Best Forex Brokers for Algorithmic Trading

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Contributor, Benzinga
April 10, 2024

Algorithmic trading (algo trading for short) uses computer programs to execute trades automatically based on predetermined criteria. These programs enter and exit positions on traders' behalf when market conditions meet given parameters. Algo trading empowers traders to seize market opportunities faster and more efficiently.

With so many brokers to choose from, it can be time-consuming to find the right algo-focused broker. 

This article introduces you to the top brokers for algorithmic trading and helps you choose the one that best fits your specific needs. 

Quick Look: Best Algo Trading Forex Brokers

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best Forex Brokers for Algorithmic Trading

Here is Benzinga’s list of the best forex brokers for algorithmic trading.

1. Best Overall Broker: FOREX.com

  • Forex.com
    Best For:
    Forex Trading in and Outside the U.S.
    securely through Forex.com's website

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account

FOREX.com is a popular forex broker for algorithmic traders, offering advanced platforms with MT4/MT5 integration, which makes it ideal for automating trades. Traders can leverage a variety of custom indicators and expert advisors (EAs) to create and backtest their trading algorithm strategies. The broker's education resources are comprehensive, and customer support is available 24/7.

Pros

  • Advanced trading platform with full support for trade automation 
  • Comprehensive educational and research resources
  • 24/7 customer support
  • Access to a wide selection of currency pairs
  • Highly regulated

Cons

  • High non-trading fees 

2. Best for Forex Trading Enthusiasts: Nurp

Nurp is an algorithmic trading firm that provides investors with a range of educational tools and advanced metrics to assist with trading. The Algorithmic Trading Accelerator helps traders ensure that they can invest with wisdom, helping them move with the market.

You will see real-time data that’s tied to your assets, or you can use the resources on the site to teach yourself how to invest.

Pros

  • Even a novice can use this site to learn, begin trading and build a portfolio
  • Quality support for investors who have questions or concerns about their algorithms
  • Real-time data helps you pivot with the market

Cons

  • If you have several algorithms live at the same time, your license fee could grow quickly

3. Best for Active Traders: Pepperstone 

  • Pepperstone FX
    Best For:
    Trading Experience
    securely through Pepperstone FX's website

    Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and 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.

Pepperstone is an online forex and contract for difference (CFD) broker that offers a range of trading platforms, including MT4/MT5 and cTrader platforms. The forex broker supports an algorithmic trading platform as well as expert EAs with advanced charting that has some of the lowest latency in the industry, which is vital for traders employing high-frequency trading strategies.

Pros

  • Competitive spreads 
  • Leveraged FX and crypto trading available  
  • Access to more than 60 currency pairs 
  • 24/7 customer support

Cons

  • Not available to U.S. traders 

4. Best for Forex Traders Who Want Choices in Trading Markets: FxPro

FxPro offers traders access to the forex and contracts for difference (CFD) market where they can access hundreds of assets, including forex, metals, indices, shares and cryptocurrencies. You can use 1 of the 8 base currencies. There are no extra fees, and there’s only an inactivity fee if your account is idle for 6 months. Multilingual support is offered to you 24/5, and you can use many different platforms, including MT4 and MT5.

Pros

  • Hundreds of trading instruments
  • Leverage up to 500:1 
  • Fast execution

Cons

  • You may prefer to trade in a wider range of assets

5. Best for Beginners: AvaTrade 

AvaTrade offers multiple trading platforms, including the ubiquitous MT4/MT5 platforms, which are renowned for their algo trading capabilities. Its proprietary trading platform, AvaTradeGo, also spots powerful algo trading features. AvaTrade's easy-to-use platforms make it the ideal starting point for new traders.

Pros

  • Excellent social trading feature 
  • Multiple trading platforms to choose from  
  • Demo account for practicing 
  • Quality educational materials

Cons 

  • Unavailable to U.S. traders 
  • Slow deposit and withdrawals

6. Best for Advanced Traders: Interactive Brokers

Interactive Brokers offers API options for advanced traders to automate their trading. These options include the REST API, IBKR API and FIX API. Professional clients with an IBKR Pro account can access additional automated trading services. Users can build trading robots and algorithms using various programming languages on the proprietary platform. 

Pros

  • Powerful mobile app 
  • Wide range of tradable securities   
  • Efficient order execution 
  • Assortment of advanced trading tools

Cons 

  • Complex for new traders 

7. Best for MT4/MT5 Users: Eightcap 

Eightcap is a highly-rated Australian forex and CFD forex broker that offers 45 forex pairs and about a dozen CFDs. It supports MT4/MT5 platforms and offers integration with specialized tools for algorithmic trading and advanced charting. Eightcap offers integration with third-party plugins like Capitalise.ai and TradingView, making it easier for traders to use advanced algorithmic trading strategies.

Pros

  •  Competitive forex spreads
  •  Quality research and educational resources
  •  Optimized MT4/MT5 platforms

Cons

  •  Limited forex pairs available

What is Algorithmic Trading in Forex?

Algorithmic trading is a way of using computers to execute trades automatically based on certain rules or algorithms. These rules can be based on factors like technical indicators or market conditions. Algorithmic trading is often used in financial markets, like forex or stocks, to make trades faster and more accurately than humans can. It is beneficial for big trades or for taking advantage of small price changes. To do algorithmic trading, people use special software and programming languages. Professional traders and big investors mostly use it, but individual traders can also use it through online forex brokers.

Forex Algorithmic Trading Strategies

To make the most of forex algorithmic trades, here are a few strategies you can use:

Trend Following

Trend following is a popular algorithmic trading strategy that involves identifying and following the direction of a market trend. The goal is to capitalize on the momentum of a market trend and ride it for as long as possible.

To implement a trend-following strategy, traders will typically use technical indicators or other tools to identify the direction of a market trend and set rules for entering and exiting trades. For example, a trend-following algorithm might be programmed to buy a security when its price breaks above a particular resistance level and to sell when the price falls below a specific support level.

Trading Range (Mean Reversion)

A trading range, or mean reversion strategy, depends on identifying and trading around the average price of a security. This strategy attempts to profit from deviations from the mean price, which is expected to return eventually. Mean reversion algorithms use technical indicators or other tools to identify the average price and set rules for entering and exiting trades based on deviations from it. These algorithms can be applied to various time frames and currency pairs in the forex market.

Arbitrage

In arbitrage algorithmic trading strategy, traders buy low and sell high in different markets, aiming to profit from price discrepancies. Forex traders apply algorithms that identify and take advantage of differences in the price of a currency pair on different exchanges or exploit interest rate differentials between currencies. While arbitrage can potentially generate risk-free profits, it is essential to note that opportunities may not always be available.

Delta-Neutral Strategy

A delta-neutral trading strategy involves creating a position that is not affected by changes in the price of an underlying security. By combining options and spot trades to create a delta-neutral position, traders can profit from changes in the underlying security's volatility. While delta-neutral trading can generate profits from changes in volatility, it can also be complex and involve using leverage, which can increase the risk of losses.

Index Fund Rebalancing

Index fund rebalancing is a strategy where traders can profit by capitalizing on index funds periodically rebalancing. In rebalancing, index funds adjust the composition of securities in a portfolio to maintain a desired asset allocation and manage risk and return. Algorithms execute this strategy speedily and at the best possible prices.

Percentage of Volume (POV)

The percentage of volume (POV) strategy uses a computer program to execute trades automatically based on a predetermined percentage of the volume of a particular currency pair. For example, if you set your POV to 5% for the EUR/USD pair, the algorithm will trade when the volume of that pair reaches 5% of the total market volume. This strategy aims to maximize profits and minimize risk by trading a certain percentage of the total volume. 

Choosing the Right Algorithmic Trading Platform for You

When it comes to choosing the best algorithmic trading platform, there is no one size fits all approach. Decide on the most important factors you want in a broker and compare brokerages based on your needs. Additionally, the broker should be highly reliable when executing orders quickly and accurately. The broker should also offer reasonable spreads and commissions to ensure competitive pricing.

Compare Forex Broker with Benzinga’s Top Picks

Finding the right broker for algorithmic trading is an important decision that can significantly impact your success. By considering factors such as platform features, fees and customer support, you can choose a broker that fits your needs and helps you achieve your trading goals. 

  • Forex.com
    Best For:
    Forex Trading in and Outside the U.S.
    securely through Forex.com's website

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account

  • Plus500 Forex
    Best For:
    CFD Trading for Mobile Users
    securely through Plus500 Forex's website
  • City Index
    Best For:
    CFD Trading
    securely through City Index's website

    Investors should keep in mind that 70% of all CFD accounts lose money.

  • FxGlory
    Best For:
    Fixed Spreads
    securely through FxGlory's website
  • AvaTrade
    Best For:
    Non U.S. Forex & CFD Traders
    securely through AvaTrade's website
  • eToro Forex
    Best For:
    Copy Trading
    securely through eToro Forex's website

    CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Frequently Asked Questions 

Q

Can algo trading be profitable?

A

Yes, algorithmic trading can be profitable if done correctly.

Q

How much does it cost to start algorithmic trading?

A

The cost of starting algorithmic trading can vary depending on the type of trading system and the broker you use. Generally, it can cost anywhere from a few hundred dollars to several thousand dollars.

Q

Is algorithmic trading risky?

A

Yes, algorithmic trading is risky. Hence, it would be best to fully grasp the risks associated with algorithmic trading and craft a well-defined trading strategy before going in.

Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.