Company

Spread

for EUR/USD

Min.

Deposit

Platforms

Offered

Account

Types

Spread

Type

Funding

Methods

Customer

Support

Execution

Details

AvaTrade

Offers four ways to trade: Forex, Spread betting, CFD trading, and options trading

 Offers Bitcoin, Ethereum, Dash, Ripple and Litecoin
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Your capital is at risk
€/£/$100Min. Deposit Learn More
  • MT4
  • WebTrader
  • Mobile apps
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  • Micro
  • Standard
  • VIP
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  • Fixed
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Trust Score:

AAA

Used by:

200,000

Established in:

2006

Regulated by:

Central Bank of Ireland, ASiC ...

London Capital Group

Offers one way to trade: Forex

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$100Min. Deposit Learn More
  • MT4
  • WebTrader
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  • Micro
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Trust Score:

A

Established in:

1996

Regulated by:

Financial Conduct Authority

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Your capital is at risk

City Index

Offers three ways to trade: Forex, CFDs, Spread Betting

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£25Min. Deposit Learn More
  • MT4
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Trust Score:

A

Used by:

140,000

Established in:

1983

Regulated by:

Financial Conduct Authority, A...

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Your capital is at risk

ETX Capital

Offers three ways to trade: Forex, Spread betting, CFD and Binary options

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$100Min. Deposit Learn More
  • MT4
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See Details
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IG

Offers four ways to trade: Forex, Spread Betting, CFD, Stock trading and Binary options

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Your capital is at risk
£200Min. Deposit Learn More
  • MT4
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Trade.com

Offers two ways to trade: Forex, CFDs

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Min. Deposit Learn More
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  • Market Maker
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Admiral Markets

Offers two ways to trade: Forex, CFDs

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Your capital is at risk
$200Min. Deposit Learn More
  • MT4
  • WebTrader
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  • Market Maker
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See Details
Your capital is at risk

Oanda

Offers three ways to trade: Forex, CFDs, Spread Betting

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$1Min. Deposit Learn More
  • MT4
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  • Market Maker
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See Details
Your capital is at risk

ThinkMarkets

Offers five ways to trade: Forex, CFDs, Spread Betting, Autotrade, Autochartist

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Your capital is at risk
$250Min. Deposit Learn More
  • MT4
  • WebTrader
  • Mobile apps
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  • Market Maker
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See Details
Your capital is at risk

EasyMarkets

Offers one way to trade: Forex

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Your capital is at risk
$1Min. Deposit Learn More
  • MT4
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  • Micro
  • Standard
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  • Fixed
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  • Market Maker
  • DMA
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See Details
Your capital is at risk
CFDs are leveraged products and can result in the loss of your capital. All information collected on 1/11/2017.
Hedging

The Ultimate Guide to

Choosing a Broker
For Hedging

Not sure which broker is right for you?

Don’t worry - we’ve got you covered. In this guide, you’ll learn:

Ready?

Part 1

Why Choose AvaTrade
For Hedging?

AvaTrade scored best in our review of the top brokers for hedging, which takes into account 120+ factors across eight categories. Here are some areas where AvaTrade scored highly in:

  • 11+ years in business
  • Offers 250+ instruments
  • A range of platform inc. MT4, Mac, Mirror Trader, ZuluTrade, Web Trader, Tablet & Mobile apps
  • 24/7 customer service
  • Tight spreads from 1.0 pips
  • Used by 200,000+ traders
  • Allows hedging
  • 1 languages
  • Leverage up to 1:400

AvaTrade offers four ways to trade: Forex, Spread betting, CFD trading, and options trading. If you wanted to trade EURUSD through copy trading or other means, skip to part two.

The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.

AvaTrade have a AAA trust score, which is v. good. This is largely down to them being regulated by Central Bank of Ireland, ASiC , FSA, FSB and BVI, segregating client funds, being established for over 11 years, and much more. For comparison:

Trust Score comparsion

AvaTrade London Capital Group City Index
Trust Score AAA A A
Year Established 2006 1996 1983
Regulated by Central Bank of Ireland, ASiC , FSA, FSB and BVI Financial Conduct Authority Financial Conduct Authority, ASiC and MAS
Uses tier 1 banks
Company Type Private Public Private
Segregates client funds

The second thing we look for is the competitiveness of the spreads, and what fees they charge. We've compared these in detail in part three of this guide.

Part 2

Who AvaTrade is (& Isn’t)
Suitable For

As mentioned, AvaTrade allows you to trade in four ways: Forex, Spread betting, CFD trading, and options trading.

Suitable for:

  • Spread Betting
  • CFD Trading
  • Forex Trading
  • Social Trading

Not Suitable for:

  • Share Dealing

To trade with AvaTrade, you'll need a minimum deposit of $100. AvaTrade offers a range of different account types for different traders including a micro account, mini account, vip account.

Finally, AvaTrade isn't available in the following countries: US, Belgium, Canada & Singapore.

Part 3

A Comparison of AvaTrade vs. London Capital Group vs. City Index


Want to see how AvaTrade stacks up against London Capital Group and City Index? We've compared their spreads, features, and key information below.



Spread & fee comparsion

The spreads below are illustrative. For more accurate pricing information, click on the names of the brokers at the top of the table to open their websites in a new tab.
AvaTrade London Capital Group City Index
Fixed Spreads
Variable Spreads
EUR/USD Spread 1.0 0.6 0.5
GBP/USD Spread 1.8 0.9 2.1
USD/CAD Spread 1.81.72.0
USD/JPY Spread 0.90.61.6
Crude Oil Spread 0.03 4.0 0.4
Gold Spread 0.60 0.6 0.5
DAX Spread 1.5 1.0 1.0
FTSE 100 Spread 1.0 1.0 1.0
S&P500 Spread 0.25 N/A 0.4

Comparison of account & trading features

AvaTrade London Capital Group City Index
Spread type Fixed A A
EUR/USD Spread 2006 1996 1983
EUR/GBP Spread Central Bank of Ireland, ASiC , FSA, FSB and BVI Financial Conduct Authority Financial Conduct Authority, ASiC and MAS
Crude Oil Spread
Gold Spread Private Public Private
DAX Spread

Part 4

Best Forex Broker for Hedging

One of the top Brokers for hedging reviewed by BrokerNotes is CMC Markets. However, it should be noted that one of the main disadvantages of CMC Markets is they do not offer the MT4 trading platform. For traders that require a broker with the Meta Trader platform, check our comparison of the best brokers that offer the MT4 platform. For traders that do not require the MT4 platform, see why traders prefer CMC Markets below.

Advantages of CMC Markets

  • Regulated by the Financial Conduct Authority: CMC Markets UK plc (173730) and CMC Spreadbet plc (170627) and the Gambling Commission, for their Binary option products, reference number 42013
  • Ability to hedge most trades with over 10,000 instruments
  • Comprehensive educational material
  • Wide range of risk management features including their Guaranteed Stop Loss Orders (GLSO)
  • Dedicated support whenever the markets are open
  • What is hedging in forex trading?

    In terms of forex trading, hedging is a strategy used by traders to protect a trading account from incurring large losses when something unexpected happens, by trading in both directions of a trade. A hedge can be viewed as a form of partial insurance against unexpected events and price movements that could occur and lead to losses in the forex market.

    There are different forms of hedging. Most of these methods can be classified unofficially into simple and complex hedging methods.
    a)

    Simple hedging

    Also known as direct hedging, simple hedging in forex implies opening two opposing positions on the same currency pair. In other words, you open a trade position in one direction and open another trade in a direction which is opposite to the initial trade, while the initial trade is still active. If a trader has open a long trade of 0.5 lots on the EURUSD, the hedge trade would be to open a short trade position of 0.5 lots on the EURUSD, with both trades running at the same time on the same account. What most traders do is to open a position, and when it starts to move negatively, they open another position in the other direction. They may then allow the currency pair to achieve a significant movement in one position, take profit and then adjust the stop for the other position to allow it to recover to some extent if the analysis for the currency permits this.
    b)

    Complex Hedging

    Complex hedging techniques involve a number of methods which are not restricted to the spot forex market alone. A true complex hedge will involve trading on a currency pair in the spot forex market and set up a contrarian trade as a hedge in the forex options market. How does this work?
    Let us assume that Trader John has a long trade setup in the spot forex market on the EURGBP to try to profit from the depreciation of the British Pound post-Brexit. In order to hedge against suffering a loss on this trade from a pound appreciation, John decides to purchase an option with a strike price that is lower than the price at which the EURGBP spot trade was made. This action, therefore, limits the downside risk of the spot trade. If the EURGBP goes up as expected, the trade gains from the spot forex trade and will only lose the premium paid on the option trade. If the EURGBP falls, then the spot trade will be closed off at the stop loss and the options trade then has potential to be profitable, depending on the number of contracts purchased and the scale of the move. This form of hedging is practised by institutional traders and that is partly responsible for why they make a lot of money even when markets are falling behind expectations.

    Factors to Consider When Choosing a Broker for Hedging

    1. Regulation

    Regulation of the broker must always be considered when choosing a broker for hedging. Hedging is inherently risky and some brokers do not always provide conditions that favour hedging. As with all types of trading, going with a regulated a regulated broker would be a prudent decision. Regulators like the Financial Conduct Authority have rules in place concerning hedging instruments, for example, their policy regarding Interest Rate Hedging Products.
    By choosing a regulated broker, you are using a broker that is mandated by law to follow those rules, which ultimately protects you, the trader.

    2. The Hedging Style Allowed by the Broker

    There are several methods of hedging. If you cannot use the simple hedging method or you find it too risky, you can use other methods. Your broker will determine what style of hedging you can perform, following the dictates of the regulators.

    3. Size of the Account Capital

    Hedging is better suited for traders with bigger accounts because it requires the use of more margin for opening new, opposing positions. Effectively a trader who hedges their trades would require twice the capital of a trader who does not.

    Advantages of Hedging

    The following are advantages of the use of hedging:
    a) When used correctly, hedging can protect traders against losses.
    b) Hedging provides the opportunity for traders to expand their trading skills set.
    c) Hedging is an indispensable tool for capital preservation when markets are in turmoil.

    Disadvantages of Hedging

    As with all trading strategies, hedging has the possibility to lead to losses and should not be considered a safe method of trading. Hedging has its costs and the potential benefits must be taken into account before justifying the cost of a hedge. It is important to remember that the goal of a hedge is not to make money but to protect you from losses.