Best Forex Brokers For Hedging 2022

Updated: Apr 25, 2022
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The following article presents an informative overview of hedging in the forex markets. Here, you will learn exactly what hedging is, and how is it used in the trading of forex.

We outline the various hedging strategies and inform you on whether hedging is aloud by all brokers. Discover what this important insurance methodology called hedging has to offer forex traders.

The brokers below represent the best Forex Brokers for Hedging.

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BrokerOfficial SiteRegulationsMin DepositMax LeverageTrading PlatformsFoundation YearPublicly TradedTrading Desk TypeCurrenciesCommoditiesIndicesStocksCryptooffers promotions
FP Markets
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This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; When trading CFDs you do not own or have any rights to the CFDs underlying assets. FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354). FP Markets is a group of companies which include, First Prudential Markets Ltd (registration number HE 372179), a company authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC License number 371/18, Registered Address: Griva Digeni, 109, Aigeo Court, 2nd floor, 3101, Limassol, Cyprus. FP Markets does not accept applications from U.S, Japan or New Zealand residents or residents from any other country or jurisdiction where such distribution or use would be contrary to those local laws or regulations.

ASIC, CySEC

$100

1:30 (ASIC), 1:30 (CySEC)

MT4, MT5, IRESS, WebTrader

2005

DMA, ECN, No dealing desk, STP

PFD
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Your Capital is at Risk

FMA

$0

1:500 (FMA)

MT4

1999

ECN, No dealing desk, STP

CMC Markets
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

FCA, ASIC, DFSA, BaFin, IIROC, MAS, FMA

$0

1:30 (FCA), 1:30 (ASIC), 1:50 (DFSA), 1:30 (BaFin), 1:45 (IIROC), 1:20 (MAS), 1:500 (FMA)

MT4, CMC Mobile App, CMC Web Platform

1989

Dealing Desk, Market Maker

Pro Tip: Most of these brokers offer free demo accounts so you can test the brokers and their platforms with virtual money. Give it a try with some play money before using your own cash.

Here’s a list of Best CFD Trading Brokers 

Note: Not all Forex brokers accept US clients. For your convenience we specified those that accept US Forex traders as clients.

FP Markets

Regulated by:ASIC, CySEC

Headquarters:Australia

Foundation Year:2005

Min Deposit:$100

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This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; When trading CFDs you do not own or have any rights to the CFDs underlying assets. FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354). FP Markets is a group of companies which include, First Prudential Markets Ltd (registration number HE 372179), a company authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC License number 371/18, Registered Address: Griva Digeni, 109, Aigeo Court, 2nd floor, 3101, Limassol, Cyprus. FP Markets does not accept applications from U.S, Japan or New Zealand residents or residents from any other country or jurisdiction where such distribution or use would be contrary to those local laws or regulations.

FP Markets was founded in 2005 and is regulated by the Australian Securities and Investments Commission (ASIC), offering segregation of client funds and top tier liquidity. FP Markets is a group of companies that includes First Prudential Markets Ltd which is authorised and regulated by the Cyprus Securities and Exchange Commission.

FP Markets also offers a range of education and market analysis resources through the Traders Hub which includes technical analysis and fundamental analysis articles and videos, as well as, trading ebooks and video tutorials. Users can access live support via telephone, email and live chat 24 hours a day, 5 days a week.

Pros: Cons:
  • ASIC regulated.
  • ECN pricing and DMA trading available.
  • 10,000+ tradable financial instruments.
  • Wide range of trading platforms and trading tools available.
  • Excellent customer support and education tools.
  • The volume of choice of markets and accounts may be overwhelming for beginner traders.

Pacific Financial Derivatives Ltd

Regulated by:FMA

Headquarters:New Zealand

Foundation Year:1999

Min Deposit:$0

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Your Capital is at Risk

Pacific Financial Derivatives (PFD) Limited was founded in 1999 and has been regulated by the New Zealand Financial Markets Authority (FMA) since 2015. The broker is also part of the Financial Dispute Resolution (FDR) scheme.

Clients can choose from three account types called PFD Trader, PFD Pro, and PFD ProPlus. The PFD Trader account offers commission-free trading with competitive spreads whereas the PFD Pro and PFD ProPlus are commission-based but offer the tightest spreads. MAM, Islamic and demo accounts are also available and the maximum leverage is high at 1:300.

Pros: Cons:
  • FMA regulated.
  • Commission-free trading available.
  • Up to 1:300 leverage.
  • Low commission.
  • Very competitive spreads.
  • Limited trader research and education.
  • No negative balance protection.

CMC Markets

Regulated by:FCA, ASIC, DFSA, BaFin, IIROC, MAS, FMA

Headquarters:United Kingdom

Foundation Year:1989

Min Deposit:$0

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

CMC Markets is a multi-asset class spread betting and CFD broker with over 30 years of experience, regulated by the UK’s Financial Conduct Authority (FCA) and thus offering segregated funds and a high level of security and safety. The CMC Group is a publicly-traded company on the London Stock Exchange.

The broker offers 3 different trading accounts: spread betting, CFD and Corporate accounts. Each account offers users to trade on more than 9,000+ trading instruments covering Indices, Forex, Cryptocurrencies, Commodities, Shares and Treasuries with spread betting offering commission-free trading and CFD and Corporate accounts offering commission-based trading on Shares only.

Users can trade on the MetaTrader 4 trading platform and on the broker’s own, proprietary, web-based Next Generation platform for web and mobile trading. The Next Generation platform is feature-rich with 115 technical indicators and drawing tools, 12 chart types and a pattern recognition tool. The broker also offers news and analysis from their own market analysts, as well as education, webinars and seminars.

Pros: Cons:
  • FCA UK regulated and publicly traded company on the London Stock Exchange.
  • 9,000+ trading instruments covering multiple asset classes.
  • Feature-rich proprietary Next Generation trading platform.
  • News and analysis from in-house market analysts.
  • Steep learning curve for beginning traders using the Next Generation advanced trading platform.

What is Hedging?

Hedging is a somewhat advanced type of investment strategy. The sole strategy or purpose of hedging is to protect the investor by mitigating possible losses. Hedging acts as a sort of insurance for the investor in the event of a negative outcome. The strategy reduces exposure to various risks by using instruments in the market to counterpoise risk from negative price movements. So, in investment terms; investors “hedge” one investment by making another. However, hedging is not the holy grail of investment insurance, it comes at a cost. Insurance is not free and this is true with hedging as well, while using a hedging strategy your potential profits are reduced, as well as your potential losses.

What is Hedging in Forex?

Hedging in forex protects investors from the volatility and uncertainty of financial markets. With forex hedging, the strategies refer to the act of an additional buy/trade of currency to offset the risk involved in the initial buy/trade. It is a method of insurance for forex traders, but should only be used by experienced traders who understand the ups and downs along with timing in the market. Adopting a hedging strategy without sufficient trading experience can make for disastrous impact on your account.

Forex Hedging Strategies

There are numerous hedging strategies forex traders can use. Some are quite simple, while some are more complex. The type of hedging strategy implemented depends on the experience level and preference of an investor, as well as whether it’s allowed by the brokerage. The hedging strategies are overviewed below:

  • Simple Forex Hedging- Some brokers allow you to place a trade to buy a currency pair, while at the same time placing a trade to sell the same currency pair. The net profit is zero while open, but if you time the trades just right you can come out with a profit while mitigating the risk.
  • Complex Hedging- For brokers who do not allow hedging, there are ways to get around their rules through complex hedging. There are numerous methods for this strategy.
  • Multiple Currency Pairs- This strategy differs from simple forex hedging because of the trading of 2 different currency pairs. This method of hedging is more complex and often requires many different currency pairs to be traded.
  • Forex Options- This method is different from all other hedging methods since there is a predetermined price and time frame to commence the trade. For instance, you conduct a trade at a specific price, as well as a strike option lower than the current price. If your exchange reaches the price point you specified in the future within the specified time frame you reap the profits. Or, if the price hits the strike option you lose, trading at the lower price. If it neither reaches the determined price in the future or hits the strike option, you lose on the purchase price of the option.

Do Forex Brokers Allow Hedging?

Hedging may be a popular method among forex investors, but not all forex brokers allow hedging. Many experts are totally against the practice of hedging; therefore, it is not welcomed on all platforms and brokerages. US based brokers strictly prohibit hedging because of US law instating a Fist In First Out policy (FIFO).

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