Do you want to avoid foreign exchange fees? Do you still use the banks to convert your funds in other currencies? In my previous foreign exchange post, I discussed the Norbert’s Gambit. It’s definitely one way to improve on your foreign exchange fees but it can have its disadvantages. On the other hand, a better way to do foreign exchange on a regular basis is to use a forex broker platforms. I have not personally used one of those platforms yet but I have looked into a couple of them and I am hungry to know more. Before we dive into the forex platforms and what they can do for you, I’d like to establish the scenarios under which people tend to do foreign exchange.
Foreign Exchange Scenarios
Currency For Trip
Be it a family vacation, a personal or a business trip, going to a foreign country usually requires funds in the countrie’s currency for your day-to-day spending. In some cases, your VISA or Master Card can cover many of the expenses but having cash on hands is beneficial too. In those cases, the cost of exchanging your money doesn’t add up to a large amount. Some will use the banks but when available near you, a currency exchange office will tend to beat the bank’s exchange fees. However, I would avoid the airport’s currency exchange as they tend to know you are desesparate
This is a common one for Canadian when we want to add some U.S. stocks to our portfolio. Something I do in my RRSP account. In the case of foreign investments, the amount of money that one will convert from one currency to another can be relatively large leading to higher cost in fees. This is where you start to really think about the savings you can have by finding better rates. A really small percentage can really add up
Moving To Another Country
Aside form the major life style transition, you need to think about possibly move large amount of money into another currency. I have many co-workers that have moved from Europe to Vancouver for work and many have actually used a forex platform.
My Foreign Exchange Needs
As it turns out, I work for a U.S. corporation and aside from my pay being in Canadian dollars, any stocks I get are in U.S. I know many others are in this situation too and it basically requires us to move money around in either currencies. I already tried the Norbert’s Gambit and I can’t say that I will use it regularly with my current discount broker.
My Foreign Exchange Process
Here is what I currently do:
- Wire transfer the proceed from my company stock account to my U.S account at my bank
- Get a bank draft form the bank (free of charge)
- Exchange my bank draft at a local currency exchange office offering the best deal I can get
- Deposit the cheque at my back (no hold on the cheque)
There are many forex platforms out there and it’s not always clear what you should look at to be honest. We see many reviews about discount brokers but not much about forex platforms. I know that Interactive Brokers does forex, if you use it as a discount broker, but they have monthly fees for having an account. I also found XE.com based in Canada but the lack of reviews and the requirements for a U.S. account in the U.S. are demanding.
This is an area where I lack experience and I am definitely not here to highlight what platform is best but I have a need for it to save a buck So readers, do you have any experience with a forex platform that you would like to share?