Europe is one of the safest regions for trading Forex with multiple top-tier market regulators originating there. The famous European Securities and Markets Authority, (ESMA) together with the Cyprus Securities and Exchange Commission, (CySEC) and the Financial Conduct Authority FCA in the United Kingdom has put a great effort into developing a secure, advanced, and competitive Forex market in the region. However, European regulators are some of the strictest worldwide. That is why you might come across some restrictions on leverage. Furthermore, European brokers cannot provide bonus programs to the residents of the region as the regulations strictly ban such promotional campaigns.
Europe plays a huge role in the global Forex market, as well. Some of the strongest tradable currency pairs come from European countries. In fact, out of the top five Forex currency pairs, three are dominated by the European currencies: Euro, British pound, and Swiss franc. You can find some of the best regulated Forex brokers in Europe offering other European currencies within their Forex exotic lists including Norwegian krone, Polish zloty, Czech koruna, Hungarian forint, and Russian ruble.
Generally, there is Capital Gains Tax applicable to Forex incomes in European countries. Most of the CGT amount varies between 15 to 25% of the net Forex earnings. However, depending on the trader’s profile in some of the regions Forex traders might be exempt from paying the Capital Gains Tax. For example, the United Kingdom classifies CFDs, Forex, and spread betting as speculative. Derivatives are not eligible for tax, therefore, traders, especially those practicing day trading, do not need to pay CGT. On the other hand, if you are trading for a living then you are obliged to pay income tax in the UK depending on the size of your income.
One of the best things about trading Forex in Europe is that you actually have plenty of options when it comes to payment methods. Most of the European brokers allow you to make transactions through Mastercard/Visa cards, bank wire transfers, online payment solutions like Neteller, Skrill, PayPal, and so on. In most cases, brokers do not charge any fees for withdrawals and deposits.
European traders have quite a large pool of best brokers in Europe that they are able to choose from depending on the trading conditions and a range of services provided. Europe is a significant financial center across many different sectors which makes the region especially attractive for every online broker. Thanks to the strict regulatory framework and active participation of the market regulators trading with European brokers is completely secure unless you go for unregulated companies. We have prepared the list of the best European-regulated Forex brokers below.
5$
CySEC, FCA, ASIC
30$, 50%+20%
30:1
2009
MT4, MT5, WebTrader
$100
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
1:400
2006
MT4, MT5, WebTrader, AvaTradeGO
USD 5,000
FINMA, FCA, ASIC, FSA, MAS, AFM
N/A
1:30
1992
SaxoTraderGo, SaxoTraderPro
$5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
1:1000
2010
MT4, MT5
15
CySEC
30%
1:500
2015
MT4, WebTrader
$250
FSCA
1:200
2012
MT4, WebTrader
100$
FCA
N/A
30:1
2008
Custom
$10
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
N/A
1:1000
2013
Proprietary
10 USD
FCA, CySEC, FSA
N/A
1:Unlimited
2008
MT4, MT5, WebTerminal
$10
N/A
N/A
1:500
2019
MT4, custom
$10
1:500
MT4
250$
FCA, NFA
N/A
200:1
1999
MT4
$25
ASIC, CySEC, FSA, BVI
50%
1:400
2001
WebTrader, MT4, TradingView
100
FCA, CySEC, DIFC, CIMA
N/A
500:1
1977
MT4, MT5
$100 AUD
ASIC
N/A
500:1
2005
WebTrader, MT4, MT5, IRESS
AUD$200
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
N/A
1:400
2010
MT4, MT5, cTrader, TradingView
$50
N/A
N/A
1:500
2015
MT4
1 USD
ASIC, FCA
10 USD
1:500
2005
MT4, MT5, WebTrader
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Investors losing money when trading CFDs is not a rare phenomenon, it happens all the time. Even though those contracts allow traders to possibly benefit on price movements, you still should consider whether you understand how they work and can afford to take the high risk of losing your money.
The most important authority in the European Union that has power over all financial sectors of the member countries is the European Securities and Markets Authority (ESMA). It is an independent organization that fights for the stability of the EU’s financial system. ESMA issues regulations and guidelines that aim to protect the investors and promote orderly financial markets. There are few important steps that ESMA regularly undergoes to ensure the overall reliability of the Forex and financial market in the region:
However, ESMA is not the only institution that the European Forex sector relies on. Each country in Europe has its own regulatory body and here are some of the most prominent ones:
Also, some brokers don’t stop with just those regulations, some of them find it important to acquire memberships from professional and governmental bodies like MiFID (Markets in Financial Instruments Directive), which is a European Union law that provides harmonized regulation for investment services across all of the member states of the EAA (European Economic Area) and the ICC (Investor Compensation Company Limited).
Register with the CySEC-regulated broker XM
MiFID is an important regulation that carries the purpose of governing services provided by financial institutions like the Forex broker Europe. It was created by the European Parliament to ensure that Forex trading can be performed transparently and fairly.
Thus, according to the regulation, there is a list of requirements the best European broker shall meet in case if it wants to continue its operations on the market. Among those there are:
In the EU there is the Financial Commission member, FT Global Limited organization, which is dedicated to resolving various issues in the financial sphere. Thus, the institution stands for transparency and security of traders’ funds. And can cover some of the expenses that have appeared in case if the money were stolen or in case of unexpected price shifts on the market. The maximum coverage rate, notably, cannot exceed €20,000 per client.
All of the brokerages located within the EU, provide negative balance protection to their users. This way they ensure that the accounts of traders will never go below zero no matter how unsuccessful the Forex trading was for one. That is of utmost importance for beginners who are still not comfortable with the market constantly moving and prices changing every day. Thus, in the ever-changing environment, EU brokers are trying to secure the traders from having debts. That is yet another sign of how responsible and highly secured are the Forex market and its representative on the territory of the EU.
The vast majority of European Union countries will charge Capital Gains Tax on Forex earnings. The CGT rate will vary from one country to another but it will fall between the range of 15% (Greece) to 34% (France). It is extremely important to file your income and capital gains taxes to the respective revenue authority within your country, otherwise, there are fines and legal consequences if you try hiding them.
The best tax system that suits Forex traders can be found in the United Kingdom. Despite the fact that there is a Capital Gains Tax applicable on any gains in the country, Forex traders can be exempt from paying the CGT. The UK government and revenue authority regard Forex trading as ‘speculative’. It means that you cannot physically hold the asset, therefore, derivatives are not taxed in the country. Not all Forex traders will be exempt from CGT, though. If you are a day trader you are not paying the taxes, that’s for sure. However, if you are trading for a living then you may still have to pay your income taxes.
If your taxable Forex earnings do not exceed 12,570 British pounds at the end of the tax year you are exempt from paying the income taxes. You will be subject to a basic income tax rate of 20% if your Forex earnings fall between 12,571 to 50,270 British pounds. For the income that ranges between 50,271 and 150,000 British pounds, Forex traders pay 40% of their net earnings in tax. Additional rate applies to earnings that exceed 150,000 British pounds and are subject to a 45% income tax rate.
As we have already mentioned, a great deal of the major Forex currency pairs is based on the top three European currency units: Swizz franc, British pound, and Euro. That is why every single broker from our list presented above will provide the currency pairs comprising these three European giants. However, the most tradable currency pair among the European Forex traders is EUR/USD. The average spreads found with the best European brokers on EUR/USD pair will range between 0.3 and 1.5 pips.
Among the most popular currency pairs on the EU Forex market there are:
The European Securities and Markets Authority (ESMA) restricts the leverage from 30:1 to 2:1 on the opening of a position by the retail clients. The major currency pairs in the Forex market have a leverage limit of 30:1 according to the market regulator. The minor currency pairs, as well as gold assets and major indices, can have the leverage of a maximum of 20:1. Commodities, as well as the minor equity indices, have a restriction on leverage for up to 10:1. Individual equities and other reference values are limited up to 5:1. Finally, the cryptocurrency trading assets can have maximum leverage of 2:1.
There are additional margin requirements and regulations that ESMA produced recently, which will be calculated on a per-account basis from now on. ESMA also made negative balance protection a necessary feature of all regulated brokers in the European Union. In addition, brokers are obliged to include a standardized risk warning including the percentage of investor accounts lose money. Since, ESMA is a common regulator of the whole European financial market, the restrictions imposed by ESMA are enforced in all European countries.
European brokers have the most diverse options when it comes to online payment solutions. Traders can choose among the numerous payment methods including the traditional Visa/Mastercard payments with debit and credit cars and bank wire transfers with most top-tier banks partnering with the brokers. Moreover, there are plenty of online payment methods and e-wallets supported on the brokers’ platforms in Europe, such as PayPal, Skrill, and Neteller. Some of the brokers even allow transactions in cryptocurrencies, notably in Bitcoin and Bitcoin Cash. Broker-to-broker transactions are also widely accepted across most platforms.
None of the best Forex brokers in the EU incorporate deposit or withdrawal fees. However, some of the payment service providers might have their respective service fees. Usually, the commissionable payments are instant payment requests. If clients wait for 2-5 working days then most of the payment methods will not charge a fee.
As we have already mentioned, Forex brokers Europe are probably the safest brokers you can opt for. Probably you have heard of the famous scam cases that happened throughout the past few years in the Forex industry. The most recent case involved at least 350 victims with a total of 8.5 million euros stolen. Fortunately, the European Union’s Agency for Criminal Justice Cooperation (Eurojust) together with the European Union’s Law Enforcement Agency (Europol) managed to arrest the main figures behind the scam. Nine arrests were made in Bulgaria and Serbia in 2020 followed by the seizure of 50 million euros in cars and luxury goods in Ukraine later in December.
But we have to note that all of the frauds happened with unregulated Forex brokers. Therefore, if you trade with the regulated brokers only you are guaranteed that you will avoid scams. Beware to look out for the bonus offers from the brokers. Offering bonuses to European clients is banned by the regulators, therefore, a regulated and decent broker will not provide bonuses in the European Union member countries. Furthermore, avoid too high leverages from the brokers that go up to 1:1000 or more, since they contain a huge risk and there is a great chance that the broker is either not complying with the regulations or is not regulated in the EU, at all.
There are numerous benefits that regulated brokers offer apart from safety and security. In today’s life, mobility is a key and every single broker we have featured before understands that they have to provide their users with a mobility-focused account system. Thus, ensuring the highest level of comfort and affordability. By the way, you can choose from trading with a demo and real money accounts when registering on the best trading platform for beginners Europe. Please remember that only the best European Forex brokers feature a mobile app to help their traders be comfortable in their trading activities. Besides, some traders are professionals and basically live off of their trading.
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