite the regulations and restrictions, and despite the fact that it is nearly difficult to open a forex trading account as a child.
There are numerous instances of successful forex traders who started their trading professions far before the age of 18, even if it may be illegal. Here are a few instances of successful forex traders who started out in their professions as minors:
Buena Patria, a 14-year-old Indonesian woman who was profiled in a Business Insider 20 UNDER 20 piece, started trading on the FX market.
Also mentioned in the same Business Insider story is Canadian Josh Olfert, who started trading when he was 15 years old. He currently works as a financial counsellor and has a YouTube channel that has approximately 500,000 subscribers.
Milan Cutkovic, a 14-year-old from Switzerland, started trading forex. He continues to trade actively now, promotes his trading methods, and has several years of experience in the forex market.
Do forex brokers carry out age checks?
Investors who want to open a live trading account with a forex brokerage must present identification with their date of birth on it.
This is necessary for brokers to meet their customer due diligence duties under international anti-money laundering standards and anti-fraud regulations, as well as to verify that investors are over 18 years old and are not attempting to register accounts under fictitious names. Therefore, like with other financial goods like opening a bank account, a current passport, driver’s license, or other form of government-issued identification is needed.
Can minors use forex demo accounts?
The majority of forex brokers provide demo trading accounts, which can be opened without proving one’s identity or age. As a result, those who are younger than 18 can practice forex trading but cannot engage in actual transactions until they become 18.
How can young people begin investing?
Until the interested adolescent reaches the age of majority and is no longer regarded as a child, some brokerages offer custodial accounts, which let a parent supervise and authorize the investments within the account with the help of the interested teen.
Long-term investments can be made using custodial accounts, but they are not currently used in the speculative trading environment, where riskier products are exchanged, particularly leveraged derivatives like CFDs, futures, and options.
How can a minor open an FX account?
You should not, under any circumstances, ask a parent, an older friend, or a member of your family to open a trading account on your behalf, despite some advice you might discover in internet forums. This might put the individual who started the account for you in legal problems because it would probably be against the broker’s terms and conditions and might even be considered fraud.
Use your time wisely and keep practicing if you’re under 18 and interested in trading FX. Although it may seem as though you are missing out on market possibilities, there is still plenty of time to engage in forex trading and both the market and the opportunities are here to stay. I personally think spending years studying and practising on a demo account can prepare you for the markets. The majority of retail forex traders lose money and this is often because they are not well prepared enough.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.