In last week’s email we looked at strategies for further growth on bigger accounts.
Once your account reaches a decent size you’re suddenly faced a bit of a dilemma… you’d need to stake huge lumps of money on each of your trades in order to maintain the performance of your strategy.
Staking £100 per pip definitely has a different feel about it to staking £3 per pip!
Now, one of your options is to simply scale things back and accept a slower rate of growth.
But, like I mentioned last week, you can also spread your business around a few different brokers. That way, you can build up the overall position size you want and still diversify some of the risk.
You’ll never prevent losing trades of course, but at least you’ll be cushioned to some degree in the event of a broker going belly-up.
(NOTE: FCA approved brokers have a duty to keep client funds ring-fenced and away from the day-to-day dealings of the firm itself. It means your deposits are protected, but it can still take a bit of time filling forms in etc. before you get your money back. Better to be without part of your overall account for a while rather than the whole shooting match!)
Anyway, after reading last week’s missive, Simon emailed in with this:
“Sorry to bother you, but with regard to this email and your advice to use more than one broker, do you have any that you recommend apart from ETX?
Using your strategy I am now managing over £10k with them, which is great, and I really can’t thank you enough!”
Good work there by Simon! And here’s how I answered:
“I’d suggest looking at GKFX and Corespreads for retail SB brokers.”
[To be fair, any of the UK based FCA registered firms are worth considering. Just keep an eye on the spreads they charge]
“And LMAX and Interactive Brokers for ‘pro level’ platforms (but higher deposits required here etc).”
[It’s definitely worth keeping one eye on the future, but you will need minimum deposits in the region of £10k to open an account with the pro level brokers.]
“As usual, do your due diligence and make sure you’re completely happy before placing any money with them.”
Just as in any other industry, trading firms come and go.
The people offering great products and services one month can ‘drop the ball’ and fade into obscurity the next.
So, I’m always more than happy to make suggestions, but… you MUST take responsibility for doing your own bit of background checking.
Seeing how quickly their customer services answers the phone is always a favourite test of mine…
Phone them up and ask them a daft question. See how helpful they are.
It gives you peace of mind you’ll be able to reach them fast in the event you need to close a trade quickly (e.g. the internet connection you are trading from goes down and you need manual assistance closing positions).
Alright, back to it…
Have a think how you might start spreading your funds once you’ve built-up your account and I’ll catch up with you again next time.