Here's an unusual question: when, how and why close a trading account? We usually wonder which broker to choose in order to open an account. We compare them, try different platforms and register with one or two brokers. However, closing an account can become necessary quickly depending on the customer's experience.
Why the need to close an account?
There are several reasons why a person would want to close their trading account. First of all, the customer may have had a bad overall experience with the broker, whether in terms of order execution, customer support, available services, etc.
Transaction and commission fees that are too high may also result in the desire to change brokers. Because the competition is fierce, it is often interesting to go elsewhere if necessary. High fees are not synonymous with outstanding service.
In addition, some brokers charge for inactivity. This is a monthly fee for any inactive account, i.e. a trading account on which there has been no transaction within a given period. In order to avoid bad surprises, it is advisable to look carefully at the terms and conditions before registering with a broker.
Finally, it is likely that the trader is a customer of one or more other brokers they prefer. They will therefore “get rid” of those they no longer need, by transferring their funds from one broker to another, for example.
How to close your account?
The account closing process varies depending on broker.
However, the common element is that all trading positions must be closed. There must be no open trades and you must liquidate everything before closing an account.
As for the procedure itself, it is sometimes possible to do everything online by going to the "account" section and clicking on "close the account" links or "delete my account permanently". Your account can be closed in just a few clicks. However, it is rarely as simple and fast.
According to brokers, an application form must be completed, signed and returned to the broker via the platform. Sometimes a specific email should be sent to customer service.
The customer may have to transfer the remaining capital to their bank account, like a simple withdrawal, before closing the account. For other brokers, this ultimate withdrawal of capital can be done at the same time, specifying the transfer method desired. This withdrawal can be made to a bank account, a credit card, a PayPal account, and so on. Nevertheless, there may be restrictions on the means of withdrawal, such as bank transfers only.
Most of the time, the broker will ask the customer to update their documents before any account closure request. Thus, the identity and proof of address documents must be returned before they can close their account. This is an important detail that can lengthen the time required to close the account and withdraw capital.
In any case, you will need to know about any closing fees. Just like inactivity fees, this kind of unfortunate modality must be taken into consideration before opening an account with a broker!
