Best Hedging Forex Brokers

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Contributor, Benzinga
May 16, 2023

U.S. forex traders love IG, international traders love IFC Markets as the best hedging forex brokers.

If you’re trading forex, you understand the need to manage risk. Hedging in forex trading is a risk management strategy that traders use to counterbalance market exposure. If you’re looking for a hedging forex broker that meets your trading needs, take a look at these hedging brokers.

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% 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.

6 Best Hedging Forex Brokers

The best hedging forex brokers offer you a choice of financial instruments along with research and analysis tools.

1. Best for Adventurous Traders Wanting to Develop Their Own Instruments: IFC Markets

Present in more than 80 countries, IFC Markets has brokered forex and contract for difference (CFD) contracts since 2006. IFC traders can access a broad range of CFDs and forex choices. The company requires a minimum $1 deposit and pays interest on account reserves. 

Users can access MetaTrader (MT4) and MT5 platforms and NetTradeX. IFC Markets also has an easy-to-use website and reasonable spreads. Registered only in Cyprus and the British Virgin Islands, the only downside to IFC Markets is that it isn’t licensed with a major regulator.  

Pros

  • More than 600 assets include currency pairs and CFDs for stocks, precious metals and commodities
  • Award-winning performance
  • GeWorko Portfolio Quoting Method enables user-developed trading instruments
  • Excellent educational resources

Cons

  • Unavailable in the U.S., Japan and Russia

2. Best for Multiple Assets at Competitive Spreads: MultiBank Group

Providing more than 20,000 assets that include forex, shares, indices, metals commodities and cryptocurrencies, the MultiBank Group offers traders competitive spreads. The company is registered with 11 financial regulators and insures user funds for up to a million dollars per account. 

Users can sign up for one of three accounts, receiving access to MT4, MT5 and MultiBank cTrader. Multibank offers excellent 24/7 customer support in multiple languages. 

Pros

  • More than 20,000 assets from asset classes
  • Registered with 11 financial regulators
  • Insurance up to $1 million per account
  • Low spreads
  • 24/7 technical support on Live Chat in 22 languages

Cons

  • Unavailable in the U.S. 

3. Best for High Volume Forex Traders: FOREX.com

  • Forex.com
    Best For:
    Fast Execution and High-Volume Traders in 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. 69% to 77.7% 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

With more than 80 currency pairs on offer, FOREX.com is one of the most inclusive forex brokers available. FOREX.com limits trading options to forex, spot gold and silver, options and futures.

The platform also provides all the information you need to make informed decisions with a range of more than 90 indicators. Users also have access to comprehensive educational facilities and research tools.

FOREX.com is licensed with four tier-1 jurisdictions. Users can trade on MT4 and the user-friendly, proprietary FOREX.com app and desktop platform. High-volume forex traders have access to tiered commission and market visibility through the DMA account.

Pros

  • More than 80 currency pairs
  • Extensive educational material and research tools
  • MT4 and user-friendly FOREX.com platform for easy research and trading 
  • Direct market access for high-volume forex traders

Pros

  • More than 80 currency pairs
  • Extensive educational material and research tools
  • MT4 and user-friendly FOREX.com platform for easy research and trading 
  • Direct market access for high-volume forex traders

4. Best for U.S.-Based Forex Traders: IG

  • IG Markets
    Best For:
    Fast Execution for U.S. Traders
    securely through IG Markets's website

    Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% 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.

The forex hedging broker IG offers U.S. forex traders the option of trading in more than 80 currency pairs. Users can access the IG mobile app, which mirrors the desktop platform functionalities. The app is easy to navigate and allows for personalization and real-time alerts.

IG offers training by way of an online course, live webinars and a live news feed. Compared to competitor educational offerings, IG training resources fall short. 

Pros

  • More than 80 currency pairs
  • An excellent platform that is easy to navigate
  • A comprehensive array of market indicators
  • No account minimum

Cons

  • Available only in the U.S.
  • Access limited to forex assets 

5. Best for Novice Forex Traders: OANDA

Offering more than 70 currency pairs, OANDA also gives traders access to an inclusive platform, complete with charting tools and over 50 indicators. The platform has a simple yet sophisticated layout that even novice traders will find easy to navigate. Users can personalize layouts, track analytics and receive instant news updates. OANDA supports social trading through its chat function in TradingView, however, does not provide the ability to automatically follow another person's trades.

Pros

  • Simple, intuitive trading platform
  • More than 70 currency pairs
  • Educational resources in several languages
  • No minimum deposit for standard accounts
  • Social trading on TradingView

Cons

  • Limited to forex trading

6. Best for Professional Traders: Interactive Brokers

The award-winning Interactive Brokers offers traders a wide range of assets from 135 global markets. With two accounts on offer, traders can use IBKR Lite for low-cost asset trades and free stock trading. IBKR Pro offers high-level research and analysis tools at low commissions to suit professional traders.

IBKR has a comprehensive trading platform that may prove a little daunting for novice traders, though the newly introduced IBKR Lite aims to service more retail customers.

Pros

  • Access to financial assets across 135 global markets
  • Low-cost trading
  • Comprehensive trading platform 
  • Wide range of educational tools, including a Trading Academy

Cons

  • Complex platform geared to experienced traders

What is Hedging in Forex?

Hedging in forex trading is taking a position to counteract the risk of adverse forex price changes. It is a common risk mitigation strategy.

How to Choose a Forex Broker for Hedging

If you plan on hedging your forex trades, you need to find a reputable forex broker that doesn’t limit forex hedging.

Hedging Styles Allowed

Brokers shouldn’t place restrictions on traders’ hedging styles. They should offer tools that enable diversification and smoothing downdraws, so find unrestricted hedging brokers. 

Regulation

In the U.S., the National Futures Association (NFA) restricts hedge trading, preventing long and short positions in an account. These regulations apply to all forex traders under U.S. regulation.

If you plan to use hedging strategies, avoid trading with U.S. brokers that don’t trade abroad.

Size of Capital Available

Forex brokers must support and leverage ongoing market trades. To do this, they need on-hand capital. You shouldn’t have to worry about your broker’s ability to support your trading aspirations, so find a well-established broker with plenty of available capital.

Find a Hedging Forex Broker to Suit Your Trading Needs

Forex trading is considered high risk. Still, armed with an effective hedging broker platform with excellent research and analysis tools, you have a good chance of making positive returns. As a risk mitigation tool, forex hedging helps reduce losses, but it also reduces potential profits. Your hedging forex brokers can help you to make the best investment decisions. 

Frequently Asked Questions

Q

Which broker is best for hedging?

A

It is impossible to select the single best broker for hedging. If you plan to hedge your trades, make sure that you choose a reputable broker that doesn’t restrict hedging.

Q

Is hedging good for forex trading?

A

Hedging is good for forex trading in that it reduces risk. However, it can also reduce profits.

Q

What are the 3 common hedging strategies?

A

Long/short, options and futures hedging are three common hedging strategies.

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.