Best Offshore Forex Brokers

After the passage of the Dodd-Frank Act in 2010, forex trading in the U.S. became less exciting. With significant leverage limits and a ban on hedging, the legislation made it harder for investors to take the big risks they needed to make big profits.

As a result, some traders have found an alternative: offshore forex brokers. While some of these brokers are still governed by strict regulations, others aren’t. Here’s Benzinga’s guide to the best ones.

Quick Look: Best Offshore Forex Brokers

• Best for U.S. Traders: FOREX.com
• Best for Experienced Traders: Interactive Brokers
• Best for High Leverage: RoboForex
• Best for Fast Execution: Blackbull Markets

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% to 76% 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.

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Best Offshore Forex Brokers

If you’re considering getting into offshore forex trading, here are some great brokers to check out.

1. Best for U.S. Traders: FOREX.com

FOREX.com is a trusted broker for forex and CFD traders worldwide. They offer a wide range of tradable currencies, low minimum account requirements, and a great trading platform. One of FOREX.com's best qualities is the speed at which it executes trades — the average time is a mere 0.04 milliseconds.

Why We Picked It: FOREX.com one of the best offshore forex brokers for US traders and is one of the most regulated sites on this list. They offer a low minimum spread starting at 0.0 pips, and leverage goes up to 500:1 for professional accounts outside the U.S. and 50:1 for U.S. traders. FOREX.com mobile trading app offers all the functionalities of the desktop version and comes with excellent charting tools.

2. Best for Experienced Traders: Interactive Brokers

Interactive Brokers (IBKR) is based in the United States and compliant with U.S. regulations. IBKR offers a comprehensive trading platform with access to a wide range of securities at competitive prices. It allows you to buy assets from over 150 global markets from the comfort of your home or office.

Why We Picked It: Interactive Brokers can be used on the web or mobile, and its interface includes complex features ideal for more experienced investors. As a bonus, there’s no minimum deposit. The downside is IBKR only accepts institutional forex traders based in the U.S. If you are a serious forex traders, IBKR is an excellent choice.

3. Best for High Leverage: RoboForex

Located in Belize, RoboForex has leverage options up to 2,000 to 1. It’s a great choice for anyone looking for algorithmic trading, as you can develop automated trading strategies without needing to code them. With over 12,000 trading instruments available, RoboForex offers a diverse range of investment options.

Why We Picked It: The trading conditions are cost-effective and spreads that can start from 0.0 pips. There are two types of Standard accounts: Fixed and Pro. The Pro account offers more base currencies, including gold, more trading instruments, and tighter floating spreads. ECN accounts also come in two types: fixed and floating spreads. The fixed spread ECN account has fewer trading instruments than the floating spread option. RoboForex offers a welcome bonus of $30 for new clients with Standard and Cent accounts in USD/EUR, credited after account verification and a minimum deposit of $10.

4. Best for Fast Execution: BlackBull Markets

BlackBull Markets is a multiple award-winning New Zealand-based forex and contract for difference (CFD) broker with over 26,000 tradable instruments. BlackBull is a pure ECN (electronic communications network) broker, meaning it doesn't match client orders internally via a dealing desk. Instead, all orders are passed to liquidity providers for order matching. This results in all account types being ECN-style with tight spreads.

Why We Picked It: For traders seeking the best spreads, the ECN Institutional account offers spreads from 0.0 pips and negotiable commissions, but it requires a high minimum balance of $20,000, which may be inaccessible for many independent traders. The ECN Prime account, with a $2,000 minimum balance and spreads starting at 0.1 pips, is a more affordable option. For beginners, the ECN Standard account offers a good entry point with a $200 minimum balance, commission-free trading, and spreads from 0.8 pips.

What is an Offshore Forex Broker?

An offshore forex broker is a broker that operates outside the U.S., typically one with lax regulations. Many of these brokers aren’t subject to regulations that limit leverage. These brokers typically operate in locations that offer favorable tax benefits and regulation for financial services.

Offshore forex brokers can provide traders with access to the global forex market, often offering competitive trading conditions, diverse trading instruments, and higher leverage options compared to brokers based in regulated jurisdictions. Traders should exercise caution when choosing an offshore forex broker, as they may not have the same level of regulatory oversight and protection as brokers based in well-regulated jurisdictions.

Why Choose an Offshore Forex Broker?

If you’re looking to get into forex trading or just want to diversify your investments, there are several advantages of offshore forex brokers to consider, including:

• Leverage: In the U.S., forex leverage is limited to 50:1, but some offshore brokers offer leverage up to 1,000:1.
• Higher flexibility: Lax or nonexistent regulations allow you more investment flexibility.
• Hedging: Hedging is permitted by brokers not subject to U.S. regulations.

Not all benefits apply to all offshore brokers. For instance, if an offshore broker is regulated by U.S. authorities, its leverage limit will still be 50:1.

Why Avoid an Offshore Forex Broker?

Offshore forex brokers offer the potential of a better return on investment. However,  they present their share of risks as well. For instance:

• Lack of regulation: You’ll likely have no recourse if your money is lost for any reason.
• Fraud risks: Thanks to the lack of regulations, there are more opportunities for fraud on the part of the broker.
• Bonus lockups: Bonuses may be held until you hit a certain turnover target.
• Managed account fraud: Some clients are drawn in to pay for managed accounts that don’t actually exist.
• Price manipulation: Some offshore brokers may artificially manipulate prices in order to trigger stop-loss orders.

Before you choose a broker, look at some customer reviews — chances are good that potential downsides will be mentioned there.

What to Look for in an Offshore Forex Broker

How do you choose an offshore broker? To find the best brokers, you’ll want to consider a few factors:

Reputation

The best brokers will have solid reviews. If you’re part of a forex trading community, ask your sources about the broker’s reputation.

Account Features

Some brokers have very basic interfaces. Others have features geared toward professional investors. Make sure you take an in-depth look.

Costs

Some brokers have minimum deposit requirements, withdrawal fees and other account maintenance expenses. It’s important to understand the total cost before committing.

Customer Support

If you run into an issue, you’ll want to contact the support team as soon as possible. Find out how and when you can reach the support staff.

Platform

The right trading platform makes all the difference. See whether the broker has a web platform, a mobile platform or both.

Diversify Your Portfolio with Offshore Forex Trading

Although you should exercise caution when choosing a broker, working with an offshore forex broker can help keep your portfolio healthy and diverse. If you’re developing a winning forex strategy or looking for tips for success, Benzinga is here to help.

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