Forex Trading: How to Manage Large Bankrolls to Optimize Fees

One of the things inherently connected to trading online, be it on the Forex or any other market, is the need to move the money around. Jumping from one Forex broker to another is something experienced traders to quite often. Reasons for this vary: tempting bonus offers, better spreads, unique opportunities, etc.

However, moving money around as well as investing, although fairly simple in its essence, doesn’t come without its costs. When you are faced with a task of moving a significant amount of money from one broker to another, it can be an expensive endeavor. Likewise, a broker can charge you a hefty sum on a big investment.

This article will help you learn how to manage large bankrolls to optimize fees. While it is (unfortunately) impossible to avoid the fess altogether, there are some tips and tricks you can use to minimize them. When talking about really large monetary amounts, every fraction of a percentage counts, so even a relatively small discount (percentage-wise) can be quite significant in terms of actual, real-life value.

Understand How Your Broker Operates

The key to minimizing fees when operating on a big bankroll is understanding how your broker operates and what rules they have in place regarding deposits, withdrawals, and investments. Generally speaking, there are two large groups of Forex brokers:

  • Discount brokers
  • Full service brokers

In addition to this, not all brokers follow the same pattern. Some will have fixed fees they charge on trades, while others will take their cut based on a percentage. In the worst case scenarios, you will be charged with both – a flat fee and a percentage after your trade has been completed.

This may sound a bit complicated, but it is essential thing to understand before getting involved with Forex trading, especially on a large scale. If you don’t know what you are getting into, a significant portion of your money can be quickly eaten up by various fees and you will have hard time keeping up the pace and maintaining your bankroll afloat.

Finding Good Forex Brokers

There are countless Forex brokers out there these days and, let’s face it, not all of them are good. In fact, many of these so-called “companies” are in it for a quick buck. You will recognize these brokers by unusually high fees or multiple fees charged on single trades (when you enter the position, when you close it, plus the percentage of your trade).

If you are looking for a way to manage a large bankroll while optimizing fees, your best bet is finding a reliable broker that charges a fixed fee per trade. These amounts are usually not that big (around $AU 20) and they shouldn’t cut too much into your bottom line.

Try to avoid those Forex brokers who also try to charge you a percentage. While in some cases these might even be decent brokers otherwise, for someone doing large trades, it can be next to impossible to outrun all the fees. While small-time traders could benefit from percentage-based fees, these will nearly always be unfavorable for those making big trades regularly.

Discount Brokers: Pros and Cons

Another way to avoid fees when managing a large bankroll is finding a discount broker. These companies will offer trades at a discounted price, often as much as 50% cheaper than a full service broker. However, this does come with certain cons.

A discount broker will not offer any type of financial advice. They will give you a fully functional trading platform but you will be left to your own means. This choice will heavily depend on your Forex trading experience and willingness to take risk. For experienced traders, the advice provided by a broker may not be valuable enough to warrant higher fees and they will gladly give it up to save money on trades.

Novices, on the other hand, will have hard time finding their way around on their own. That’s why it is best to start trading small and only increase your trading bankroll when you become more experienced. If, however, you want to start big right off the bat, you probably shouldn’t pick a discount broker because trading tips will be invaluable to you at the start of your Forex trading career.

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If you want to manage a large bankroll to optimize fees, you will have a few choices available to you. One of them is finding a broker that charges fixed fees regardless of the trade. These brokers are better fit for large traders because paying a percentage on every trade can quickly add up and make it almost impossible for your trades to be profitable.

Going with discount brokers is another possibility, but this option is for experienced traders only. Since discount brokers do not provide trading tips you will be left to your own means. Your trades will be much cheaper, helping you preserve and grow your bankroll, but you will have to come up with the ideas and decisions completely on your own.

Depending on your trading experience and willingness to risk, there are definitely ways to help you manage large bankrolls to optimize fees. Follow this advice, make sure to fully understand your broker’s rules before you start trading, and you should be golden!