Lesson 6 of 8 · 7 min
Deposits and withdrawals
Where your money goes when you deposit, what it costs to move it in and out, and how a small withdrawal tests a broker before you deposit more.
By the end you'll be able to
- Explain what happens to your deposit at a segregated and a non-segregated broker
- Calculate the real cost of a deposit and withdrawal including conversion
- Run a withdrawal test before scaling up a deposit
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Depositing is always easy. The only thing you learn about a broker from a deposit is that its payment page works. Withdrawing is where you find out who you are dealing with.
Where the money goes
Segregation means the broker holds client money in separate bank accounts it cannot use for its own business. Toggle to see what happens if the broker fails.
At a broker with segregated client funds, your deposit goes into a separate bank account held on trust for clients. At a broker without, it goes into the company’s general account alongside its rent, salaries and trading losses. The difference is invisible day to day and decisive the day the broker fails or decides it would rather not pay.
Regulated brokers must also run KYC checks: identity and proof of address before you can withdraw. Annoying, and a good sign. A broker that takes deposits with no checks has no regulator asking it to.
What moving money costs
Typical fee structures, not any specific provider’s. A currency conversion can cost 0.5–1% each way.
Three costs hide in a transfer: the method fee (wires are flat, e-wallets are a percentage), a currency conversion charge if your card or bank uses a different currency from your account, and sometimes a broker withdrawal fee on top. The conversion is charged both ways and rarely itemised.
The withdrawal test
Before any serious deposit: fund the account with a small amount, trade a little, and withdraw some of it. Note how long it takes, what it costs, and whether anyone tries to talk you out of it. A regulated broker processes a withdrawal in one to three working days with no persuasion. A broker that delays, asks for new documents each time, or offers a bonus to stay has told you what you need to know, cheaply.
Quick check
Question 1 of 3
Your deposit at a segregated broker is held:
Question 2 of 3
Which transfer cost do people most often overlook?
Question 3 of 3
The purpose of a withdrawal test is:
Go deeper: Forex Withdrawal: How to Get Your Money Out and What It Costs · Segregated Accounts in Forex: How Your Money Is Protected