Opening your Brokerage Account
Though there are many brokerage platforms out there, we personally use Interactive Brokers for the low trading cost, paper trading function, no minimum balance required, and the ability to trade outside of the trading window. Please follow the instructions below on how you can set one up for yourself.
Step 1: Start Trading with Interactive Brokers by Opening an Account Application
You start the process by clicking on the Open Application. Then Start Application.
Then you will need to create an online account. You need an unique email, username and password.
The username will be what you use to access to your Interactive Brokers account the most frequently. So do think about what you set for it.
Once you have finished that part of the process, an account verification email will be sent to your email address.
You will need to go to your email address to click on the link in the email.
You will then be prompt to log in to your Interactive Brokers account to continue with the account opening process.
Step 2: Filling in Your Particulars
Select Individual account type under Customer Type
Then fill in your personal information and addresses
You will need to specify a phone number. This is to be used for your two-factor authentication in the future. Then you will also need to specify the identification that you wish to use to identify yourself as well as your tax residency.
Then your employment details.
Specify your source of funds for compliance reasons.
Step 3: Choosing Your Interactive Brokers Account Type and Your Base Currency
Interactive Brokers will then ask you what kind of account type you wish and what is your base currency.
There are 3 kind of account type:
- Requires account holder to have enough cash to cover the cost of transaction plus commissions. You cannot borrow to support trading in a cash account.
- US regulatory-based margin account. Allows borrowing to support equities trading, stock shorting, full options trading, full futures/futures options trading, currency conversions, and securities/commodities trading in multiple currencies.
- Portfolio Margin
- Allows borrowing to support equities trading, stock shorting, full options trading, full futures/futures options trading, currency conversions, and securities/commodities trading on multiple currencies.
The base currency is the currency you use to maintain the book of accounts. This affects the translation of currency for your statements and uses to determining your margin requirements.
You can hold stocks in a lot of different currencies be it Euro, USD, AUD. When you review the statements, the portfolio and accounts are translated into my base currency SGD.
You can change your base currency after this process easier in your account settings so don’t sweat over this.
InteractiveBrokers will then need you to confirm your postal address is correct.Then you have to answer some compliance questions.
Specify your net worth and objectives you intend to achieve by trading.
Step 4: Choosing What Financial Instruments to Trade and Where You Can Trade on Interactive Brokers
This section is important in that Interactive Brokers find out your experience with different instruments. If you do not have the requisite experience, you cannot manage certain instruments.
If you get it wrong, you can change this in the account settings. However, changing this will take 1 day of approval before you can trade in the new markets or instruments specified.
Step 5: Submitting Your W8-BEN Withholding Tax Status
If you open a trading account that allows you to trade in the United States, you will need to submit a W-8BEN form for reporting of your tax withholding status.
There are some compliance agreements and disclosures. Please take your time to read through them and choose to AGREE or DISAGREE where appropriate.
IBKR then ask how do you know about them follow by a review of your application.
If you click next, IBKR will continue with the actual processing of your application.
Step 6: Submitting Your Identity and Address Verification Online to Interactive Brokers.
IBKR will then inform you that the process submission is done.
Like many application that involves money, the financial institution will need to verify your identity.
IBKR will need you to submit digital copy of some documents to prove your identity. You can also choose to email, fax and snail mail to them.
Here are the documents that you can submit.
Step 7: Wait for Interactive Brokers Update
All that you have to do next is to wait.
Wait for IBKR to inform you about the status of application.
Step 8: Interactive Brokers Account Approval in Email
Approval should be within 3 workings days or 5 calendar days in total. So Make sure you start your application early!
IBKR will then inform you to fund your account so that you can get started trading.
Step 9: Funding your Account
Go to Account Management then Fund Transfers, then select Make a Deposit
Go to the section Choose a New Deposit Method.
We will want to do a Bank Wire transaction which is to wire funds from your bank account to Interactive Brokers account.
Notice that you can select different currency to fund. This means if you move to another country, say Australia, and you have a local Australia bank, you can Bank Wire AUD into the Interactive Brokers account.
Type in the account number of your DBS Bank in Account Number. The nickname will be the name that appear in your IBKR’s Saved Deposit Information section.
Specify the amount you wish to fund.
You have the option to make this a recurring transaction.
Once that is done click on Create Deposit.
Interactive Brokers is now waiting for your money to come.
If you wish to save this information in the future, toggle Yes for the first option. Give your sending institution a name.
Interactive Brokers will provide you with the information to specify when performing your wire transfer from your respective banks.
This transfer should take about 1 to 2 hours to be reflected in your IBKR account.
Now you are ready to start trading! Don't worry, I will be here to help guide you through.
Please feel free to contact Interactive Broker with any specific questions not addressed in this message. Spiking does not represent Interactive Broker and will not be able to provide the support you may require.