Trading on the Forex global market can be a tempting thing itself. It is known to be highly volatile and risky. That is, notably, applicable to all types of trading account, no matter if you have $5 or $5000 invested in it. Now imagine that you have, to say, $100,000 of funds allocated to Forex trading. What does that mean apart from higher trading capacities? That you have higher loss potential and higher risks connected to the large account Forex brokerage choice.
Therefore, that is of utmost importance for you to perceive that decision-making process as seriously as possible. Overwise you simple risk losing all of your hard-earned money to brokers that might turn out to be complete scams. However, before moving towards the operations of brokers allowing you to keep those funds on your trading account, you, presumably, need to learn about the essence of Forex trading with large funds itself. Now, without any more rambling, let’s jump directly into the topic of our article.
FCA, ASIC, DFSA
CySEC, FCA, ASIC
MT4, MT5, WebTrader
ASIC, BaFin, FMA, CNMV, FSC, CIMA, RAK
FCA, SV, FSCA, DFSA, FSA
cTrader, MT4, MT5
100 GBP/EUR,150 USD
MT4, MT5, WebTrader
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Firstly, imagine the Forex trading market just like any of your local street market. Yes, that is right. Someone has something to offer you, currency in our case, and there are also members who are eager to buy the services/products available on the market. But things are not that primitive, unfortunately, when it comes to Forex trading space. As it is famous for being the most liquid one. However, the liquidity of the market is mainly connected to the main popular currency pairs. That means that change in pips of those has the lower potential to change drastically in comparison to weak pairs.
For instance, if you have decided to trade with any of the exotic currency pairs like USDPLN or USD vs. Polish Zloty, in other words, your pips are likely to change by more than 2 pips over time. That might be explained the following way. The FX brokers suitable for large accounts will take time to unload your order for that currency pair to the market. Meanwhile, the price for that might increase or decrease over that period of time.
That, in turn, might be explained by the simple economic phenomenon: the relationship between the price for something and supply/demand for that product/service. Thus, if the supply on the market goes up, the price, in turn, will go down. But if you increase the demand, the price, in that case, will go up as well. Therefore, if you are placing an order for one of the exotic currency pairs, you automatically make rather excessive demand or supply, depending on your position on the market.
Moving toward the question of whether it is possible to earn billions of dollars with the large trading accounts, the answer will rather be “no”. That is simply explained by the reason mentioned previously. When you are trading with a big Forex account, you are creating a huge demand and supply swings on the market, even if you are trading with stable currency pairs like, for example, EURUSD.
Just because it takes time for the top best brokers for large accounts to load your orders on the Forex market, you will most probably face huge price changes. Thus, it gets even harder to somehow predict how the market will behave in the future. Not that it is an easy thing to do in the first place.
That is the main reason why teams of traders were created. By gathering capacities of those traders, that is somehow possible to break down large orders and try to trade smaller “pieces” instead. In general, when you are trading with large funds, you are moving the whole market. Therefore, it becomes impossible for you to make enough profit to then multiply your account balance and earn billions on that.
Another important thing to mention is that there are not many Forex broker who will allow you to trade with huge funds. But they still exist. So let’s discuss if it is worth it to sign up with those, what are the factors you need to pay your attention to the most, and what are the certain risks associated with huge fund Forex trading.
That is quite a subjective topic for discussion. As you can’t really tell where the large funds trading starts. However, we feel like trading with the $10,000 capital can be perceived as one. However, experts state that you shall always think as a big player, even if you have only $10 on your account.
But there is still a certain accounts classification existent online we would like to share with you. So, some people claim that account with less than $500 shall be considered as a Tiny Account. Then follows a Small Account with the capital of $500 and $2,000. A Medium Account shall store an amount of $2,000-$10,000. A Large Account start at the level of $10,000-$100,000. And, finally, you can be called a holder of a Very Large Account, if you are keeping a capital worth over $100,000 on your trading account.
Basically, when you have large funds kept at your trading balance, you might be called the “big league” trader. And that, in turn, gives you a number of undeniable priorities and benefits in comparison to others. For instance, you are eligible to enjoy the best Forex trading platforms, the best tools, and the best services provided by Forex broker you are working with.
However, in order to get full value for money, you need to analyze the broker you will be trading with first. Here you may find the extensive list of factors you need to pay your attention to:
The Forex brokers that allow you to keep huge funds on their trading platform, shall provide you with certain benefits and features that will not be available for other traders. And that is actually in the best interest of those brokers.
Everyone knows how competitive is Forex brokerage market, each one of those is trying its best to attract customers and, what is more, to keep them loyal. So, if you are giving those your money, why not to take the most out of that? That is the main reason why lots of Forex brokers allowing you to trade with huge funds are providing separate account types that will be available for huge funds owners only. Those account holders are usually awarded certain bonuses and special offers.
That is yet another undeniably important factor you need to look after. Everyone knows by now how important the presence of license is for Forex brokers. That becomes even more critical when it comes to trading with huge capital. You should never trust any money to brokers that cannot provide you with the string proof that they are regulated by any of the regulatory institutions.
However, as things are getting even more serious when it comes to trading with large accounts, your research and analysis shall be more thorough and detailed as well. Therefore, never trust the words of the broker only, overwise you are still risking to be tricked. If any of the large accounts oriented Forex brokers states that they have the license, you shall still proceed to the regulatory official website and check it yourself. But that is not it, you also might need to check up on the broker’s reputation among traders on the Forex review forums. People there will never hold back and will tell you the truth as it is.
When starting to trade with big funds on Forex market, you need to understand that the usual trading platform cannot satisfy your needs anymore. As the scope of your trading gets bigger and your potential losses are getting more serious as well. Therefore, you need to check if the Forex brokerage, that can already be perceived as a market maker, has DMA, or Direct Market Access, platforms provided. Those platforms allow traders to obtain direct access to interbank trading. Simply saying, this way traders can directly connect with large banks and other financial institutions using ECN platforms.
ECN is abbreviated as Electronic Communications Network and is responsible for connecting Forex traders with the international banks and other liquidity providers via a network connection. Therefore, we might say that if the trader is using the ECN platform, s/he is actually trading in a real-time regime.
All in all, using such platforms allows brokers to provide traders with the highest transparency level and yet eliminate the possibility of price manipulations or requotes.
Just to illustrate what we will be talking about next, we want to remind (or tell) you about what happened to one of the previously most successful brokers from the list of FX trading brokers for large accounts – Alpari UK. It seemed to be really stable and reliable: it was regulated by the highest regulatory institution, had ECN/DMA available for traders with large accounts, as well as offered several account types for traders that were trading with large funds. Seems perfect, right? However, it was one of the first ones that were completely destroyed after the SNB’s tsunami that took place in mid-January 2015.
Notably, there were other weaker and smaller brokers that actually managed to survive. “Why did that happen” you would ask. Well, here were capitalization rate of the brokerage comes out of the shadow. The thing is that this Forex broker simply did not have enough funds and liquidity to cover all of the losses that appeared during that economic crisis.
Therefore, we will not get tired from saying that you need to check up on the broker you are planning to go within the smallest details. And yet another factor you need to consider analyzing is the financial condition of the broker, as well as the risk mitigation strategies it offers.
That is something that might be offered to you only if the broker has separate account types available for large funds Forex traders. Meaning that you shall be able to withdraw your funds without any major complications, just like you would do if you were trading on a checking account.
Summing everything up, we would like to remind you the main idea of that article: you shall never underestimate the funds you are trading with, that is still your money you are risking to lose in case you are trading unwisely. Therefore, even if you have something like $100 on your Forex trading account, you still need to think big and analyze every step you take.
Another point that was mentioned in the article is that you always need to check the reputation and reliability of the FX broker you are planning to start trading with. Sometimes, unfortunately, even those FX brokers that are best for large accounts turn out to be scams that steal traders’ money.
And, finally, the best thing you can do when trading with large funds, is to choose ECN/STP brokers that will allow you to actually trade smart with the large funds you have. Why is it a good idea? Simply because those brokers are the ones that are trying their best to provide their users with the lowest spreads, yet connecting them directly to the liquidity providers. That, in turn, ensures that you are not playing against your broker, as it usually happens with the market makers. As ECN/STP Forex brokers are not benefiting from your loss. On the contrary, they are gaining profit when you are better off.
All in all, conducting thorough research will benefit you either way. Better be safe than sorry.
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