XMVisit XM77,37% of retail investor accounts lose money
eToroVisit eToro77% of retail investor accounts lose money
AvaTradeVisit AvaTrade79% of retail investor accounts lose money
XTBVisit XTB79% of retail investor accounts lose money
IG MarketsVisit IG Markets70% of retail CFD accounts lose money
AdmiralsVisit Admirals76% of retail investor accounts lose money
Plus500Visit Plus50077% of retail investor accounts lose money
ActivTradesVisit ActivTrades75.7% of retail CFD accounts lose money
PepperstoneVisit Pepperstone74-89% of retail investor accounts lose money when trading CFDs
Interactive BrokersVisit Interactive Brokers74-89% of retail CFD accounts lose money
Europe is a major economic powerhouse, with many of its nations consolidated under the European Union (EU).
The primary currency used by 19 of the 27 EU member states is the Euro (€), which stands as one of the most traded currencies in the world, only second to the US Dollar.
To ensure the integrity and transparency of the vast forex market operating within its jurisdiction, Europe has the European Securities and Markets Authority (ESMA).
ESMA oversees financial markets and regulates retail forex trading activity, setting standards to protect investors, promoting stable and orderly markets, and working to foster coordination among member states. This regulatory body plays a pivotal role in maintaining the trustworthiness and robustness of the European financial market, ensuring that it remains competitive on the global stage.
In this article we have chosen the best ones for European traders. We took into consideration various factors, including:
- The regulation of the broker;
- Their physical presence of offices within Europe;
- The overall quality of the service;
- Forex trading commissions;
- Available base currencies.
What are the best forex brokers in Europe?
Below is our curated list of the best forex brokers for traders living in Europe, with details and information about the region laws, the features, and the characteristics.
How to open a forex trading account in Europe
In Europe, opening a trading account is slightly more complex than in other countries.
European brokers have to respect strict rules on profiling their clients in order to protect the less experienced, and at the same time fight money laundering.
Clients who want to trade with real money must complete the brokers’ profiling procedure, known as KYC (Know Your Customer). This consists of 5 steps:
- Answer questions about CFDs to let the broker know your level of expertise.
- Answer questions about your financial situation to verify the source of the money.
- Provide a proof of identity through an official document (such as a passport or ID card).
- Provide a proof of address with an official document (such as a bank statement or utility bill).
- Deposit money with an entity linked to the identity of the trader.
What should European traders look for in a forex broker?
If you are a European trader, there are some things you need to look out for to navigate the FX market. European traders are free to choose any broker in the world as long as it is regulated by at least one European financial regulatory body.
Other tips to keep in mind as a European trader include:
1. Stick with ESMA compliant brokers
Brokers cannot offer financial services within the EU without an ESMA regulation.
For brokers to get an ESMA license, they usually register in Cyprus with the CySEC. They can also choose whichever country they prefer. ESMA brokers are safe and offer a great level of protection.
2. Active Trader Programs may help
Another important tip is to leverage active trader programs. The benefit of using active trader programs is that they offer lower spreads and costs. These are only available to active traders that trade large FX positions.
Experienced traders can also get great benefits from active trader programs. One of the best rebates programs for European forex traders is offered by Pepperstone (74-89% of retail investor accounts lose money when trading CFDs).
3. Choose a broker with an unlimited demo account if you are a beginner
Next is to choose a broker with an unlimited demo account if you are new in forex trading.
Demo accounts are free accounts that brokers offer to let you test their service with virtual money.
They can be opened quickly without having to provide ID cards, bank statements, or other formalities.
4. Watch out for forex trading scams
European traders are often the target of online scams. These are carried out in many ways, but the main way scammers attract victims is by using telemarketing.
One should always be wary of call centers that offer to invest money in forex or other markets.
What is ESMA and what does it mean for forex traders?
ESMA (or European Securities and Markets Authority) is the body that oversees the European financial markets.
Brokers operating in Europe must comply with ESMA directives, which directly affect European traders as well. Among them, the most important are the following:
- Brokers are required to show how many traders lose money using their service.
- Brokers cannot offer bonuses of any kind.
- Brokers cannot offer high-risk products such as binary options.
- Brokers must implement systems that prevent the user from losing more money than they deposit (Negative Balance Protection).
- Brokers must keep users’ money in segregated accounts.
- Brokers may offer leverage of up to 1:30.
It should also be noted that these rules apply only to clients who are classified as “retail”, i.e. “non-professional”. If the trader meets the necessary requirements, they can apply to the broker for professional status who will be able to grant higher leverage, rebates based on the volume traded, and potentially even high-risk assets.
How to verify if a forex broker is regulated in Europe
Determining the regulation status of a broker in Europe is simple. All you need to do is to go to the ESMA (EU) firms register, select the country the broker operates in and hit the verification button. The result will display whether or not the broker is registered in the selected country. If you still have doubts, check our dedicated article on how to check the regulation of a broker.
Is forex trading taxable in Europe?
The EU does not have a single tax law, so each European state has its own policy.
Despite this, forex is usually taxable according to the local Capital Gain Tax rates.
If you are interested to know the tax trading laws in a particular European country, on InvestinGoal we have covered the top 10 best forex brokers for various European countries:
However, we strongly recommend contacting a professional tax advisor to file your taxes, seek help and receive tips.
About The Author