Design a Small Withdrawal Test Before You Trust a Broker

[Fairman]

Design a Small Withdrawal Test Before You Trust a Broker

Scenario: you are considering a broker, and want to measure its handling of withdrawals before depositing real money. Plan a test with a small amount.

Step one, choose an amount you can afford to lose completely, say 100 dollars. Note the deposit method, the time of deposit, and any fee. Suppose the deposit is free and instant.

Step two, complete identity verification, and record how long approval takes. If it takes four days, note it.

Step three, place a few small trades, for example 0.01 lots, including one at a volatile time, such as the London open. Record spreads and fills.

Step four, request a withdrawal of 90 dollars, leaving a small balance. Record the date and time, the method, the stated processing time, and the fee. Suppose there is a 5-dollar fee, which is 5.6 percent of the amount.

Step five, measure the time until the money arrives in your account. Suppose it takes three business days.

Step six, assess. Total cost of the round trip: fees of 5 dollars plus spread costs on trades of perhaps 1.50, about 6.50 dollars on 100, or 6.5 percent. Total time: nine days from deposit to receipt, including verification.

Compare with the broker's claims. If it advertised withdrawals within 24 hours, the gap is a red flag.

Decide before you start what counts as a pass, such as arrival within two business days and fees under 2 dollars.

Exercise: write the pass criteria for a withdrawal test on a broker you are evaluating.