Is Trading Possible Under the Age of 18
Brokers in most cases only allow traders over 18 years of age to open accounts. But there are exceptions:
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Trading with guardians.
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Demo account.
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Cryptocurrency exchanges.
Most brokers limit the age of traders to 18 years; in some countries, trading is only allowed from 21 years of age. Reason: minors do not have documents to pass KYS, cannot act as defendants in courts, their transactions may be declared invalid by the courts. Exit: training up to 18 years old on a demo account, trading with the permission of guardians, trading on cryptocurrency exchanges.
How to invest under 18?
In the modern world, trading is becoming increasingly popular. Many people see it as an opportunity to earn additional income or even build a career. It is not surprising that minors are also interested in trading. However, most brokers impose restrictions on opening accounts for minors. In this article, we will consider why this is happening and what possible solutions to this issue are.
Why do brokers impose restrictions?
There are several main reasons for imposing restrictions on trading for minors:
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Legal restrictions. In most countries, minors do not have full legal capacity. This means that they cannot enter into contracts independently and be held accountable for their actions in court. In the event of financial losses, the broker may file a lawsuit against the minor trader to collect the debt. However, since the latter does not have full legal capacity, the court is likely to side with the broker and order the minor's parents or guardian to reimburse the losses. This can lead to serious financial problems for the family.
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Risky operations. Trading is a risky activity. Even experienced traders cannot always predict how the market will behave. For minors who do not yet have enough experience and knowledge, the risks are even higher. As a result, they may lose all their money.
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Consumer protection. Brokers are interested in their customers being satisfied and continuing to use their services. Therefore, they try to limit access to trading for minors in order to protect them from possible losses.
Possible solutions
There are several possible solutions to the issue of trading for minors:
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Trading with a guardian. In this case, the minor trader can open a brokerage account, but the guardian will make transactions on his or her behalf. This will help to protect the interests of the minor and reduce risks.
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Demo account. A demo account is a virtual account that is credited with virtual money. Minors can use demo accounts to learn trading without the risk of losing their money.
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Trading on cryptocurrency exchanges. In most cases, cryptocurrency exchanges do not impose strict age requirements on customers. Therefore, minors can open accounts on such exchanges and make transactions. However, it should be taken into account that cryptocurrencies are highly risky assets, and trading them can lead to serious losses.
Best Forex brokers
Which option to choose?
The choice of option depends on the specific circumstances. If the minor has sufficient experience and knowledge, as well as the support of parents or guardians, then he or she can open a brokerage account and make transactions independently. If the minor is just starting to learn trading, then it is better for him or her to start with a demo account or trading on cryptocurrency exchanges.
Conclusion
Trading under the age of 18 is possible, but it is important to consider all the risks associated with this activity. Minor traders are advised to get the support of parents or guardians, as well as to undergo training in trading.
Glossary for novice traders
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Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
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Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
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Cryptocurrency
Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.
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Index
Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.
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CFD
CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.
Team that worked on the article
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).