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Best Forex Brokers For Hedging 2020

FX Empire Editorial Board
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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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BrokerRatingOfficial SiteRegulationsMin DepositMax LeverageTrading PlatformsFoundation YearPublicly TradedTrading Desk TypeCurrenciesCommoditiesIndicesStocksCryptoCommission on tradesFixed spreadsoffers promotionsOfficial Site
First Prudential Markets Pty Ltd
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Your capital is at risk

ASIC, CySEC

$100

1:500

IRESS, MT4, MT5, webtrader

2005

No dealing desk

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Your capital is at risk

Vantage FX
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Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

CIMA

$200

1:500

MT4, MT5, webtrader

2009

ECN, STP

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Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

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

Foundation Year:2005

Headquarters:Level 5, Exchange House 10 Bridge St Sydney NSW 2000, Australia

Min Deposit:$100

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Your capital is at risk

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.

Vantage FX

Regulated By:CIMA

Foundation Year:2009

Headquarters:Level 4, 42 N Church St, George Town, Cayman Islands

Min Deposit:$200

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Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

Vantage FX was founded in 2009 in Australia and is the brand name of the Vantage International Group which is regulated by the Cayman Islands Monetary Authority (CIMA) and advertises the segregation of client funds which are held with Australia’s AA rated National Australia Bank (NAB).

The broker offers services that are designed for both beginner and professional traders with access to Forex ECN trading, as well as CFD trading on Indices, Commodities and U.S and Hong Kong Shares on the MetaTrader 4 and MetaTrader 5 trading platforms for Mac, PC, iOS and Android as well as social trading platforms such as MyFXbook and Zulutrade.

Clients of Vantage FX have access to an impressive range of educational materials and research tools including MT4 SmartTrader Tools, a wide variety of promotional trading offers and rebate programs, as well as access to accounts with 500:1 leverage.

Pros: Cons:
  • Forex ECN Trading.
  • U.S and Hong Kong Share CFDs.
  • Segregated client funds with the National Australia Bank (NAB).
  • Unique bonus and promotional trading offers.
  • No regulation from Europe or UK regulators.
  • Limited Share CFDs on offer.

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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