Recently, restrictions and regulations have become part and parcel of online forex and CFD trading. International scrutiny in these trading instruments has increased, causing a ripple effect, and that is exactly where offshore brokers come in.
Offshore forex brokers are a good option, mainly if the brokers in your jurisdiction are restricted in one way or another. And there are benefits with the offshore forex brokers such as higher leverage, improved incentives such as bonuses and rebates, and simpler onboarding.
We briefly discuss five of the best offshore forex brokers to help you make an informed decision.
What are Offshore Forex Brokers?
Offshore brokers have recently emerged as viable investment instruments, especially for people living in countries without a robust financial or investment sector. Forex trading has lower margin requirements, and a single account gives you access to numerous asset classes.
Forex brokerage has grown to be a vast and lucrative industry, attracting both scrupulous and unscrupulous businesses in its fold. Where there is profit, there will you also find people looking to make a quick buck unethically and head for the hills.
Many unethical companies have used aggressive marketing and promises they are unwilling to fulfill to grab the market segment that doesn’t understand the concept that well. This has caused a flurry of complaints to regulators and the resulting restrictions and advisories.
Offshore forex brokers are in lightly regulated jurisdictions such as Cyprus and Malta and enjoy lots of freedom in how they operate.
How Offshore Forex Brokers work
The best offshore forex brokers are in countries or jurisdictions with regulatory frameworks and jurisdictions considered favorable by many brokers. For instance, Plus500 is regulated in Seychelles but publicly listed in the London Stock Exchange. It is now possible to work with a broker registered away from home, which was an uphill task years ago.
The main attraction of offshore brokers is higher leverage. It is possible to get leverage as high as 1:2000 and attractive incentives. They do not have competency questions and the sort to determine your eligibility to trade in certain asset classes.
Best 5 Offshore Forex Brokers
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Coinexx
Coinexx is based in Saint Vincent and the Grenadines, and they are not regulated. Their commissions and spreads are some of the most favorable. For instance, the 0.4 pips average spread for EURUSD and $1 commission for every lot is among the best you can get.
At around 5.8 pips and a low commission of $0.2 per lot for BTCUSD, these forex brokers have some of the lowest bitcoin spreads available. Their maximum leverage is 1:500 for forex major, indices, oil and metals.
But despite having the best bitcoin spreads, their swap rates are nothing to write home about. They are not entirely favorable. But that is not an issue if you are a day trader, as the low spreads bridge the gap. The swap rates are only an Achilles’ heel for position traders who tend to hold on to the trades for prolonged periods.
Coinexx has patient and helpful customer service, but their most apparent shortcoming is the website. Some of the tools on the site, such as an online calculator, are not entirely effective.
Open an Account Now2. N1CM
The maximum leverage of 1:1000 is attractive, and the minimum account size of $5 is unbeatable. You have the option to choose from three types of accounts depending on your preference and goals.
The first two types of accounts, Cent and Standard, have no commission. They are STP accounts with variable spreads. But still, you can get fixed spreads with the two.
Please note that you can only use the Cent account for Forex major, not other instruments such as oil and stock. The other two have a bit of flexibility in that regard.
The forex broker’s customer service is responsive and quite helpful. In particular, N1CM has a live chat whose English version is only available during working hours.
And while they have various payment and withdrawal options, US traders can only use cryptos. You can deposit and withdraw from N1CM through bitcoin cash, litecoin, ethereum, bitcoins and dogecoin. A withdrawal normally takes around two hours maximum.
Open an Account Now3. FXChoice
Regulated by IFSC, FXChoice is an excellent option for people looking for reliability and efficiency. The trading instruments and types of operating accounts are straightforward and easy to understand, even for first-time users. There is a section for average spreads and live spreads, and which are also easy to find.
The minimum account size is $100, which is pretty much in the middle of the park. Not too bad. As one of the best offshore forex brokers, FXChoice has a wide variety of trading instruments. You have a lot to invest in under-one-roof, literally.
There are seven indices, up to 38 forex pairs, three cryptos, oil, silver and gold.
The forex broker has attractive leverage of 1:200. They also have an Islamic account to accommodate more users.
And even though the broker does not have any interest rates, there is a commission you pay for holding positions overnight.
Open an Account Now4. EagleFX
The popularity of EagleFX is in its wide variety of trading instruments and favorable swap rates. They are especially ideal for cryptocurrency trading, given that their trading portfolio includes 32 cryptos. Their cost of trade, of around $6, is average.
Of course, they do not give you the best deal in cost, but they are not too bad either. For example, the spread and commission for EURUSD are 1.32, which is around the average. You will still find a low of around 0.5-0.6 with other brokers.
One of their main selling points is their fast deposit and withdrawal methods. They are also the best offshore broker because of their exceptional customer service. You can directly deposit into your account from your bitcoin wallet, from which a 0.0005 BTC network fee is charged.
Open an Account Now5. Turnkey Forex
Turnkey Forex is among the most popular forex brokers for US traders and elsewhere, primarily because of their tight spreads. They are exceptional for day traders and scalpers.
With a spread of between 0.2 and 0.4 pips EURUSD and a $2 commission, it would be hard to find such favorable terms elsewhere, and that’s a good thing. Well, it’s the same case for the majors.
Turnkey has a $10 minimum account size and maximum leverage of 1:500 for forex. And if you are a US trader, the payment method is through cryptos and vload. But what about the trading instruments?
This offshore forex broker gives you access to a wide range of investment instruments that include 66 forex pairs, 11 indices, oil, ten cryptos, silver, and gold. The trading strategies you can access include hedging, scalping and Automated trading (EAs).
Their swap rates may not be the best, but they are not too bad either. However, keeping your trades open for prolonged periods is not the best. They are only suitable for a couple of days.
Open an Account NowChoosing Offshore Forex Brokers
- The regulatory jurisdiction of the forex broker is as important as the investment. Be sure to check where the forex brokers are registered and determine if it is safe. But why do we say so? Jurisdictions such as St. Vincent, Dominica, and Grenadines do not actively regulate brokers registered in the country. They do not monitor or officially authorize forex traders operating from the country, which somehow exposes traders to risks. Dominica has a regulatory authority but does not have a regulatory framework for forex trading. An unscrupulous and unchecked company in such jurisdiction can use price manipulation and cause loss of money for investors. Brokers that are not made to provide execution and operation reports to the regulator can get away with anything.
- Every account has a trading fee. Keep an eye on this as well. After all, the goal is to end up with the best margin and laugh all the way home with profits. What is the commission per lot round turn? What about the spread? The commission of $2 per lot is the lowest and significantly reduces your trading costs. However, that shouldn’t be the only trading cost variable that you should track. What is the spread plus commission? What are the swap rates? Swap rates are a significant factor to consider depending on whether you are a day trader or someone that holds their position open for more than a week.
Conclusion
Offshore forex brokers are excellent investment vehicles for people looking to expand their portfolios. However, you should exercise due diligence. Don’t jump right in head first without proper scrutiny of the firm you intend to use to invest. One offshore jurisdiction is not the same as another, and it is not every company that operates with the same standard.
FAQ
What is the difference between onshore and offshore forex brokers?
Offshore brokers have a significant amount of operating freedom, thanks to their lightly regulated jurisdictions. Examples include Vanuatu, Seychelles, Belize, Grenadines and St. Vincent. Vanuatu has more than 114 licensed firms that can deal with securities such as forex. In contrast, onshore brokers are in tightly regulated jurisdictions such as Japan, Canada, Europe, the US, Singapore and Australia.
