AvaTrade Broker Review

If you are a retail trader, looking for a forex broker, then AvaTrade is certainly an option you should consider. With protection against potential losses and a strong social trading function, AvaTrade is great for newbies and intermediate traders alike.

In this broker review, we will highlight all the important factors you need to consider when deciding upon whether AvaTrade is the right broker for you.

Key Pros and Cons

If you are tight on time, here are a few key Pros and Cons to consider if you are thinking of using AvaTrade.

Company Information

AvaTrade was founded in 2006 by Emanuel Kronitz and Negev Nosatzki. Starting life as AvaFX they branched out to become a cross-asset brokerage firm and rebranded as AvaTrade in 2013.

The global client base has now grown to over 300,000 registered traders, placing over 2 million trades per month, which AvaTrade says generates trading volumes of over $70bn per month.

A Global Presence – With a head office based in Dublin, Ireland they also have regional offices and a presence in:

Management

The AvaTrade management team is also highly experienced with each of the heads coming from strong industry background.

They are headed up by CEO Daire Ferguson (ex Bristol Meyers Squib), the CFO Sairi Hemmendinger is ex PwC, whilst the head of compliance Ian Webb is ex Citco Bank Nederland and Deutsche Bank.

Why Trade with AvaTrade?

If you are in a bit of a rush, here are some of the important features that we like about trading with AvaTrade.

Regulation

The discussion around how well regulated a broker is tends to be based around the number of regulatory licenses they hold. This is true, the more regulatory bodies that a broker operates under, the more they have to adhere to the rules.

So with AvaTrade’s entities coming under the umbrella of six different regulatory authorities, some of which are very stringent, the regulation is pretty solid. Here is a breakdown of the various regimes they come under:

Importantly though there is one interesting omission from the list of regulators. There is no regulation under the UK’s FCA (Financial Conduct Authority). The FCA is a world-renown regulator requiring stringent conditions on the brokers that it oversees. This means that AvaTrade is not restricted by the FCA’s leverage limits of 1:30. Subsequently, traders can get access to leverage of up to 400 times (or 1:400).

The regulatory structure that AvaTrade has allows them to offer clients around the world a variety of trading needs. Traders just need to decide upon which entity best fits their needs and then they can be registered there.

Also as is so often the case with brokers from outside the US, there is no regulation with the Commodities Futures Trading Commission (CFTC). However, on the flip-side, AvaTrade does have a partnership with Friedberg Direct which is a Canadian broker. This gives Canadian traders access to AvaTrade’s product suite.

So we believe that whilst having many regulatory licences certainly improve the level of trust, the lack of a UK regulator is an interesting omission. However, AvaTrade is still covered under other strong regulators which arguably balances this out.

KYC Procedure for Account Creation and Depositing

We signed up to join AvaTrade and it took us about ten minutes to complete our profile. The questions and information asked were all fairly basic and typical of what you are required to do when signing up to a broker.

Just go to the website and click the “Register Now” button to get going. Here are the steps that we had to take to sign up:

1. Add contact details – add in your name, email address and telephone number. Or simply use Facebook or Google logins.
2. Further contact details – with your date of birth and address
3. Trading Experience – answer questions of how much you have traded in the past year and in what volume
4. Trading Knowledge – assessing your professional qualifications and your experience of leverage trading.
5. Choose a password
6. Choose your platform – we were offered MT4, MT5 and AvaOptions
7. Select your base currency – we had the options of USD, EUR, GBP and CHF
8. Financial status and funding – finally you are required to disclose your estimated annual income, the level of your savings, how much you will invest and the source of your funds. This may seem a little uncomfortable for you, however, it is all fairly industry standard.
9. Now you have set up your profile, you will need to upload some documentation for AvaTrade to check. You will be asked to prove your identity and a proof of residency.
10. Proof of ID – you will need to prove your identity via one of the following:
    • Passport
    • National ID card
    • Driver’s License
11. Proof of residency – such as a utility bill or bank account statement.
    When you have completed your profile and uploaded your documents, you will need to wait for AvaTrade to approve your account. This review is done within one business day.

    However, there is also one more thing before you can start trading. You will need to fund the account. With AvaTrade to open the Standard account, there is a minimum deposit of $100 (or €100/£100).

Account Types

Broadly speaking, there are two main accounts that you can open with AvaTrade:

• Standard Account – this is the account that all retail traders default on.
• Professional Account – qualifying traders are offered narrower spreads and bigger leverage limits are available.

There are three significant differences that the Professional Account has over the Standard Account.

• Spreads are tighter
• Leverage limits are much bigger for European accounts
• Cryptocurrencies traded on margin are available

To qualify for a professional account the hurdles are quite high:

1. Trading activity – transactions of significant size and over 10 per quarter over the past four quarters
2. Experience – working for at least one year in the financial sector as a professional.
3. Portfolio size – needs to be greater than $500,000.

Other accounts available

Other accounts are available but these do come with restrictions:

• Spread betting account – Clients in the UK & Ireland can open a spread betting account. This is similar to a CFD trading account, however, traders can have a lower tax bill. This is because profits from spread betting are free of capital gains tax.
• Islamic Account – Traders who comply with Sharia Law and qualify on religious grounds are offered access to the Islamic trading account which is free of overnight financing charges.
• AvaOptions – a Vanilla Options Account is also available to those who are deemed to be sufficiently experienced.

What you don’t get at AvaTrade

It is not all about what you get, but sometimes what you do not. Here’s a couple of account features that AvaTrade does not offer that some other brokers might:

• STP or ECN accounts – All accounts at AvaTrade come with dealing desk model trade execution. This means that you cannot get Direct Market Access trading through AvaTrade, and there is no zero spread account availability.
• Guaranteed Stop-Loss Orders – Some brokers offer a facility of guaranteed stop-loss orders. This helps to protect traders from fast-moving and gapping markets. AvaTrade does not offer Guaranteed Stop-Loss Orders (GLSO). However, they do counter this with AvaProtect which is a feature that covers trading losses for a specific time, for a fee of course.

Trading fees and other costs

All brokers have to make money somehow. The costs to the trader are all helping the broker to run their business and allow us all to trade. However, you would still want the costs to be as low as possible. You do not want to be giving away too much of your hard-earned cash.

There are several costs that you can incur whilst trading. Broadly speaking these can be split into two categories:

• Trading fees – spreads, commissions and overnight financing charges
• Non-trading costs – account fees, inactivity fees, currency conversion fees

Let’s break these down into sections and see what they are for AvaTrade.

Trading Costs

AvaTrade’s broker model is a Dealing Desk process, so they can make money in two ways you’re your trades:

• Firstly, the spread they charge on trades. This is the difference between the Bid price (the price you get when you sell) and the Offer/Ask (the price you get when you buy).
• Secondly, they may take the other side of the trade. When the trader makes a profit, the broker loses; when the trader makes a loss, the broker makes money.

At BestBroker.com we are here to tell you about the spread costs. It is up to you as to what you think of the other way that AvaTrade can make money.

Spreads

We believe that AvaTrade’s spreads are competitive. As a result of the dealing desk broker model, AvaTrade can offer fixed spreads. This is good as it does not matter when you trade, you can always get the same spread. Other brokers that have variable spreads can achieve lower minimum spreads, however, against the average spreads, AvaTrade compares favourably.
The commodities trading is subject to Standard Spread or ‘Spread Over Market.’ For example, the spread cost for Gold is 0.34, whereas.
This table shows how AvaTrade compares to large competitors on the most widely traded forex positions. On average, the competitors tend to have wider spreads, however, this is not always the case. Minimum spreads can be lower than AvaTrade’s fixed offering.

*unconfirmed

Commissions

AvaTrade charges zero commission for trades. They make money on the spread “except where otherwise stated”.

Financing charges

These are the charges that are incurred if you hold a position open overnight. The charges will vary day to day, and depending upon the interest rates of the currencies involved, you can either gain or lose from swaps charges.

The formula for the calculation of overnight financing charges that AvaTrade uses is fairly standard and is as follows:

Trade Amount x Daily Overnight Interest = Daily Overnight Interest Charged/Paid

Deposit fees

AvaTrade has zero deposit fees – which is fairly standard. – for more details see Deposit Methods

Withdrawal fees

AvaTrade has zero withdrawal fees – which is good. Many brokers will charge on second withdrawals within a month and often maybe around $25 for Wire transfers out. – for more details see Withdrawal Methods

Inactivity fees

However, where you benefit from the lack of deposit/withdrawal fees, you are significantly squeezed if your account lies dormant for any time.

If you have not used your account for three consecutive months then you will incur an inactivity fee. This fee is 50 of your base currency ($50, £50 or €50). This inactivity fee is charged every successive three months and is deducted from the value of the trading account.

Compared to most brokers, this fee is very expensive. Most will be between $10 to $15 per month and on average only starts after maybe a year. We would say that 24 months is generous, 12 months is average and six months is tight. AvaTrade inactivity fees kick in after just 3 months.

Administration Fees

The inactivity charges do not stop there either. On top of the quarterly inactivity fee, if you have not used your account for a year, you will be charged an Administration Fee of 100 base currency.

So with AvaTrade, if you are trading in USD and have not used your account for 12 months consecutively, you will be charged $200 in Inactivity Fees (4 quarters x $50) PLUS a $100 Administration Fee. A total of $300! This is hugely expensive compared to rival brokers:

• Forex.com only starts charging an inactivity fee of $12 per month after 12 months.
• OANDA charges a $10 inactivity fee per month after 12 months.

Overall on Fees

AvaTrade compares well to rival brokers on Trading Costs, with low fixed spreads and zero commission. We also like that there are no deposit or withdrawal fees. However, they charge extremely high fees on dormant accounts through inactivity fees and an administration fee which is also very rarely seen in other brokers.

Looking at the overall package of costs, AvaTrade is, therefore, a bit of a mixed bag. However, for active traders, who would never leave their account dormant, AvaTrade is good for fees.

Desktop Trading Platforms

AvaTrade has a few platforms you can trade on. Let’s start by looking at the basic trading platforms available:

• WebTrader – AvaTrade’s proprietary platform
• MetaTrader 4 – MT4 is still considered to be the benchmark platform for retail traders
• MetaTrader 5 – MT5 is the upgraded version of MT4

Now we will look at them in a little more detail:

WebTrader

AvaTrade’s proprietary platform is web-based, so no need to download it to your PC. The design is sleek and easy to navigate.

Here’s what we like:

• The simple, segmented layout splitting the screen into asset classes and charting.
• The information that comes with the trade editor helps the trader with the calculation of profit and loss from the trade, costs and overnight financing charges.
• The LiveChat function is available from the platform.

However, the charting capability could be considered to be slightly lighter compared to rival proprietary platforms that are available, such as CMC Markets.

MT4 & MT5

The vast majority of traders will have come across a MetaTrader platform, at least at some stage of their trading journey. Almost every broker you can name will have the MT4 platform available for its retail clients to trade on. Present in the market since 2002, MT4 is seen as the industry benchmark for traders. Many are also offering MT5 too, which is the upgrade to MT4.

MetaTrader 4 (MT4) – is good for charting, technical analysis indicators and translates very well across your devices, meaning desktop, tablet and mobile versions interact very well. With AvaTrade, the MT4 platform also has Guardian Angel which is a risk assessment add-on that gives traders feedback on trading actions and helps traders to develop and learn their skills.

MetaTrader 5 (MT5) – the upgrade on MT4 supports a wider selection of asset classes, including shares, commodities, ETF CFDs and cryptocurrencies (Bitcoin, Ripple, Etherum, etc). Other upgrades include:

• More order types (6 on MT5 versus 4 on MT4),
• More timeframes available (21 to choose from on MT5, versus just 9 on MT4)
• 38 technical indicators (versus 30 on MT4)
• 37 graphical drawing and annotation objects (versus 24 on MT4)

Other platforms & functions

Aside from the trading platforms, there are other trading platform facilities available too for desktop trading.

AvaOptions – AvaTrade offers something that very few brokers will. Options traders can use a dedicated options platform called AvaOptions.

Automated trading – DupliTrade and ZuluTrade are copy trading functions that are available through AvaTrade. DupliTrade is available for UK traders, whilst ZuluTrade gives you access to follow over 10,000 traders from over 190 countries around the world.

Mobile Trading Platforms

AvaTrade has a good offering in mobile trading platforms.

AvaTradeGo – is the proprietary mobile version that pulls over from the WebTrader. The app is available on iOS and Android and has good functionality, with access to tutorials and educational content. It even has a paper trading account for traders who are still learning the ropes and do not yet want to trade live.

Here’s what we like about AvaTradeGO:

• charts features that are available,
• information features such as the sentiment bar,
• Social trading notifications
• AvaProtect is also available within the proprietary mobile app.
• Market Trends – the copy trading feature

AvaSocial – this is AvaTrade’s copy trading app. Social trading is growing in popularity and AvaSocial is a strong offering in the market. With the app you can:

• follow and copy the trades of the best traders
• learn on the app by asking questions of mentors and be part of trading groups
• discover new strategies for your trading

Trading Instruments

At AvaTrade there is a wide selection of traded instruments available. There are 8 different asset classes to choose from. We think this is a strong selection, given the FX options, crypto and ETFs availability that many brokers may not offer. We are though slightly underwhelmed by the attempt at offering bonds, whilst the forex selection is fairly middle of the road.

Forex

There are 55 instruments to trade. This is a reasonable selection and is fairly average amongst competitors. However, some brokers offer a greater selection, with OANDA and Forex.com offering between 70 to 80 pairs.

Indices

There are a total of 33 indices to choose from. All the major indices are available, with 19 of the world’s major markets, in addition to some other more sector-based indices such as FAANG, AIRLINES and GREEN ENERGY. This is a decent selection.

Commodities

There are a total of 27 commodities available, including all the major precious metals ( Gold, Silver, etc. ), energy and softs. They are a little light on base metals with only Copper available, however, broadly this is a decent offering.

Bonds

Only two bonds are available, with EURO-BUND and JAPAN GOVT BOND. There are no Treasuries, Gilts or any other major government debt. Right now, this is fairly minimal.

Stocks

Equities trading is always the area that brokers can use to bump up their instrument offering. When brokers advertise that they have thousands of instruments to trade, the vast majority of these will be equities.

For AvaTrade, the website has a total of 625 stocks to trade. Around 500 of these are US stocks. There are also major German, UK, French, Italian, Dutch and Canadian stocks. This is a decent selection.

Cryptocurrency

There are 17 cryptocurrencies to trade (Bitcoin, Ripple, Etherum, etc). There is a good selection for crypto traders to get their teeth into.

Other asset classes

AvaTrade also offers 57 ETFs (Exchange Traded Funds) in addition to 44 FX Options. The selection of ETFs is good, but not many brokers will offer options.

Trade Execution

AvaTrade runs its model as a Dealing Desk broker. In other words, it is a market-maker. This comes with several benefits to traders, but also some factors that you need to be aware of. First of all, here are the benefits of the market-making model:

• Fast trade execution – all orders are dealt with in-house and not pushed out into the market.
• Low spreads – as AvaTrade incur lower costs
• No commission on trades – as AvaTrade makes their money on the spread

However, alongside the benefits of the Dealing Desk model, traders will also need to weigh up the issue of trust. AvaTrade will hedge trades by outsourcing them to third-party liquidity providers “sometimes”. The times where trades are not hedged, AvaTrade will be taking the other side of the trade to their clients.

Effectively, this means that AvaTrade will be trading against their clients. Knowing this is always an important part of the decision-making process of whether you feel comfortable with your broker trading against you.

AvaTrade does not appear to offer STP (Straight Through Processing) or ECN (Electronic Communications Network) execution.

Deposit Methods

To open an account with AvaTrade there is a minimum deposit of 100 base currency:

• USD account – $100
• EUR account – €100
• GBP account – £100 (only available for UK clients)
• AUD account – A$100 (only available to Australian clients)

AvaTrade also recommends that you have at least 1000 to 2000 of preferred base currency to enjoy the full range of products on offer.

With regards to depositing funds, AvaTrade does not charge for deposits. This is fairly standard but is always important to confirm. There are several methods that you can fund your account:

• Debit/Credit Card
• Wire Transfer – note this can take up to 7 business days to clear into your account
• e-Wallet (such as PayPal, Skrill, Webmoney, Neteller) – although this is not available for Australian or EU clients

The process is simple, just click on the “Deposit” section of your account and select the method you would like to use.

Withdrawal Methods

At AvaTrade the withdrawal process is completed in prompt time. Some withdrawals can be processed within minutes however, they do advise that the process tends to done within 1 to 2 working days. We would consider this a good level of service.

Due to international anti-money laundering regulations, the method of withdrawal has to be the same as the payment method that the account was funded. You must withdraw up to 200% of your deposit (i.e. your total deposit plus 100% profit on top). After that, you can withdraw to a different method.

It would also appear that there are no costs incurred on withdrawing funds. Some brokers will charge for more than one withdrawal per month, but not with AvaTrade

Customer Support Contacts

AvaTrade’s customer support contact can be achieved by all the usual methods. However, we were a little disappointed by the supposed “Email” contact, which we go into below. In the meantime though, here are the contacts available:

First and foremost, we like that AvaTrade’s website can be accessed in a multitude of different languages. Just go to “About” and click on “Trading Websites” and choose the language that you would prefer.

1. FAQ and Help Centre
   There is an extensive list of FAQs on the website, with several sections of question banks for you to quickly find an answer to your query. Topics covering technical issues, general support, the trading platform and your account. These are available 24/7.
2. Online chatbot – AvaGuide
   If your queries are not satisfied by the FAQs, then there is also an online chat-bot “AvaGuide” for you to type in your questions. The responses are automated but also instant and 24/7.
3. Telephone contact
   If you prefer to interact with a person, there is also an extensive list of 37 different telephone numbers to contact on the website. This includes countries from continents across the world:
   • 21 countries in Europe
   • 7 countries in Asia
   • 4 countries in South America
   • 2 countries in Africa

   Telephone contact appears to be during trading hours, so 24/5.

4. Email
   There is not a specific email address to contact however, you can add a request via the website inbuilt emailer. Adding in your contact details, the subject of the query and your request details. Response time was quick, as we were contacted within 24 hours of logging our query.

   AvaTrade refers to this service as an “Email”, but we disagree. This is more of a message service where you have to input your contact details to get a response. You have to provide telephone details, as well as an email address, so effectively this is more of a marketing tool.

Research and Educational Materials

The Education hub on the AvaTrade site is jam-packed with content covering a variety of topics to educate traders. It is an impressive bank of information that AvaTrade has available and will certainly be of great help to traders just starting on their journey.

Free to all there is to a multitude of articles explaining topics such as:

• Trading for beginners – explaining the basics of trading
• Technical analysis indicators
• Fundamental Analysis indicators
• Trading strategies and risk management explainers

If you prefer you can also watch several white-labelled education videos too. And if that’s not enough you can also sign up for the free eBook where there is even more to digest.

For registered clients, there is the “Sharp Trader” trading academy. This is where you can get more analytical content with technical and fundamental analysis in addition to more video and written educational content.

Trading Central

There is also the white-labelled Trading Central analysis tool available. This sends out trading signals to the platform. You can get access to analyst views and featured ideas in addition to newsflow streamed into the MT5 platform.

Security and Money Guarantees

When it comes to the protection of client funds, at bestbrokers.com we believe that this is one of the most important factors in choosing a broker. At your money is safe with AvaTrade. Depending upon your jurisdiction AvaTrade comes with:

• Full segregation of client funds
• Compensation scheme (for European traders)
• Negative balance protection
• AvaProtect

Let’s look at these in more detail.

As tends to always be the case with reputable brokers, client money is segregated from company funds. This means that if the company goes bust, your account is protected. AvaTrade’s European clients are also covered under the ICCL (Investment Compensation Company) which is Ireland’s “fund of last resort” for customers of financial companies. This means that the ICCL will pay compensation for up to 90% of the amount you have lost, up to a limit of €20,000 per investor. This protection is however not extended to clients of other jurisdictions.

We think the ICCL protection is positive for AvaTrade’s European clients. However, it is certainly worth noting that if AvaTrade had FCA regulation (and therefore the Financial Services Compensation Scheme) then this compensation limit would be considerably higher, up to £85,000.

However, one strong aspect of having your trading account with AvaTrade is that all retail trading accounts are covered with a negative balance protection guarantee. This means that clients cannot lose more money than they put in. This is excellent for beginner traders.

Another innovative feature that we like about AvaTrade is that clients can have AvaProtect on specific trades. For a one-off cost (described as a “modest hedging cost”) that is paid as the trade is opened, a position is protected within a specified time frame. If your trade is stopped out within your selected duration then you will be fully reimbursed for your losses of up to $1m. You will need to be trading via the proprietary platforms (either WebTrader and AvaTradeGO) to use AvaProtect.

Conclusion

BestBrokers.com believe that AvaTrade is a good broker and certainly a good option for beginner and novice traders to consider. Looking at the overall picture it has:

• good regulation (although not the best)
• a good selection of trading platforms and mobile trading
• a large variety of traded instruments
• low spreads and zero commissions
• good social trading and automated trading options

Our only real negatives are:

• the lack of UK regulation
• no Direct Market Access (STP or ECN) accounts
• huge inactivity fees – although this should not bother active traders

Taken as a whole, we believe that AvaTrade is a good broker to trade with.

R. Perry