Trading technology, and the financial markets, have evolved a long way since the days of the outcry trading system. With new technology and faster communications, a new form of trading has begun to emerge and gain popularity: HFX trading or high-frequency trading. This basically refers to executing several hundreds of trades in a very short span of time to focus on quantity instead of quality and make small profits on each trade.
In this guide, we analyse the different top HFX trading platforms and identify the characteristics that you must consider in order to choose the right broker for your needs.
In This Guide
There are several brokers that provide the option to trade on an HFX basis. However, each of these brokers is suitable for a different type of trader and have their own pros and cons. Here is a list of the top HFX brokers, followed by a review of each of them:
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% 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.
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80% of retail investor accounts lose money when trading CFDs with this provider.
After extensive research on all the HFX trading platforms available to traders and investors, we have come up with the top 10 platforms that you can use. Each of these platforms has been discussed below in detail.
eToro is a social trading platform that is widely considered to be the best HFX trading platform. It operates in over 140 countries and is the largest trading platform worldwide. It is also highly regulated and insured, making any capital you deposit into eToro secure. It has well over 20 million users and offers access to 2400+ financial assets that you can trade on.
It offers nearly 50 forex pairs, ranging from major pairs such as EUR/USD, GBP/USD, and USD/JPY to minor currency pairs. eToro offers two types of accounts: a regular account and an expert account. If you open a regular account with eToro, you will get leverage of 30x for major and 20x for minor currency pairs. On the other hand, if you choose to open an expert account, then you can get leverage as high as 400x. However, opening an expert account on eToro requires you to complete their test so that they can make sure that you know what you’re doing and that you understand the risks associated with trading on such high leverage.
eToro also offers a variety of assets that you can trade besides currencies. These include stocks (which you can trade on with 10x leverage), ETFs (with 5x leverage), as well as commodities, and cryptocurrencies. It provides a different level of leverage on each of these assets. If you are new to trading, you can always use eToro’s social trading feature in order to begin and capitalize on the expertise and experience of other traders.
Pros:
67% 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.
If you’re an experienced trader who is looking for advanced trading tools, high leverage trading, and access to a variety of financial assets, then Avatrade is the right choice for you. Not only does Avatrade support MT4 and MT5 trading platforms, but it is also among the best forex HFX trading brokers. It supports a variety of automated trading tools such as DupliTrade, AvaSocial, and ZuluTrade.
However, perhaps the biggest USP of Avatrade is that it offers extremely high leverages for most trades. For example, on most currency pairs, it offers a leverage of 400x, making it extremely popular for experienced traders who are comfortable with the risk. At the same time, Avatrade also has very tight spreads (0.9 pips for the EUR/USD pair and 1.6 pips for the GBP/USD pair) which are fixed throughout the day. It offers the opportunity to trade CFDs, thus allowing to trade on vanilla options with low fees on high leverage.
AvaTrade fees
Cons:
71% of retail CFD accounts lose money with this provider.
Pepperstone is another very popular HFX broker that has over 500,000 users worldwide. It is a no-dealing desk broker and offers both ECN and STP accounts by providing access to some of the top liquidity providers in the industry, such as banks.
It provides access to over 800 instruments and forex pairs through a range of advanced trading platforms. When you choose to set up an account with Pepperstone, you have the option to choose which platform you wish to trade through, based on your level of experience and trading requirements. This includes the MT4 and MT5 platforms alongside other niche platforms and trading tools such as cTrader, MyFXBook, MirrorTrader, and RoboX.
They offer two types of accounts, the Razor and the Standard accounts. The Razor, as the name suggests, is an ideal trading account for those looking to scalp trade, whereas the Standard is much more suitable for all other trading requirements. All in all, Pepperstone is definitely known for having one of the lowest spreads and fees in the market, being as low as 0.1 pips sometimes for major currency pairs like the EUR/USD.
Pepperstone fees
Your capital is at risk.
HFX trading refers to the use of technology and algorithms for the quick buying and selling of forex pairs. In this situation, algorithms are used to automate the trading process so that trading is done at extremely high speeds on the basis of a few set rules. For example, a trader might develop an algorithm that places buy and sell orders on a variety of forex pairs whenever certain conditions are breached. Typically, the traders with the fastest execution speeds are more profitable than traders with slower execution speeds. In addition to the high speed of orders, HFT is also characterized by high turnover rates and order-to-trade ratios.
There are several things that you should keep in mind while trying to select the right HFX trading platform for your needs. Your choice of broker has a direct and proportionate effect on how successful your trading strategy will be, and therefore it is important for you to look at a variety of factors before deciding on a particular broker. A list of the various factors that deserve some consideration has been discussed below.
It is important for you to select a broker that is regulated for a variety of reasons. The first and primary reason is that regulated brokers are inspected and monitored to ensure that they do not manipulate or exploit customers. This is particularly important when it comes to market-making brokers since they have a conflict of interest between their trading division and brokerage division. Therefore, if you are trading with an unregulated broker that makes markets, they might have a tendency to skew prices in the wrong direction in case they are facing significant losses. This will adversely affect you as a trader on the other side of the trade, and reduce your profitability. However, this risk does not present if you are dealing with a regulated broker, since they cannot manipulate prices based on their whims and fancies.
Another advantage of using a regulated broker is that they are safer and keep your capital secure. There have been numerous instances of brokers absconding with the capital that was invested with them and the like, resulting in huge losses to the investors. This is not a possibility with regulated brokers, since they are required to have insurance for the funds that they hold on their platform. This ensures that the funds you deposit with them are safe and can be withdrawn at any given point in time.
In order to make sure that the broker you are investing through is safe and regulated, you should only consider brokers that are regulated by Tier-1 agencies. There are several such agencies that belong to different countries in the world, and they each apply to a different jurisdiction and/or asset class. For example, if you are trading in the UK, then the FCA is the number 1 regulatory agency that you should be on the lookout for. Commodity trading in the US is regulated by the CFTC, whereas brokers that operate in Cyprus are regulated by the CySEC.
The next factor to consider before trading through an HFX trading platform is the variety of assets that it offers. Even if you are only going to be trading one or two asset classes, it is always advisable for you to trade on an HFX trading brokerage platform that provides variety in terms of the asset classes. This will be useful later if you choose to expand your trading horizons and begin trading other assets too.
In addition to this, platforms that offer access to more than one asset class also usually have more features than other platforms since they have to cater to a variety of traders. Usually, multi-asset HFX trading platforms allow you to trade stocks, currencies, commodities, indices, ETFs, and cryptocurrencies.
The fees you pay are also an important consideration that will affect your bottom line. They also affect the kind of strategies that you can employ on a particular platform. For example, an HFX trading platform that charges high commissions on each trade that you make implies that you will not be able to scalp trade through it, because your small profit margins will be wiped out by the commissions, resulting in negligible profits or even losses.
The fees charged by a platform can be divided into two types: trading fees and non-trading fees. Trading fees refer to the fees that a trader incurs whenever they make a trade, this could be in the form of a commission or a spread. On the other hand, non-trading fees are fees that are not directly related to the trading activity on the account. For example, this could include inactivity fees, deposit and withdrawal fees, as well as account management charges.
Before you begin trading through a platform, it is important for you to be aware of the different fees that the platform charges. Usually, these fees differ across asset classes and are different for each country and jurisdiction, so you should look at the ones applicable to your trading needs. For the same functionality, you should always prefer a platform that charges lower fees over one that has high fees.
A commission is a flat fee that you pay for each trade order that you place. One of the advantages of commissions is that they are known in advance, therefore you can easily accommodate commissions and account for them when backtesting a strategy or preparing a plan for trading. Commissions are usually volume-based, and the greater your trading volume, the lower the commissions that you will have to pay. At the same time, commissions can sometimes be higher than spreads.
Different brokers offer spreads and commissions, and some brokers even offer a combination of both. While both spreads and commissions have their own advantages and disadvantages, commissions are usually preferred by HFX traders because they are fixed, accountable, and quite low if a certain trading volume is exceeded. When selecting a broker that charges commissions, you should always check if this broker offers rebates or discounts. Since HFX trading strategies usually involve large volumes, it will be easy for you to meet the threshold and be eligible for rebates, if any.
Spreads are the other type of trading fee that a platform can charge and usually refer to the difference between the buy and sell prices of an asset. Spreads charged by platforms can either be fixed or variable. Fixed spreads stay constant throughout the trading day, whereas variable spreads vary during the trading day based on volatility and liquidity in the market. It is important for you to know what the spread for your broker is, and whether it is fixed or variable. Different brokers have largely different spreads depending on the instruments you wish to trade, and spreads can vary even among one particular asset class.
Other platform fees are non-trading fees, and they can be divided into three types of fees. The first is the management fee for the account, which is an annual charge that you pay for using the platform. The next is the fees for depositing and withdrawing fees to your account. This could be either a blanket fee for deposits and withdrawals, a fee for either deposit or withdrawals, or a fee that is only applicable on particular forms of depositing and withdrawing funds.
The third type of fee is the inactivity fee, which only comes into play when you do not use your account, makes trades, or add funds to your account for more than a particular period of time. If this happens, you will be charged a regular inactivity fee.
Before selecting a broker, it is important for you to know the different non-trading fees since they also affect your profitability.
Aside from the characteristics and criteria mentioned above, there are several other factors that you have to keep in mind while selecting a broker. These are the features and tools that the platform offers. A larger variety of tools is always better than a smaller one if you do not end up using all of them. The major features that you should look for in an ideal HFX trading platform have been discussed below.
The primary feature that you need to look at is the possibility of fractional ownership. This allows you to purchase a fraction of a share, such as 0.01 of a share or even less. This is particularly useful if you do not wish to invest a large amount of capital into your trading account. For example, some shares can cost as much as 2000 GBP, and the only way in which you can buy them with a small capital investment is through the use of fractional ownership options. There are several platforms these days that offer this functionality, and this is definitely something you should be on the lookout for.
A corollary of having fractional ownership of shares on a platform is having low minimum deposit requirements since this allows you to set up an account with low capital investments. Therefore, you should also look at platforms that have low capital requirements, such as XTB (minimum deposit of 1 GBP).
The next factor to keep in mind while trading is to look at the automated trading facilities that they offer. While some brokers allow you to set up and execute automated trading strategies through their own platform, the most common way to do this is through the MT4 and MT5 trading platforms. There are several types of automated trading strategies that you could employ. For example, you could choose to trade through bots, trading signals, or copy trade with another trader. Either way, it is important for you to find and use a broker that supports automated trading strategies.
There are several types of orders that platforms allow you to place. These include market orders, limit orders, stop-limit orders, and stop-loss orders. In addition to this, there are numerous timeframes that you could set on your orders, such as:
It is important for the broker you choose to allow you to place such orders so that you can trade with maximum efficiency.
Research and analysis tools are highly important, particularly for HFX trading platforms. There are two types of research and analysis tools that a platform might offer: technical and fundamental. Technical tools include charting and analysis methods and can be either general or asset-specific. Fundamental tools include economic calendars, financial reports, analyst forecasts, and other similar forms of data.
Traders usually perform only one of the two forms of analysis, however, it is important to be aware of both since they have an impact on prices and can therefore affect the overall profitability of your strategies. Having a broker that incorporates both fundamental and technical analysis can mean that this job is made easier.
Some platforms require getting used to because they are designed and structured in a unique way. A demo account helps with this since it enables you to understand how the navigation and order execution on the platform works. At the same time, having a demo account on a platform means that you can easily test out your strategies in real market conditions, and build up your knowledge and experience without risking real capital. This is a very useful tool, and it is always better to use a broker that allows you to open a demo account with them.
As an HFX trader, you will often be opening and closing multiple positions quickly and automatically. HFX trading does not usually require a very high level of close management, however, you might want to see how your portfolio is doing as a while at any given point in time. Therefore, a mobile app is very useful since it allows you to monitor your positions and trade on the move, even when you are not near a laptop or a computer. At the same time, most mobile apps also have functionalities that enable you to set price alerts and push notifications for a variety of situations, enabling you to stay informed on the move.
The variety of methods that you can use in order to withdraw and deposit funds to your trading account is also a key factor to consider. While most brokers allow you to deposit funds through bank transfer and credit/debit cards, it is better to use brokers that allow other forms of deposit as well, including electronic wallets such as PayPal, Skrill, and others. This will enable you to easily add and withdraw funds from your account.
The last factor that you must consider is the customer service offering provided by the platform. Those platforms that provide live chat options are always highly preferred since this means that your queries can be resolved quickly and easily as and when they arise. At the same time, you should also look for platforms whose customer service teams are available 24/5 so that you can call or email them during this time and receive answers to your questions.
The process of opening an account on the best HFX trading platform, eToro, is relatively simple and straightforward and incorporates 5 steps. These have been discussed below in detail.
The first step is to open an eToro account. This can be done by simply heading over to their website and clicking on the “Join Now” button. You can either create an account from scratch or log in using your Facebook or Gmail account.
Once you have created an account, the next step is to then verify your identity. Since eToro is a highly regulated broker, they require you to submit proof of ID and address proof before your account is verified. For ID proof, you can submit any government-issued ID such as a driving license or your passport. For address proof, you could either submit a utility bill or your bank statement.
Once you have uploaded the requisite documents, the eToro verification process is pretty quick. As soon as your account has been verified, you will be able to move on to the next step.
The next step is to deposit funds into your account. You can do so either via your debit/credit card, a bank transfer, or online wallets such as PayPal and Skrill.
The next step is to search for the market that you wish to trade on. This is as simple as going to the search bar and typing the name of the market. You can then select the market you are interested in. alternatively, you can use the menu to select an asset class and find the market you wish to trade in through that.
The last step is to place a trade. To do this, simply open an asset’s page, click on buy or sell, enter the amount you wish to trade, enter the leverage, set the stop loss, and then click on execute. The trade will be executed almost instantaneously.
HFX platforms provide a unique service offering: the products that you can trade through them cannot normally be traded through exchanges. There are several important considerations to keep in mind when trading through an HFX trader, which have all been discussed. These include general considerations about the platform, such as the trading fees and the asset class list. But they also include the trading tools that the platform provides, such as their analysis capabilities and the different order types that can be placed through the platform.
In conclusion, if you’re looking to get started with an HFX trading platform, the best option for you is to do so via eToro. It is one of the most reliable and safe trading platforms for investors and traders of all experience levels, and it also contains among the largest variety of asset classes to trade on. Their trading platform and its functionalities are almost unparalleled in the industry, and it also has low spreads and fees on the trading of stocks and forex pairs. All in all, eToro is definitely a strong option to consider for your HFX trading needs.
While different platforms are suitable for different traders, eToro is the overall best fast trading platform.
The cheapest HFX trading platform, with the best variety of assets and products, is eToro.
A lot of HFX trading platforms offer cryptocurrencies, including eToro.
The top HFX trading platforms are regulated by different agencies worldwide, like the FCA in the UK and the CFTC in the USA.
The best HFX trading platform to trade stocks, with the lowest fees and the largest variety of markets to trade on, is eToro.
Commission-free HFX trading platforms make money either by charging spreads or by having other indirect fees.
The top-tier HFX trading platforms usually offer leverage of up to 30x on major forex currencies, but AvaTrade offers leverage as high as 400x.
I'm a second year Accounting and Finance student at the University of Warwick, in addition to being an incoming Trading Analyst at Morgan Stanley. I'm passionate about the financial markets and all things finance.
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