Best brokers for online trading on Forex, cryptocurrencies, indices and commodities
ESMA regulation for European traders: up to 1:30 leverage on Forex and up to 1:2 leverage on CFDs
The new ESMA regulation has profoundly changed the use of leverage for non-professional traders, bringing it back to up to 1:30 on Forex and up to 1:2 for CFDs. If on one hand we complain of the excessive restriction on leverage, on the other hand we must applaud this legislation which has allowed us to restore professionalism and credibility to the sector. There were too many low-quality services that continued to maintain a strong link with high financial leverages and risked burning accounts at the slightest mistake.
Another important ESMA initiative is deposit insurance for all European customers. That is, you cannot lose more than the amount deposited with a broker. So before making a choice about the broker being ESMA or non-ESMA, make sure you really understand the need for high leverage and maximum risk insurance.
Forex broker strategies
As mentioned above, every Forex strategy affects the choice of the broker. If you are a scalping trader or a trader who uses Expert Advisors with numerous intraday trades then you must prefer ECN / STP brokers.
After comparing and choosing the best Forex and CFD broker for you, we recommend that you read and use one of our winning trading strategies:
- We-Point: trend following strategy
- Spread Trading: non-directional trading strategy
- Ichimoku Kumo Breakout Trend Following
ECN / STP Broker and Market Maker Broker
ECN / STP brokers use IT structures called No Dealing Desk, that is, they match customer orders automatically. All ECN brokers are STP but not the other way around.
ECN brokers are designed to enter customer orders in the interbank Forex market and are characterized by a high degree of trading volumes, tight spreads and entry and exit fees. Entry thresholds of at least $50,000 were required to work with ECN brokers. So ECN brokers are real intermediaries who do not intervene in the event that there are no prices to match. In fact, one of the negative aspects of ECN accounts is the possibility of not finding the counterparty willing to exchange currencies or, in the event of volatility, the jump of the price entered in the order.
STPs can be ECNs or not… i.e. they can create a trading system that automatically matches the buy / sell orders of the broker’s customers but not on the interbank Forex market. So they work as if they are in a sub-market. Also in this case there are reduced spreads and entry and exit commissions. STPs maintain a structure similar to ECNs’ and do not intervene to match the trading prices of currency pairs.
Among the ECN / STP brokers featured in the comparison table above are: Pepperstone, Swissquote, Tickmill and KeyToMarkets.
Finally, there are the Market Maker brokers which are the most common and which act as a counterparty to the trader to ensure the execution of the prices entered and the protection from negative balance. For their service, however, they apply higher spreads than ECN brokers but do not apply entry and exit commissions. Being the trader’s counterparty can be an advantage or a disadvantage. It depends on the seriousness of the broker and the type of trading you do.
Among the best Market Maker brokers that we recommend are: XM and Avatrade.
Expert Advisors and Forex Scalping
In case you want to trade with Expert Advisors and / or use Forex scalping strategies then we advise you to choose an ECN, STP or reduced spread account such as the XM Zero Spread account.
No deposit broker bonus
Another element of comparison among the best Forex and CFD brokers can be the welcome bonus till 500 Euros/Dollars or the first deposit bonus. This is a bonus that the broker will credit you following the opening of an account and / or deposit which can be advantageous for increasing the capital available to invest. For example you deposit 1000 and have a balance of 1000 + a bonus of 500. In this case, you can take advantage of the entire trading margin calculated on 1500 and not on 1000 Euros.
Among the Forex brokers with bonuses we recommend FBS because the bonus is on the trading margin, it can be used to trade and withdraw profits and does not constrain withdrawals. However the bonus can never be withdrawn.
Always inquire before accepting Forex bonuses as they may bind you in withdrawals.
Finally we want to remind you that STP and ECN brokers cannot give deposit bonuses.
Forex commissions and spreads
As we said before, ECN and STP brokers charge trading fees which in most cases are 5 USD per trade executed. Market maker brokers, on the other hand, do not apply commissions but a spread between the Ask and Bid prices.
Normally the spread on EURUSD is 2 pips.
Some brokers charge withdrawal and deposit fees that can be as high as 20-30 euros.
Also in this case we want to pay attention to the XM broker, who applies a spread of 1.5 pips on EURUSD (0.2 on the Zero Spread account) and does not apply commissions on withdrawals and deposits.
CFD trading deserves an important look, that is the offer of indices, shares and commodities in the brokers’ MT4 platform. These are derivative instruments linked to futures and are treated differently from broker to broker. Among the best CFD brokers we recommend XM, because its MT5 account offers excellent spreads on CFDs and applies very competitive and almost negligible swap fees.
Training, Webinars and Trading Platforms
Another very important element to compare and choose the best Forex and CFD brokers is related to the free basic or advanced training services that you can get by becoming a broker’s customer. If you are in the early stages of becoming a trader then you definitely need a productive and winning approach.
Enter now on the best and complete educational program for trades
If you want to become one of the best Forex traders, it is necessary to study both in the first phase and subsequently to improve trading strategies, know and avoid your mistakes and compare yourself with other professional traders.
Almost all brokers offer free training via online Forex webinars or via trading seminars. Among the many we mention XM.