Given that foreign exchange trading tends to exceed $4 trillion in average traded value, every day, you would be right to think that choosing the right broker to make your overseas money transfer is not an easy decision to make.
Fortunately, The Money Cloud exists precisely to make the process as simple and hassle free as possible. Both of our co-founders Emmanuel and Huw spent years researching the process of sending money overseas, working alongside governments across different continents, and even setting up a site to help migrant workers send money back to their families.
It was whilst doing this that they had the idea for The Money Cloud, which works with a network of sophisticated brokers to find the best deals, and best processes and procedures for each individual overseas transfer, from anything from £100, to £1 million pounds – or more!
Although you can always rely on The Money Cloud, it doesn’t hurt to educate yourself about how to pick the perfect broker, so here’s 5 “rules of thumb” it’s always helpful to apply if you are struggling to get to grips with the options available to you.
Is the FX broker regulated?
Avoid unregulated brokers! You should be able to quickly tell, upon visiting any foreign exchange site, whether the firm is regulated or not. In the UK you are looking to see if the firm is regulated by the Financial Conduct Authority (FCA). Don’t be fooled by slick, stylish websites, big promises or pushy sales agents. Being regulated means being accountable for customer deposits, and having your integrity vouched for. In the event of the broker defaulting the customer’s assets are automatically protected by the Financial Services Compensation Service (FSCS) up to an amount of £48,000. In almost every circumstance, using an unregulated broker is taking a big and unnecessary, risk with your money.
Is the FX broker offering a reasonable spread?
A spread is quite simply the difference between what price a broker will buy at, and what they will sell at. Obviously there will be a difference; the broker will make a small profit from every deal that they make, but the best brokers’ spreads will be “thin” – i.e. just a few basis points between the buying and selling price.
It is always worth shopping around to see which broker is offering the best spread – or you could save a lot of time (and money) by using our comparison widget.
- How easy is it to setup an account?There are two factors at play here – setting up an account should be straightforward, but you should also expect a satisfactory level of “know your customer” checks. You probably do not want to waste a lot of time if you are only sending a small amount, so it may be tempting to choose a broker who can set up your account quickly and efficiently without taking you through unnecessary security steps.That said, the chances are you will need to make another overseas transfer at some point, so taking extra time and registering with a more security conscious broker could be worth your while in the long run.At The Money Cloud, we are only too happy to guide you through the verification personally – remember – a broker is for life, not just for Christmas!
- Online trading platformsHow quickly your broker can respond to sudden fluctuations in the prices of different currencies due to market events matters a great deal. The best brokers will be using software and trading platforms that ensure they are right on top of the market, and can execute trades quickly and efficiently.You may not be the expert when it comes to trading platforms, and again, you can always reach out to us for advice, but a little working knowledge – or even asking the broker to explain to you personally what systems they are using – goes a long way.
- Are you getting along?Personal relationships and gut feeling matter – some might even say they move markets on their own! A frosty relationship with a FX broker is bad news – and smacks of unprofessionalism.
You want a broker that will always do their best for you and prioritise your interest over their own. Of course, standards of service vary – there are good brokers and bad ones – but good interpersonal skills, a good memory and having market knowledge at their fingertips are all clear signs that you are dealing with a good one.