As the means to both fund and liquidate your trading account, deposit and withdrawal options should be considered as careful as possible. Here are the 4 key factors to watch for.
Deposit and withdrawal methods are vital aspects to pay attention to, especially for beginners. It deals with how you want to fund your account or withdraw your money. Different methods bear different procedures, fees, and transfer speeds that may influence the amount of deposit and withdrawal that you should apply.
If you are interested to learn how to choose the payment methods wisely, here are the four things to consider:
1. The Payment Options
The broker can provide various deposit and withdrawal methods such as classic transfer modes like Western Union, prevalent transfer modes like Wire Transfer and Credit Card, e-payment, and third party deposits, even cryptocurrency. But not all brokers can provide everything because of regulatory limits.
For example, US-based brokers like OANDA and FXCM used to offer payment via Wire Transfer, Credit/Debit Card, and Paypal. But since the regulation changed, they eliminate the Credit Card and Paypal methods.
As for European-based brokers, they usually prefer e-payments while also provide Wire Transfer and Credit/Debit Card options. Meanwhile, many offshore brokers provide transfer choices via a third party to speed up the process. With this transfer method, traders from many countries can deposit through local banks so the transaction is free of charge and processed instantly.
Exness, for example, accepts cryptocurrency such as Bitcoin. This is because this payment method benefits individuals who have already invested in Bitcoin and wish to explore alternative brokers for further investment opportunities.
Apart from other methods mentioned above, there are also innovative ones such as virtual pre-register cards, cooperation with local companies to receive a direct transfer from local banks, etc. The goal is for the clients to deposit and withdraw their funds more efficiently.
See also: Forex Brokers offering Deposit and Withdrawal via Debit Cards
2. The Processing Time
Fund transfer among banks that are located in different countries or even continents is very complicated. More than that, the transfer fee can also be very high. Meanwhile, transactions using Credit/Debit cards are usually subject to high fees by the card issuer, although processing can be done instantly.
That is why brokers always try to provide alternative deposit and withdrawal methods so their clients are not restricted to conventional means like Wire Transfer and Credit/Debit cards. Even so, processing time can vary on what option the trader chooses and how much time is needed for the brokerage company to process their approval upon deposit and withdrawal activities.
Moreover, it's important to learn from other trader's past experiences and mistakes. Some brokers can promise many things but are often different in reality. The quicker and easier the process, the better it will be for you. Therefore, choose a reliable broker that has been proven to put their clients' best interests as their top priority, especially in the matter of deposit and withdrawal process. Normal processing time for bank transfer should be within 3-5 business days, while online methods should take no more than 24 hours. Some electronic payments can even process transactions within minutes.
3. The Fee
Novice traders don't realize that fees are cut twice in the deposit and withdrawal process: by the company that acts as the intermediary and by the broker. In Wire Transfer, the fee deducted by the intermediary can be very high because the funds will pass through several banks before arriving at their destination. Whereas in the third party transfer method, there can be no fee needed because the transfer process can be seen as a transfer of funds from one account to another.
Other alternatives of low fee payment options come from Credit Card and e-payment. As a matter of fact, transactions via e-payments like PayPal, Skrill, and Neteller are known to have relatively low fees as compared with the Wire Transfer.
For example in OANDA, it charges $20 for withdrawals processed within a calendar month using bank transfer, while no fee is taken if you use debit card and PayPal.!
4. The Amount of Transaction
This aspect is also correlated to the payment method that the trader chooses. Every broker can set a various minimum amount of deposit and withdrawal, with a range from only a few dollars to tens of thousands. This will affect the number of funds that you need to deposit in the beginning and how much profit you will get later once you can withdraw your money.
Therefore, it's important to pay close attention to the minimum amount of deposit that each broker has determined for each payment method. In this case, the Wire Transfer system usually has a higher deposit size and minimum withdrawal than other methods such as Credit/Debit cards, e-payment, and third-party transfers.
To sum up, considering what deposit and withdrawal method needs a thorough consideration as it is a critical aspect of your trading experience. After practicing in a forex demo account, funding a real account is the first step to live trading. The various payment options and different rules that follow each method can sometimes be confusing, especially if you're a new trader. However, you can use the four aspects explained above to pick your ideal deposit and withdrawal option in a forex broker.
Our best recommendation is to prioritize brokers with various payment options, quick and efficient in processing your transaction, sets a relatively low fee, and have minimum deposit and withdrawal amounts that accommodate you. To find it easily, you can follow the guides in the Broker Finder.
6 Comments
chhewang tamang
Jan 27 2021
I invest with levitfx $300 but I invest for short time, they give me an offer for a short time profit is 7050 dollar but? they took from me several charges to get money for withdrawal money around 7500 dollars but still, yet I didn't receive or refund my money. In this case what should i can do?
Levitama
Dec 27 2022
Chewang Tamang: You were tricked, dude. Trustworthy brokers never require their customers to deposit more funds in order to make a profit. We were told to deposit if we wanted to start live forex trading. Even when I registered, they never ask me to deposit. So, if the broker asks and offers you to make a deposit in order to get a lot of profit, you can be classified your broker are a scam broker. The Forex concept is deposit, trade, win or lose. It's like trading some profit and sometimes loss. As such, you cannot know exactly how much profit you will make, and there are no investments in the world that can yield large returns in a short period of time.
Ogura
Jun 10 2023
Have you ever wondered why wire transfers tend to be so expensive compared to other methods of transferring funds in the trading world? Novice traders often overlook the fact that fees are cut twice during the deposit and withdrawal process: by the intermediary company and by the broker.
With wire transfers, the fee deducted by the intermediary can be very high because the funds pass through several banks before reaching their destination. Each bank charges its own fee for handling the transfer, contributing to the overall cost.
In contrast, some alternative transfer methods, like third-party transfers, eliminate the need for fees. These methods allow for direct transfers between accounts without involving multiple banks or intermediaries. This streamlined process offers more cost-effective options for managing funds.
Understanding the reasons behind the high costs of wire transfers is crucial for traders. Have you encountered expensive wire transfer fees in your trading journey? Have you discovered alternative methods that are more budget-friendly?
Lidya
Jun 12 2023
@Ogura: Wire transfers often come with higher fees compared to other methods of transferring funds in the trading world, and it's a question that many people ponder. The reason behind this lies in the nature of wire transfers themselves.
Firstly, wire transfers are typically processed through intermediary banks or correspondent banks. These banks facilitate the transfer of funds between the sender and the recipient's banks. Each intermediary bank involved in the process may charge a fee for their services, contributing to the overall cost.
Secondly, wire transfers are often considered to be more secure and reliable compared to other methods. They involve direct bank-to-bank transfers, which means that the funds are sent directly from one bank account to another. This added level of security and reliability comes with higher fees.
Furthermore, wire transfers are often associated with international transfers, which can incur additional charges due to currency conversion and international banking regulations.
Hocky
Jul 7 2023
Why have brokers like OANDA and FXCM made the decision to eliminate Credit Card and PayPal as payment options, even though they were previously available alongside Wire Transfer? Has this change been driven by specific regulatory restrictions imposed on these brokers, and if so, what are the key regulations that led to the removal of these payment methods?
It's interesting to see how brokers offer various deposit and withdrawal methods to cater to their clients' diverse needs, including classic transfer modes like Western Union, prevalent transfer modes like Wire Transfer and Credit Card, e-payment solutions, third-party deposits, and even cryptocurrency.
Gary
Jul 8 2023
@Hocky: In my opinion, brokers like OANDA and FXCM may have decided to remove Credit Card and PayPal as payment options due to regulatory restrictions and operational considerations. Financial regulations imposed on brokers often require compliance with guidelines to prevent money laundering and fraud while ensuring the security of client funds. Credit Card and PayPal transactions involve third-party intermediaries, which can introduce complexities and security risks. Additionally, these transactions may come with higher costs, including transaction fees and potential chargebacks, which can burden brokers administratively and financially. By focusing on more direct payment methods like wire transfers, brokers can streamline their operations, minimize costs, and prioritize security and compliance. Although Credit Card and PayPal options have been eliminated, brokers still offer other payment methods to accommodate clients' needs. As a trader, it's important to consider the available payment options provided by your chosen broker, factoring in convenience, cost, security, and regulatory compliance when making your decision.