I have reviewed the global offerings of OTC Forex brokers to list the most competitive brokers below with the best all-round trading conditions. Read on below the detailed listing to find out how to choose the most suitable OTC Forex broker for you.
Best OTC Brokers Comparison
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Regulators | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | CMA, CySEC, FCA, FSC Mauritius, FSCA | ASIC, CySEC, FSCA | ASIC, CySEC, FCA, SCB | FMA, FSA |
Year Established | 2006 | 2011 | 2005 | 2009 | 2014 |
Execution Type(s) | Market Maker | ECN/STP, Market Maker | ECN/STP | ECN/STP, Market Maker | ECN/STP, No Dealing Desk |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.9 pips | 0.1 pips | 1.1 pips | 1.0 pips | 1.3 pips |
Average Trading Cost GBP/USD | 1.5 pips | 0.2 pips | 1.4 pips | 1.2 pips | 2.0 pips |
Average Trading Cost Gold | $0.29 | $0.18 | $0.21 | $0.12 | $0.90 |
Trading Platform(s) | Other, MetaTrader 4, MetaTrader 5, Web-based+ | MetaTrader 4, MetaTrader 5, Proprietary platform | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Trading View | MetaTrader 4, MetaTrader 5, Trading View |
Islamic Account | |||||
Negative Balance Protection | |||||
| Visit Website | Visit Website | Visit Website | Visit Website | Visit Website |
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade is one of the largest Forex / CFD brokers and well-known for offering their clients a choice of fixed or floating spreads. They have a very high and strong level of regulation. AvaTrade is directly regulated in Ireland (and by extension, the European Union), Australia, Japan, South Africa, and the British Virgin Islands. Outside the European Union, Ava offers maximum leverage on Forex currency pairs as high as 400 to 1. AvaTrade offers trading in over 55 different Forex currency pairs, 17 commodities, 20 equity indices, 14 cryptocurrencies, plus 66 individual stocks and shares. 2 bonds and 6 ETFs are also on the menu.
Pros & Cons
- High-quality educational offering via SharpTrader
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
FXTM
In Summary Best all-around broker with high floating leverage and fast executionWe have made FXTM one of our top-rated brokers because in addition to its lengthy track record, it enjoys a very high level of regulation and reputation, and it offers a highly competitive fee structure which tends to keep down the cost of trading.
Pros & Cons
- Excellent commission-based Forex pricing environment and transparency
- Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app
- Quality market research and educational content for beginner traders
- A highly regulated broker with a tier-1 license
- No cryptocurrencies and limited choice of commodities
FP Markets
In Summary ECN trading with leverage up to 1:500fpmarkets is an ASIC-regulated Australian brokerage which launched in 2005. For most traders, the unique selling point of this broker is in the extremely wide range of tradable assets offered, providing the opportunity to trade over ten thousand individual stocks and shares including publicly quoted Hong Kong and Australian companies. Ffpmarkets also offers 60 Forex pairs and crosses, 11 equity indices, the major commodities, and 5 cryptocurrencies including Bitcoin. fpmarkets offers an unusual hybrid ECN/STP execution model, meaning their clients can choose between ECN style of execution giving a very high level of speed, and a “straight through processing” execution style which allows for more “natural” spreads.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
Eightcap
In Summary Competitive pricing + excellent daily videosEightcap offers its Forex traders deep liquidity pools, essential for decentralized over-the-counter or OTC trading. Numerous liquidity providers quote prices to Eightcap, and technology automatically sources the best prices, meaning the highest bid and the lowest ask prices. The low spreads in the commission-based Eightcap Raw Spread account indicate an excellent order matching mechanism, with minimum spreads of 0.0 pips on all major currency pairs. Therefore, Eightcap is a leading OTC Forex broker for demanding clients, like high-volume algorithmic traders and scalpers.
MT4/MT5, Capitalise AI, Crypto Crusher, and TradingView ensure traders have a leading platform or service for various strategies.
Pros & Cons
- Low minimum deposit and high leverage of up to 1:500
- Competitive cost structure
- Excellent technology infrastructure and seasoned management team
- Daily research and quality educational content
- Limited leverage in some areas
BlackBull Markets
In Summary Best ECN trading environment, with scalping and hedgingBlackBull Markets was founded in 2014 in New Zealand. Like many antipodean Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. They are regulated in New Zealand by the Financial Services Providers Register (FSPR) and offer a maximum leverage on some Forex currency pairs as high as 500 to 1. In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.
Pros & Cons
- ECN/NDD execution model with deep liquidity
- Institution-grade pricing for retail traders via proprietary price aggregation
- ZuluTrade and Myfxbook for social trading
- Leverage of up to 1:500
- Limited deposit options
- Pepperstone - Superior ECN execution on the MT4 platform.
- FP Markets - ECN trading with leverage up to 1:500.
- BlackBull Markets - Competitive ECN trading environment with scalping and hedging.
- IG Markets Overview - Best CFD broker globally with excellent trading conditions
Pepperstone - Offering superior ECN execution on the MT4 platform
With daily transaction volumes exceeding $12.5 billion and over 300,000 active traders, Pepperstone is an OTC Forex broker ideal for algorithmic traders and scalpers. It offers an industry-leading 14 currency pairs with raw spreads from 0 pips with a commission of $6.00 per round lot. Confirming deep liquidity at Pepperstone is the average EUR/USD spread of 0.09 pips for the EUR/USD or $0.90 per 1 standard lot. High volume traders can lower trading costs by between 5% and 15% per lot via the Active Trader Program with special discounts for traders with 501+ lots monthly.
Pepperstone offers traders one of the most competitive MT4/MT5 environments due to its 28 plugin Smart Trader Tools package, and cTrader is also available. Algorithmic trading is available through all Pepperstone trading platforms, which also have integrated copy trading services. Social traders additionally get Myfxbook Autotrade and DupliTrade.
FP Markets Snapshot - ECN trading with leverage up to 1:500
As an OTC Forex broker, FP Markets shines with its deep liquidity and fast order execution. It offers raw spreads from 0 pips for a commission of $6.00 per 1 standard lot, NDD execution, and no requotes, ensuring traders receive quoted prices. For a minimum deposit of $100, traders can benefit from a maximum Forex leverage of 1:500 and a well-balanced asset selection covering more than 10,000 trading instruments, making FP Markets ideal for Forex and CFD OTC traders.
FP Markets upgrades the core MT4/MT5 trading platforms with its Traders Toolbox, consisting of twelve plugins, maintains five trading calculators, and supports algorithmic traders via VPS hosting. Portfolio managers have access to the MT4 MAM/PAMM module and Myfxbook Autotrade, which in addition to the proprietary copy trading service, supplement the integrated MT4/MT5 solutions. Adding to its international appeal is the wide choice of twelve currencies accepted for deposit.
BlackBull Markets - Competitive ECN trading environment with scalping and hedging
BlackBull Markets became the most dominant OTC Forex broker headquartered in New Zealand with global ambitions and a highly competitive core trading environment. Besides Forex CFD OTC trading, BlackBull Markets recently expanded its asset selection. It now has 23,000+ trading instruments, primarily equity trading in 80+ markets, including fractional share dealing. Traders can manage portfolios with the core MT4/MT5 trading platforms or connect their advanced algorithmic trading solutions via FIX API.
This investment in trading technology and infrastructure makes BlackBull Markets ideal for high-frequency traders, scalpers, and algorithmic traders. Free VPS hosting is also available for traders with a minimum deposit of $2,000 and 20 monthly lots in trading volume. A maximum Forex leverage of 1:500 is available. While the minimum deposit is $200, BlackBull Markets shines with its Prime account from $2,000. It offers spreads from 0.2 pips for a commission of $6.00 per 1 standard lot.
IG Markets Overview - Best CFD broker globally with excellent trading conditions
As the number one CFD broker, offering more than 17,000 CFDs and 102 currency pairs, IG Markets maintains trading conditions that make it a leading OTC Forex broker. The commission-free cost structure commences with spreads from 0.6 pips or $6.00 per 1 standard lot, matching many commission-based brokers. Besides its proprietary web-based trading platform, IG Markets offers ProRealTime, MT4, and L2 Dealer, with MT4 receiving an 18-plugin upgrade and Autochartist.
Traders can connect advanced trading solutions to the IG Markets infrastructure via API. Another benefit at IG Markets is the ability to write new CFD contracts based on demand. Beginner traders can benefit from the IG Academy, one of the best educational tools in the industry. IG Markets also delivers excellent in-house research featuring high-quality written and video content, plus G Markets trading subscriptions.
What Should Forex Traders Know About OTC Forex Brokers?
- All online Forex brokers are OTC Forex brokers, as the Forex market is decentralized and operational 24/5, taking place over the counter, without clearinghouses or supervision from an exchange
- OTC Forex brokers provide trading platforms, assets, and quotations via an electronic quotation system, and they source liquidity from several liquidity providers
- Since Forex trading is decentralized, prices may differ slightly between brokers, but arbitrage trading is usually prohibited and nearly impossible to conduct
- OTC Forex brokers often act as market makers and may decide to become the direct counterparty to a trade, earning from client losses, or pass the order on via a no dealing desk (NDD) broker execution model
- Raw spreads depend on liquidity, but OTC Forex brokers add mark-ups at their discretion, creating either a competitive cost structure or an expensive one
- OTC Forex brokers usually match client orders within their internal order book whenever possible, lowering their risk profile and exposure
What are the best OTC Forex trading platforms?
The most popular OTC Forex trading platform is MT4, followed by cTrader. The successor to MT4, MT5, failed to duplicate the success of its predecessor. ProRealTime has emerged as an alternative, especially for advanced and algorithmic traders, with NinjaTrader and other smaller competitors carving out niche segments of the Forex market.
Proprietary trading platforms developed by dominant OTC Forex brokers can offer an attractive alternative, but most are oriented towards manual trading strategies. FinTech companies began to disrupt the market with their trading solutions. Many focus on mobile trading for millennial and GenZ traders, optimized for causal or copy trading.
What should traders look for in their OTC Forex trading platforms to ensure a competitive edge?
- Trading platform stability
- User-friendly interface with swift navigation
- Full support for algorithmic trading, ideally with API trading
- Risk management, order management, and inventory management tools
- Real-time data and low-latency order execution without requotes and minimal slippage
- Seamless multi-chart toggling
- Streaming news and an in-depth economic calendar
- In-depth trade analytics
Benefits of trading OTC Forex with MT4/MT5
- Full support for algorithmic trading, including the ability to create and back test
- Advanced trades can develop proprietary solutions and connect to MT4 or MT5
- Integrated copy trading service
- MT4 has 25,000+ plugins and EAs, notably less for MT5
- MT4/MT5 come in dozens of languages
- Micro lot trading from 0.01 lots, with some OTC Forex brokers offering cent accounts with nano lots
- Traders can hedge positions
- Advanced trade statistics
- Multi-account management module for MAM/PAMM traders and asset managers
Benefits of trading OTC Forex with cTrader
- Advanced trading platform with a user-friendly interface and the best out-of-the-box trading platform
- Full support for algorithmic trading, including API trading, using C#, including the ability to create and back test, and plug-and-play automated trading
- Integrated copy trading service
- Complete charting suite with broad-based technical indicators and ChartShots allowing swift screen capture
- Best suited to ECN account traders and high-volume trading strategies
- Fast order execution and micro lot trading without maximum order size
What is a Competitive Cost Structure at OTC Forex Brokers?
Trading costs are the most important criteria in evaluating OTC Forex brokers, as they directly impact profitability.
Below are competitive trading cost examples at OTC Forex brokers in commission-free and commission-based accounts. Forex traders may use them as a guide when evaluating OTC Forex brokers.
OTC Forex brokers with variable spreads
Variable spreads accurately reflect market conditions based on supply and demand, unlike fixed spreads, which are usually higher to compensate for the lack of volatility. Active traders can exploit advantages in liquidity changes and avoid more expensive transactions.
OTC Forex brokers offering variable spreads include all trading costs via internal mark-ups, creating commission-free cost structures. Forex traders should approach this type of offering with caution and ensure spreads remain competitive.
The minimum trading costs for the EUR/USD in a commission-free account at competitive OTC Forex brokers are typically:
Minimum Spread | Commission per Round Lot | Cost per 1 Standard Lot |
0.6 pips | $0.00 | $6.00 |
Noteworthy:
- Spreads on the EUR/USD currency pair exceeding 1 pip result in an unacceptably expensive cost structure
- Unfortunately, some OTC Forex brokers have it between 1 and 1.5 pips, advertising tight spreads to beginner traders while delivering high costs favoring broker revenues over trader profitability
OTC Forex brokers with ultra-low spreads
High-frequency, high-volume traders, like scalpers, require ultra-low spreads provided by OTC Forex brokers in commission-based trading accounts. Traders get raw spreads as calculated by supply, demand, and volume, and lower overall trading costs.
The minimum trading costs for the EUR/USD in a commission-based account at competitive OTC Forex brokers are typically:
Minimum Spread | Commission per Round Lot | Cost per 1 Standard Lot |
0.0 pips | $4.00 | $4.00 |
Noteworthy:
- A spread above 0.1 pips for the EUR/USD or a commission above $6.00 is expensive
- Most ultra-low spread OTC Forex brokers levy a commission between $6.00 and $7.00 but maintains active trader programs lowering the costs
- Traders should avoid OTC Forex brokers without an active trader program
- While the minimum cost structure in commission-free and commission-based offers usually commence from $6.00 per 1 standard lot in the EUR/USD, trading costs remain lower in commission-based accounts as traders rarely transact at minimums and variable spread accounts have access to less liquidity, resulting in higher actual spreads
What about spreads on non-Forex OTC assets?
OTC Forex brokers with a competitive Forex pricing environment extend it across all assets. Traders will get low spreads on commodities, index CFDs, stock CFDs, and cryptocurrencies. Therefore, trading costs remain the most defining aspect when evaluating a broker.
Commission-based cost structures, especially with a volume-based rebate program, create lower trading costs. Traders should avoid the commission-free marketing trap despite the ubiquity of commission-free trading ads.
Forex Options and their Potential Benefit to Traders
Forex options offer traders another derivative contract, allowing traders to execute more complex strategies or hedge positions at a lower cost. Options grant the holder the right but not an obligation to buy or sell an asset at a future date.
What type of Forex options exist?
1. Traditional options or vanilla options
- These are the most traded options and consist of call and put options
- European-style options are cheaper but more restrictive
- US-style options offer greater flexibility at a higher premium
2. Exotic options or SPOT (single payment options trading) options
- Buyers and sellers agree on a specific scenario where price action will exceed a certain price level during a select period
- Barrier options trigger when the price reaches an agreed threshold
- Digital options are exercised if price moves above or below an agreed price at the expiry time
- Asian options calculate the average price during the lifetime of the option
Why should Forex traders consider options?
They can offer a low-cost hedging alternative and allow for complex trading strategies.
Which options strategies should traders know?
- Covered Call
- Married Put
- Bull Call Spread
- Bear Put Spread
- Protective Collar
- Long Straddle
- Long Strangle
- Long Call Butterfly Spread
- Iron Condor
- Iron Butterfly
Are Forex options the same across all brokers?
The availability and breadth of options will differ across brokers, together with the costs.
Do exotic Forex options exist?
Three exotic options exist, barrier options, digital options, and Asian options.
What are Cash-Settled Forex Options?
Forex options are cash-settled, meaning there is no physical delivery upon exercising them, and the contract remains settled in cash.
Are retail traders allowed to buy Forex options?
Retail traders may transact using Forex options if their regulatory jurisdiction permits it, and their Forex broker offers them. Forex options trading is most popular in the US.
What are the risks involved in Forex options trading?
The most significant risk is the total loss of the premium. Once an option expires, it becomes worthless, meaning the trader either earned money or lost all deployed capital. On the other hand, this means an option trader can always quantify their maximum risk: trading spot Forex can be prone to massive slippage in a crisis, such as the 2015 Swiss Franc unpegging.
The Bottom Line
OTC forex trading is the most common trading service and continues to expand globally. OTC Forex brokers act as market makers in a decentralized trading environment, offering trading instruments, quotations, trading platforms, research, and education.
Forex traders must always ensure they trade with a well-regulated and trustworthy Forex broker. OTC currency trading depends on the electronic quotation system provided by the broker, who may, at its discretion, either pass on orders through a dealer network, usually the electronic communications network (ECN), or take the trade, meaning client losses result in broker profits.
Trading Forex CFD OTC with a trustworthy broker, like those listed above, offering a low-cost pricing environment with upgraded trading platforms, will ensure traders have a competitive edge, resulting in higher profit potential, as well as peace of mind from knowing their broker is regulated.
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