Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

Best German Forex Brokers

Germany is known to be one of the most powerful states in the world and equally makes a significant contribution to the growth of the Euro. Although there are numerous countries in the Eurozone that contribute to the welfare of the EU, Germany shows a key strength in instituting sound economic policies and regulatory framework guidelines. This has not been different with Forex trading as about 20% of the total FX transactions in the EU are made by the European country. Since the country is a significant contributor to the market volatility, major global Forex brokers have taken the chance to offer their services.

Likewise, there are also local German Forex brokers who are regulated by the Federal Financial Supervisory Authority, which is locally known as the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This is the central regulatory body, which works under the MiFID a derivative of the EU that helps to maintain a financial code of conduct that is uniform to all Eurozone countries. Check out the table below to find out more information about German Forex Brokers.

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XM.COM1XM.COM2009
ASIC, IFSC

Regulated

51

Payment systems

MM
5 $1:888N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
RoboMarkets2RoboMarkets2012
CySEC
4

Payment systems

NDD, ECN

Broker type

  • NDD
  • ECN
  • STP
  • MM
100 $1:500N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
EXNESS3EXNESS2008
FCA, CySEC
47

Payment systems

NDD, ECN

Broker type

  • NDD
  • ECN
  • STP
  • MM
0 $1:2000N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
Libertex4Libertex1997
CySEC
60

Payment systems

NDD
10 $1:500N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
Alpari5Alpari1998
IFSC, NAFD
27

Payment systems

ECN
0 $1:1000N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A100 %


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Brief history of Forex Trading in Germany

For a long time, German Fx traders have had the chance to trade currencies. In the past, however, currency trading in the country was done over the telephone as there was no better technology to facilitate Forex trading. This meant that for one to trade any currency, they had to call their broker to place the order.  Due to the ability to automate this process, there have been a large increase in the number of individuals who trade currencies in the country. Forex trading in Germany has seen a sharp increase as all the processes are done online. The key stakeholders in the trading of currencies in Germany include the Bundesbank (Germany’s central bank), approved banks, Forex brokers, hedge funds, institutional investors and investment companies.

One of the primary reasons why there has been a large growth in the overall number of Forex traders in the German market is because of the multi-bank Forex portals that have become exceedingly popular in Germany. It is believed that the growth of Forex trading in the country arose too fast for the local regulator to keep up, hence the popularity of the multi-bank Forex portals. This has, however, also had its downsides. For example, the LIBOR scandal that was a major news publication story in 2013 was one of the downsides. In the scandal, there were many major traders and Forex brokers who were implicated in fixing the LIBOR rate and making huge profits from it. A major outcome of this scandal was that the integrity of the German markets was put into questions as a number of German stakeholders were also implicated in the scandal.

Regulation of Forex Trading in Germany

The main regulatory body in Germany is BaFIN (Bundesanstalt für Finanzdienstleistungsaufsicht) that was established in 2012 to help regulate and streamline the trading of currencies in the European country. The body supervises a number of financial entities including the financial providers, banking institutions, BAFIN regulated Forex Brokers and even insurance firms. BaFIN is also an independent organization that is not funded by the government but it instead runs on the fees and fines that it collects in the supervision of institutions that fall under it. This makes it completely impartial when making decisions regarding the trading of currencies among other assets.

Since the country is also part of the Euro-zone, its laws on the regulation of Forex brokers and traders is expected to fall within some certain parameters although the individual countries are given room to select the type of regulation that it desires. For a long time, the regulation in German have been quite strict as they required the brokerage companies to solely trade with companies which they had a direct relationship with. These rules have, however, been loosened to allow new and foreign Forex brokerage companies to set up shop in the country.

Some of the requirements include:

  1. Anyone that wishes to offer financial services on a commercial scale is expected to hold a written authorization from BaFIN, which means that they should be licensed by the organization.
  2. A Forex broker should have sufficient capital for starting their operations which should be always available and should not be received from borrowing.
  3. A minimum operating capital required for financial institutions that trade for their own account should be around €730,000. For firms that do not trade but offer financial services, their minimum operating capital should be around €125,000.

Germany is also part of the MiFID, which is the EU’s watchdog and their set rules and regulations also apply to German Forex Brokers. Forex brokers that fall under the MiFID regulations should:

  1. Be regulated, licensed and authorized to operate in the specific countries where they were offering their services.
  2. Classify their clients into three categories, which include the eligible clients, professional traders and retail clients to ensure that they give each client the best service and protection.
  3. Collect the relevant information about their client when they are accepting an order from their client to ensure that the orders are well handled and properly aggregated.
  4. Ensure that their clients get the best possible executions of all orders, which may include the speed of execution, cost and the likelihood of settlement.
  5. Stick to a transparency code during the pre-trade and post-trade by publishing information that may be useful to their clients. This may include the five best price levels on the buying and selling side or the best offers and bids.

Features of Forex brokers in Germany

There are a lot of features that are available to German Forex brokers. These include:

Deposit methods

Germany is one of the most technological advanced states in the EU and this has also spilled over to the Forex industry. Since the banking industry is also highly developed, Forex traders have a multitude of options when depositing their funds with German Forex brokers. The local brokers accept a couple of deposit methods which include debit and credit cards, eWallets and even wire transfers among others.

Trading platforms

A significant number of the Forex brokers in Germany use the generic platforms. For example, the MT4 platform is one of the popular choices for Forex traders in the country. There are many reasons why Forex traders prefer to use this platform. Not only does it allow them to access charts, patterns and even the complex indicators but it also allows Forex traders to programme their expert advisors. Othyer generic platforms offered by most German Forex brokers include the cTrader and Sirix platforms that are almost as popular as the Meta Trader 4. Most of these platforms are available as web apps, desktop clients and even through mobile platforms.

Other German Forex brokers deem it fit to create their own apps. As much as these apps may not even be used to trade, they can be used to offer news, information and even updates on the technical and fundamental analysis.

Spreads and commissions

Most Forex brokers from Germany do not trade a commission on their trades. Instead, these Forex brokers will choose to charge a spread, which is the difference between the price of buying and selling an asset and the price of the spread depends on the currency pair. Some German Forex brokers may charge you a commission if they offer CFD trading services.

Customer service

One of the most important facet of a Forex broker is a great customer service since a significant number of brokers do not have many physical locations in all countries. This is why it is extremely important for a Forex broker to have a quality customer service department. A key feature of German Forex brokers is that they have an efficient and knowledgeable customer service department. They offer their customer service in German but English is also a common language for the support systems as well as other common languages. These platforms such as the applications and websites are also localized, which means that they have been translated to the German language.

Alternative to local German Forex brokers

The restrictions placed on local Forex brokers in Germany make it unsuitable or unattractive for the local companies to set up brokerage companies. On the bright side, however, these restrictions make it safe for Forex traders in the country to trade currencies as they are assured that only qualified Forex brokerage companies can offer these services. Germany is still part of the EEA agreement and this means that the currency traders in the country are allowed to trade with Forex brokers that are in the EU. As such, Forex brokers in other parts of the European union can offer their services in the country without necessarily having a valid license from BaFIN. Alternatives to local brokerage firms are thus Forex brokers from other parts of Europe such as Cyprus, Italy, UK, France and other member countries.

While these brokers may not offer the type of protection that is extended by the companies that are regulated by BaFIN, they are regulated by MiFID. The brokers in the European region are regulated by the MiFID directive which holds them accountable for their actions. The EU Forex brokers from other countries can thus be held liable for any financial malpractices or fraudulent activities. The German authorities, however, do not encourage their citizens to trade with international Forex brokers who are not regulated by the BaFIN or the MiFID directive or rather those outside Europe. Although this is the case, the German authorities do not also place any limitations to people who choose to trade with these international Forex brokers unlike other jurisdictions. In the US, for example, the NFA does not allow US residents to trade with foreign Forex brokers that are licensed in other countries. It is, however, worth noting that the locally licensed Forex brokers and the EU Forex brokers offer more protection to German traders in comparison to the other global Forex brokers. Since there is a higher trading freedom in the country, the traders will often have to choose between having this freedom and ensuring the safety of their investments through local brokerage companies.

Popular Forex brokers in Germany

eToro

Founded in 2006, eToro has grown to be a global leader in Forex trading over the last few years. While the Forex broker is mostly known for its social trading features, it also boasts of a number of features that make it an excellent Forex broker for Germany currency traders. For example, the account has both a demo and a live account. While the former caters for the novice traders, the latter is suitable for those with some experience. The broker also offers their services on a number of trading platforms including mobile platforms for iPhone, Android and even Blackberry. Also, the site has a social trading platform where the beginning traders can learn and emulate the professional traders. The broker also offers real time information and news which is great for all currency traders.

Markets.com

This is a reputable brokerage company known for offering Forex and CFD trading. The broker is suitable for German traders as its regulated by the CySEC and is even licensed to operate by the FCA and other bodies that are part of the EEA. For beginners, the broker offers some training courses and even webinars to help kick start their trading careers. Furthermore, the account also offers the chance for each client, regardless of their experience, to have a personal account manager and even a trading specialist. To ensure that they capture every client, the brokerage firm has 4 trading platforms where each type of trader can be sure to find something that works for them.

 


Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.