Funding a managed account is a straightforward process.
Even though most brokerage firms have their own funding requirements and procedures, the way to fund an account is similar from forex broker to broker.
The Standard Funding Process – The Wire Transfer
When a customer is funding their account account, the wire transfer is usually the preferred method. After the client opens an account at the desired brokerage firm, he simply provides his current bank or broker the wiring instructions of the new broker and, depending on the country the wire transfer is being made from and the bank or broker initiating the wire, it can take between 1 to 3 business days for the funds to be posted to the investor's new account.
Credit Card Funding
Some customers use a credit card to fund, although it is usually not recommended. Here's why.
Since the average managed account is usually more than 10,000 USD in size, it is usually not convenient to deposit such a large amount of money via credit card. Not only will credit card fees be higher to fund the account, but when clients use credit cards to participate in an investment due to a lack of liquid funds, those clients won't be financially suitable to participate in a managed forex and should not be using credit for the same purpose.
Some brokers will allow the funding of accounts via local deposits. This option allows investors to go to a local bank that participates in the local funding program, and have the bank submit the funds to the broker on the clients behalf. This can also be done online, if the investor's bank provides for the submission of online wires.
The fee to complete the entire local-funding process is usually lower than for wire transfers. The problem is that most brokerage firms do not provide the local funding option and most banks that are in the investor's vicinity might not participate in the program. Forex Day Trading allows customers to fund their accounts using the local funding method.
Currency Conversion Fees
Even though investors can fund their accounts by making a transfer in any currency, most managed programs are usually traded in only one major currency; e.g., Euros, US Dollars, etc. This is because the master account where all client accounts are pooled is typically only offered in a single currency (see, "What is a MAM / PAMM?").
What this means is that if an investor wires funds in Euros and the account is based in USD, a conversion from EUR to USD must take place at the receiving broker end. Even though this currency conversion will take place at the going market exchange rate, the customer will have to incur a small fee to complete the conversion. This has the effect of reducing the amount deposited into the program. That is why investors should try to fund their accounts using an account in the same base currency (if possible).