IC Markets
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74-89% of retail CFD accounts lose money
10 Best Carry Trading Forex Brokers for 2023
Our Top Picks
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IG Markets
Visit IG Markets70% of retail CFD accounts lose money -
XTB
Visit XTB79% of retail investor accounts lose money -
XM
Visit XM77,37% of retail investor accounts lose money -
HF Markets
Visit HF Markets70.51% of retail investor accounts lose money -
Pepperstone
Visit Pepperstone74-89% of retail investor accounts lose money when trading CFDs -
FxPro
Visit FxPro72.87% of retail investor accounts lose money -
FBS
Visit FBS74-89% of retail CFD accounts lose money -
OctaFX
Visit OctaFX74-89% of retail CFD accounts lose money -
Interactive Brokers
Visit Interactive Brokers74-89% of retail CFD accounts lose money
A carry trade forex broker refers to a forex (Foreign Exchange) brokerage firm that supports or provides favorable conditions for the investment strategy known as “carry trading.”
Carry trading is a type of trading strategy where an investor borrows a certain amount in a currency with a relatively low interest rate, then uses these funds to invest in another currency with a higher interest rate. The trader profits from the difference between the interest rates, known as the “carry.”
In this article, we have grouped some of the best forex brokers for carry trading.
In making this ranking, we have taken the following factors into consideration:
- The mark-up on the spread
- The broker’s trading commissions
- The quantity of forex pairs
- Additional tools to help with carry trading
- The overall quality of the broker
Table of Content
What are the best brokers for carry trading?
Below our curated list of the best forex brokers with favorable conditions for carry trading, with details of features and characteristics.
Warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
IC Markets : best forex carry trading broker overall
- With IC Markets it is possible to carry trade with low commissions.
- IC Markets’ ECN execution allows carry traders to access the forex market with spreads as low as 0 pips.
- You can carry trade on IC Markets’ MT4, MT5, or cTrader platforms with a minimum deposit of $200.
IG Markets : widest range of assets
- IG Markets is a good broker for carry trading thanks to its wide number of forex pairs and assets available.
- IG Markets offers up to 17,000 assets in total, and over 90 forex pairs.
- Traders on IG Markets can trade forex with spreads as low as 0.6 pips.
- Trading accounts at IG Markets generally require a minimum deposit of at least $300 depending on the country of residence.
XTB : best trading platform
- XTB allows carry trading on numerous forex pairs with spreads as low as 0 pips.
- XTB does not require a minimum deposit to open an account and start carry trading.
- The trading platform offered by XTB is the xStation5.
XM : most efficient order execution
- XM is a good broker for carry trading because of its efficient order execution.
- XM’s spreads start at 0 pips, and the broker offers a large number of accounts to choose from.
- XM’s minimum deposit is generally $5 on the accounts offered.
HF Markets : most flexible forex carry trade broker
- With HF Markets, carry traders can trade over 40 forex pairs.
- Spreads on HF Markets start at 0 pips depending on account type.
- The minimum deposit to open an account and do carry trading on HF Markets is $0.
Pepperstone : great for low spread carry trading
- Through Pepperstone it is possible to carry trade with one of the lowest spreads in the industry.
- On Pepperstone, spreads start at 0 pips, averaging 0.09 pips on the EUR/USD pair.
- Pepperstone allows you to open trading accounts on MT4, MT5, and cTrader with a minimum deposit of $200.
74-89% of retail investor accounts lose money when trading CFDs
FxPro : large number of trading platforms
- With FxPro, carry trading is possible on three different platforms, MT4, MT5, and cTrader.
- Spreads on FxPro start at 0 pips, but vary depending on the type of account you choose.
- To open a real account at FxPro and start carry trading, $100 is required.
FBS : lowest minimum deposit
- FBS is the highest leveraged carry trading broker, as it offers levers up to 1:3000 under IFSC.
- On FBS it is possible to trade with spreads as low as 0 pips, however, European clients will find spreads from 1 pip.
- FBS offers accounts on several platforms, including MT4 and MT5, and requires a minimum deposit starting at $1 depending on the account.
OctaFX : carry trading broker for beginners
- OctaFX has a comprehensive calculator that allows traders to work out how their swap rate for different currency pairs.
- New traders can open an OctaFX trading account for $25.
- The spreads on OctaFX start from 0.2 pips.
Interactive Brokers : best for professional forex carry traders
- At Interactive Brokers, carry trading is possible on several platforms, including MT4 and the broker’s proprietary one.
- The service offered by Interactive Brokers offers spreads as low as 0 pip, with over 100 forex pairs to choose from.
- There is no minimum deposit to open a real account with Interactive Brokers.
What is forex carry trading?
A carry trade in forex may sound complex, but is actually not too complicated, and another potential way to profit. It is in fact a trading strategy that involves two currencies. One of these is what is considered a high interest currency, the other, a low interest currency.
As a carry trader, you will attempt to borrow at a low interest rate, and invest this money in a place that returns a high interest rate, in this case, all in the form of foreign currency pairs. By borrowing a pair at a low interest rate, and investing in a pair with a high interest rate, you should be able to exploit the percentage difference as profit.
How to choose a carry trade forex broker
Choosing the right broker can significantly impact the success of your carry trade strategy. Here’s a step-by-step guide to ensure you pick the best one:
- Ensure the broker is regulated by recognized and reputable bodies such as the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC), the National Futures Association (NFA) in the US, or European regulators like the Cyprus Securities and Exchange Commission (CySEC). Regulated brokers adhere to strict standards, ensuring the safety of your funds and fair trading practices.
- It’s beneficial to choose a broker that provides timely insights and news about currency interest rates and global macroeconomic events. These updates can help traders make informed decisions and understand the potential impact on carry trades.
- Considering the nature of carry trades where positions are held for extended periods, it’s crucial to select a broker with competitive fee structures. Aim for those offering spreads under 1 pip for popular forex pairs. Additionally, understand other fees like overnight financing or swap rates, especially since carry trades often involve holding positions overnight.
How does forex carry trading work?
As a simple carry trade example, let’s imagine that you borrow a low interest currency (LIC) at an example rate of 1%, and you use that to buy into a high interest currency (HIC) that earns typically 3%. You should expect a 2% profit. to illustrate this example:
With an exchange rate of 10.00:
100 LIC will purchase 1000HIC.
After a period of time, the HIC gains 3% to 1030.
The LIC gains 1% to 101.
With the exchange rate remaining unchanged, you would now have 1030 HIC which converts back to 103 LIC representing a 2 LIC profit, or 2%.
Of course, the interest rates may change during this time. This can certainly lead to fluctuation in profits and losses that you need to be mindful of. The above example is put forward in the table below:
| TIMEFRAME | LIC (1%) | HIC (3%) | |
|---|---|---|---|
| Let’s buy HIC with LIC | 100 | → | 1000 |
| After the interest | 101 | 1030 | |
| Let’s get the LIC back | 103 | ← | 1030 |
| Gains | 103-101 = 2 LIC |
How to find the best forex carry trade currencies for 2023
In order to find the best forex carry trade currencies you can use forex or financial news sites that showcase the current state of global economy and the currencies exchange rates.
Sites such as FxStreet can be a good start for forex carry traders, as they offer a detailed economic calendar with world currencies interest rates.
From here, the next step is to find good interest rates differentials. In other words, you can take a look at the interest rate of the USD currency, and then take a look at the EUR interest rates. If the interest rate differential is wide between the 2 currencies, you might want to check with your forex broker if it’s worth opening a trading position.
Carry trade pros and cons
Pros
- The carry trade is very flexible in the sense it can apply to any number of currencies moving in either direction. A wealth of opportunity.
- Like many forms of trading, a carry trade relies on, and rewards your knowledge and awareness of the markets and current trends.
Cons
- If the interest rate changes at any point during your trading process, then it can ruin the entire trade and the profitability you spotted.
- Carry trading is not suitable for those Islamic traders who wish to remain compliant with Shariah law.
About The Author
Filippo Ucchino
Co-Founder - CEO - Broker Expert
Filippo is the co-founder and CEO of InvestinGoal.com. He has 15 years of experience in the financial sector and forex in particular. He started his career as a forex trader in 2005 and then became interested in the whole fintech and crypto sector.
Over this time, he has developed an almost scientific approach to the analysis of brokers, their services, and offerings. In addition, he is an expert in Compliance and Security Policies for consumers protection in this sector.
With InvestinGoal, Filippo’s goal is to bring as much clarity as possible to help users navigate the world of online trading, forex, and cryptocurrencies.
10 Best Carry Trading Forex Brokers for 2023
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