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If I was to trade on the foreign exchange market as an individual investor and I bought 100 USD with my 70 GBP.

Have I essentially converted my currency similar to exchanging the currency in a bank ? Could I 'cash out' with dollars. Or is all this just speculation like a commodity futures contract?

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I've done exactly what you say at one of my brokers. With the restriction that I have to deposit the money in the "right" way, and I don't do it too often. The broker is meant to be a trading firm and not a currency exchange house after all. I usually do the exchange the opposite of you, so I do USD -> GBP, but that shouldn't make any difference.

I put "right" in quotes not to indicate there is anything illegal going on, but to indicate the broker does put restrictions on transferring out for some forms of deposits. So the key is to not ACH the money in, nor send a check, nor bill pay it, but rather to wire it in. A wire deposit with them has no holds and no time limits on withdrawal locations. My US bank originates a wire, I trade at spot in the opposite direction of you (USD -> GBP), wait 2 days for the trade to settle, then wire the money out to my UK bank. Commissions and fees for this process are low. All told, I pay about $20 USD per xfer and get spot rates, though it does take approx 3 trading days for the whole process (assuming you don't try to wait for a target rate but rather take market rate.)

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You would think so wouldn't you, after all, it's your money!

In practise though, it's not as easy as you might think because anti money laundering and anti fraud laws mean you generally have to withdraw money to the same account you funded your trading from.

Some forex trading account providers will allow you to fund from multiple sources, but then insist on putting money back to those sources in some proportion or some order or other.

Some forex trading account providers at least claim that they may, AT THEIR DISCRETION, let you do it, IF the destination account is in the same name, but I wouldn't be surprised if they charged you for it, and actually the charges might be somewhat justified if they have to invoke identification procedures to make sure the other account is indeed actually you.

You would have to talk to a specific service provider and see if they agree to do what you want, they all have FAQs about funding and withdrawal so you can scan around online for the slightly more flexible ones and then give them a call. You might find it difficult to get any guarantees out of them though.

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