5 Best Hedging Forex Brokers in 2021

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Forex brokers allowing hedging are plentiful, as almost all non-US regulated brokers allow this risk management strategy. Since there are many choices for traders to consider, we have extensively researched the field for you, the results of which we set out in the list of the best Forex hedging brokers below.

1
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Best all around broker
High floating leverage + fast execution
2
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
ECN-style trading
Daily market research and Autochartist access
3
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
4
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Best ECN execution on the MT4 platform
Excellent implementation of cTrader and Smart Trader Tools
5
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Marketsi strategy builder helps traders trade smarter
Competitive trade execution with low slippage

FXTM, Best all-around: high floating leverage + fast execution.
FP Markets, ECN trading with leverage up to 1:500.
AvaTrade, Highly regulated, choice of fixed or floating spreads.
Pepperstone, Great ECN execution on MT4 platform.
Markets.com, Excellent educational offerings.

FXTM

5.0/5 in this category
In Summary
Best all-around: high floating leverage + fast execution

FXTM, or ForexTime, is one of the world's greatest all-around brokers. This trustworthy broker, who has a decade of expertise, is currently open to traders in Cyprus, the United Kingdom, and Mauritius. FXTM allows you to trade a variety of currencies, as well as gold, silver, and other precious metals. Traders who purchase stocks through ForexTime assume full legal ownership of the shares. Whether you're looking to invest in commodities, CDFs, stocks, metals, indices, or oil, FXTM is the right broker for you.

Pros

  • 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

  • Proprietary copy trading platform, low minimum deposit, and high leverage

Cons

  • Limited choice of cryptocurrencies and commodities

FP Markets

5.0/5 in this category
In Summary
ECN trading with leverage up to 1:500

FP Markets, an Australian forex broker, was launched in 2005, more than 15 years ago. Over 60 currencies, 10 crypto choices, over 20 commodities, several CFDs, and a variety of other assets such as precious metals and oil are among the trading possibilities offered by the financial services provider. FP Markets is available in more than 80 countries around the world and is regulated and authorized by CySEC and ASIC. This multi-award-winning forex broker offers Euro, US Dollar, British Pound, and Australian Dollar as currency alternatives. They also provide training resources for new traders in order to improve their chances of making a profit from their new business.

Pros

  • 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

Cons

  • Availability of Iress geographically restricted

AvaTrade

5.0/5 in this category
In Summary
Highly regulated, choice of fixed or floating spreads

If you are new to the trading game and looking for a forex trading app to assist you, AvaTrade may just be the answer. This highly regulated broker goes the extra mile to assist new traders and traders looking for hedging trading, in making a success out of their new journey. AvaTrade provides users with extensive training resources. These trading training resources consist of over 200 informative videos and 40 different courses that are available to all users via SharpTrader. These consist of valuable lessons that will guide new traders in making the right decisions. AvaTrade is licensed and regulated in Japan, Israel, the United Arab Emirates, South Africa, Australia, the British Virgin Islands, and Ireland where their headquarters are based.

Pros

  • 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

Cons

  • Trading costs competitive but nothing special

Pepperstone

4.5/5 in this category
In Summary
Great ECN execution on MT4 platform

Pepperstone is a global forex broker that was created in 2010 and has since amassed a significant user base to its excellent user experience and diverse trading options including hedging. Traders can buy and sell 62 different currencies, over 900 different equities CDFs, over 20 different commodities, cryptos, and much more. While they have their headquarters in Australia, where they have a regulatory license, they are also regulated in other countries, notably the United Kingdom, where they have a highly sought-after Financial Conduct Authority license. Cyprus, Germany, Dubai, Kenya, and the Bahamas are among the countries that govern them.

Pros

  • Excellent choice of trading platforms consisting of MT4/MT5, and cTrader

  • Market-leading MT4/MT5 upgrade package, Autochartist, and API trading

  • Social trading support via Myfxbook, MetaTrader Signals, and DupliTrade

  • Leverage of up to 1:400 and superb trade execution

Cons

  • Minimum deposit slightly higher than industry average

Markets.com

4.5/5 in this category
In Summary
Excellent educational offerings

Markets.com is a reliable and well-known forex broker that has been in business since 2008. This publicly traded firm is listed on the London Stock Exchange under the ticker LSE:PTEC. Users from all over the world can access Markets.com, including the United Kingdom, Cyprus, Australia, South Africa, and many more countries. Markets.com is overseen by four regulatory bodies under these countries, namely the FCA, CySEC, ASIC, and FSCA. The forex broker provides traders with a selection of over 2200 assets comprising of 25 cryptos, 28 commodities, 67 currencies, 60 EDFs, 40 index CDFs, trading in the form of hedging and much more.

Pros

  • Competitive commission-free Forex fees from 0.6 pips

  • Well-balanced choice of trading instruments with 2,200+ CFD Assets

  • Competitive proprietary trading platform alongside MT4/MT5

  • Excellent Customer Support

Cons

  • Commodities and indices fees higher than Forex costs

Hedging can be a useful part of a trading strategy if it is executed properly. It can also be a risk management technique in the hands of skilled traders. When the online brokerage industry launched, some brokers restricted hedging, and traders with US regulated brokers cannot hedge. The initial launch version of the MT5 trading platform, which is widely considered to be a failed successor to MT4, only allowed netting and had hedging features disabled. MetaQuotes, which developed the MT4 and MT5 trading platforms, listened to the negative feedback and realized its error, correcting it with an update that now supports both modes for the benefit of non-US traders. Today, most brokers allow hedging, but most retail traders do not fully understand hedging. Many throw the term hedge fund around lightly. Working for a hedge fund used to be the number one career ambition among US teenagers. Following the 2008 global financial crisis, and the largely counter-productive regulatory changes which quickly followed, many hedge funds converted into family offices, while most of the remainder delivered subpar investment returns. While hedge funds and hedging received plenty of negative coverage, traders should understand what “hedging” means and learn the benefits of trading with one of the many hedging Forex brokers.

Dumb vs Smart Hedging

The most definitive difference within hedging is between a “dumb hedge”, which professional traders do not use, and a “smart hedge”. A dumb hedge means taking a buy and a sell position of equal size simultaneously in the same asset. This locks in any floating profit or loss, but commits to a day-to-day capital bleed, as swap rates on leveraged overnight positions will have to be paid on both positions. A dumb hedge serves no beneficial purpose, and traders benefit more by closing a trade rather than taking an opposing one of equal size in the same asset for the same net result. A “smart hedge”, where the trader takes a second position in a correlated asset, can however be an intelligent risk management strategy but will also increase overall risk. Therefore, it is best suited as a strategy for skilled traders who understand financial markets. An example of a smart hedge in Forex might be buying EUR/USD and selling GBP/USD due to the strong correlation between the two currency pairs. Stock traders might hedge by buying individual equities while selling the index of which they are a component. Options contracts are also heavily used in hedging portfolios.

Restrictions on Hedging

Traders should avoid brokers that place restrictions on hedging regardless of whether they want to use hedging or not. The best Forex brokers do not impose needless restrictions upon their clients. The hedging Forex brokers we reviewed above in detail ensure their traders have the tools to build an edge in the market. Before deciding on hedging as a strategy, traders should learn how to create smart hedges and forget about dumb hedges.

Huzefa Hamid

I’m a trader and manage my own capital. I trade the major Forex pairs, some Futures contracts, and I rely entirely on Technical Analysis to place my trades. Today, I am also a Senior Analyst for DailyForex.com. I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up (I grew up in England), with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. The 1990s were a bull market, so naturally, I made money. I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.