A forex broker is a financial services company that provides traders access to platforms for buying and selling various financial instruments, including currencies, commodities, indices, ETFs, and more. Acting as intermediaries between retail traders and global financial markets, these brokers facilitate transactions electronically, offering tools, resources, and support to help traders navigate the complexities of the markets.
Exchange-traded funds (ETFs) are popular financial instruments that offer exposure to a basket of assets, such as stocks, commodities, or bonds, without requiring direct ownership of the underlying assets. Trading ETFs provides traders with the flexibility to diversify their portfolios and speculate on market trends with ease. ETFs are known for their liquidity, cost efficiency, and accessibility, making them an attractive choice for both beginners and experienced traders. Many forex brokers offer ETF trading through platforms that allow you to trade ETFs via CFDs (Contracts for Difference), providing leverage and short-selling opportunities. Brokers also provide access to major ETFs tracking indices like the S&P 500, and Nasdaq 100, or sectors such as technology, healthcare, and energy.
With numerous online forex brokers available, finding the right one for trading ETFs can be challenging. In this article, we’ve compiled a list of the best forex brokers for trading ETFs. Our goal is to assist you in finding trustworthy partners that align with your trading objectives while ensuring a smooth and efficient trading experience.
A List of Top 10 Forex Brokers for ETFs Trading?
- Pepperstone: Best Overall Forex Broker
- IC Markets: Best for for Tight Spread
- ActivTrades: Best for EU and UK TradersÂ
- Etoro: Best For Social Copy TradingÂ
- BlackBull Markets: Best Broker For Free TradingView
- Exness: Best for Instant Deposit and Withdrawal
- XM: Best for Deposit Bonus
- Eightcap: Best for Smart Trading Tools
- Avatrade: Best for Automated Trading
- FBS: Best For High Leverage (as high as 1:3000)Â
Best Forex Brokers for ETFs Trading ( Compared and Reviewed)
Can I trust these online brokers for ETF Trading?
Yes, you can trust these brokers. Brokersway recommends brokers based on facts and findings. We evaluate brokers based on 170 data points grouped into 6 macro categories including regulations and security, fees, Trading experience, trading tools, customer support, and trading education. Multiple regulatory authorities regulate these brokers. So they are legit and trusted. Here are the regulations of these brokers
- Pepperstone: Regulated by 7 regulatory authorities including FCA, ASIC, CySEC, BaFin, DFSA, CMA, and SCB
- IC Markets: Regulated by 3 Regulatory Authorities including FCA, CySEC, and ASIC
- ActivTrades: Regulated by 5 Regulatory Authorities including SCB, FCA, CMVM, BACEN, and CVM
- eToro: Regulated by 7 Regulatory Authorities including SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM
- BlackBull: Regulated by 2 Regulatory Authorities including FMA, FSA-S
- Exness: Regulated by 8 Regulatory Authorities including CySEC, FCA, CMA, FSCA, FSA in Seychelles, CBCS, FSC (Mauritius), and FSC (BVI)
- XM: Regulated by 5 Regulatory Authorities including ASIC, CySEC, DFSA, FSCA, and FSC in Belize (Global)
- Eighcap: Regulated by 5 Regulatory Authorities including ASIC, FCA, CySEC, SCB, and FSASVG
- AvaTrade: Regulated by 9 Regulatory Authorities including ASIC, JFSA, FSA, FSCA, ADGM, CBI, ISA, KNF, IIROC
- FBS: Regulated by 3 Regulatory Authorities including Cysec, ASIC, FSC-Belize
How Did We Choose the Best Forex Brokers for Trading ETFs
To choose the best brokers for ETF trading, we follow the procedures below.
Research
To find the best forex brokers for ETF trading, we conducted extensive research, focusing on the features, services, and regulations associated with each broker. We analyzed market trends, broker offerings, and user feedback to understand what traders value most. This comprehensive approach allowed us to build a solid foundation for our evaluations.
Data Collection
We gathered data from various reliable sources, including official regulatory bodies, broker websites, and reputable financial news platforms. This data encompassed key metrics such as trading fees, available assets, leverage options, and client support services. Additionally, we considered user reviews and testimonials to gauge trader satisfaction and experiences.
Verification
After collecting data, we verified the information to ensure accuracy and reliability. This step involved cross-referencing details from multiple sources, including regulatory websites and independent reviews. By ensuring that our data is accurate, we aim to present an honest assessment of each broker’s strengths and weaknesses.
Live Testing
We conducted live testing of the shortlisted brokers to provide a real-world perspective. This involved opening demo accounts and executing trades to evaluate the trading platforms, order execution speed, and customer service responsiveness. Our live testing process allowed us to assess each broker’s performance under actual market conditions, providing valuable insights into their functionality.
Scoring
Finally, we scored each broker based on a set of criteria, including regulatory compliance, trading costs, platform usability, available trading instruments, customer support, and overall user experience. Each category was assigned a specific weight, reflecting its importance in the trading process. The scores helped us rank the brokers, ensuring that our recommendations align with the needs and preferences of traders who want to trade ETFs or other trading instruments.
What is a Forex Broker?
A forex broker refers to a financial entity that acts as an intermediary between traders and the global forex market, providing the tools and infrastructure needed for trading currency pairs. Through advanced platforms, these brokers enable real-time trade execution, market analysis, and portfolio management, ensuring traders can operate efficiently during global forex market hours.
Beyond currency trading, forex brokers often extend their offerings to include CFDs on various assets such as commodities, indices, stocks, ETFs, Bonds, and cryptocurrencies. These instruments allow traders to speculate on price fluctuations without directly owning the underlying assets. Many brokers also provide leverage, analytical tools, and educational materials to help traders refine their strategies and make well-informed trading decisions.
What is an ETF?
An Exchange-Traded Fund (ETF) is a type of investment fund that pools money from investors to buy a diversified portfolio of assets, such as stocks, bonds, commodities, or a combination of these. ETFs are traded on stock exchanges, similar to individual stocks, allowing investors to buy and sell shares throughout the trading day at market prices. They are designed to track the performance of specific indices, sectors, or themes, such as the S&P 500, technology stocks, or gold prices.
ETFs offer several benefits, including diversification, liquidity, and cost efficiency. Unlike mutual funds, ETFs typically have lower expense ratios and no minimum investment requirements. Their price fluctuates based on the underlying asset values and market demand. For traders, ETFs can also be accessed through Contracts for Difference (CFDs), enabling leveraged trading opportunities. Popular ETFs include SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ), which track the S&P 500 and Nasdaq 100 indices, respectively. By trading ETFs, investors can gain exposure to broad markets or targeted strategies with the flexibility of stock-like transactions.
How to ETFs on Forex Brokers?
To trade ETFs (Exchange-Traded Funds), you need to have a solid understanding of what ETFs are and how they are traded. ETFs are investment funds that hold a basket of assets, such as stocks, bonds, commodities, or other securities. They trade on stock exchanges, similar to individual stocks, offering liquidity and flexibility. ETFs provide a way for investors to diversify their portfolios and gain exposure to a wide range of markets or sectors, often at a lower cost than actively managed funds. The price of an ETF is influenced by the performance of the underlying assets, market demand, and broader economic conditions. ETFs are commonly used for long-term investing, hedging, and short-term trading strategies. Next, develop your skills in market analysis and create a trading strategy that will help you generate effective trading signals. Start ETF trading by practicing and refining your strategies on a demo account to gain confidence without risking real money. Once you’re ready, you can follow this step-by-step guide to start live ETF trading:
Step 1: Choose a forex broker that offers ETF trading and open a trading account.
Step 2: Verify your account, fund it, and download the trading platform if required.
Step 3: Select the ETF you wish to trade and create a new order.
Step 4: Set your trade parameters, including trade volume, stop loss, and take profit levels.
Step 5: Place your order by clicking ‘buy’ or ‘sell.’
Step 6: Monitor your trade and close it when you achieve your target. This completes the ETF trade.
What Factors Impact the Price of ETF CFDs?
Exchange-Traded Funds (ETFs) Contracts for Difference (CFDs) allow traders to speculate on the price movements of ETF assets without owning the underlying securities. The value of ETF CFDs is driven by several factors, including market performance, sector-specific trends, and broader economic indicators. Below are the key elements influencing the price of ETF CFD pairs.
1. Performance of Underlying Assets
The price of an ETF CFD mirrors the performance of its underlying assets. For example, a tech-focused ETF derives its value from the performance of the stocks within the technology sector. Similarly, commodity-backed ETFs, such as those tracking gold or oil prices, are directly influenced by the fluctuations in the value of those commodities. The strong performance of the underlying assets pushes the ETF CFD price higher, while declines reduce its value.
2. Market Sentiment
Investor sentiment plays a critical role in ETF pricing. Bullish sentiment in a particular sector or economy tends to increase demand for ETFs tracking those areas, driving up prices. Conversely, bearish sentiment can lead to outflows, causing prices to decline. This effect is amplified in CFDs, where leverage can intensify price movements in response to changing sentiment.
3. Sector-Specific Trends
ETFs often focus on specific sectors such as technology, healthcare, or renewable energy. Sector-specific developments, such as technological advancements, regulatory changes, or shifts in consumer demand, directly influence the prices of ETFs tied to those sectors. For instance, increased investment in clean energy can drive up the value of renewable energy ETFs and their CFDs.
4. Broader Macroeconomic Indicators
Macroeconomic data such as GDP growth, employment figures, and inflation levels impact the value of ETFs across sectors. For example, ETFs tied to industrial or financial stocks are sensitive to economic growth and interest rate policies, while commodity ETFs are influenced by inflation and currency fluctuations. Strong macroeconomic performance typically supports higher ETF prices, whereas economic downturns can lead to declines.
5. Interest Rates and Central Bank Policies
Central bank decisions on interest rates significantly affect ETF prices. Lower interest rates generally benefit equities-focused ETFs by reducing borrowing costs and boosting corporate profitability. Conversely, rising interest rates can create headwinds for equities, pressuring ETF prices downward. Additionally, bond-focused ETFs are directly impacted by interest rate movements, with rising rates typically lowering bond prices and vice versa.
6. Currency Fluctuations
Currency movements affect ETFs with international exposure. For instance, an ETF tracking foreign equities is sensitive to exchange rate fluctuations between the base currency and the foreign currency. A stronger domestic currency can reduce the value of foreign-denominated assets within the ETF, while a weaker currency enhances its value. For ETF CFDs, this adds another layer of complexity as traders must account for both asset performance and forex dynamics.
7. Liquidity of the Underlying Market
The liquidity of the underlying assets impacts the pricing and volatility of ETF CFDs. ETFs based on highly liquid assets, such as major stock indices, tend to have more stable prices, while those tracking niche markets or emerging sectors may experience greater price volatility. Low liquidity in the underlying market can amplify price fluctuations in ETF CFDs, creating trading opportunities and risks.
8. Geopolitical Developments
Geopolitical events, such as trade wars, military conflicts, or regulatory changes, affect ETFs tied to specific regions or industries. For example, an ETF focused on emerging markets may see significant price changes in response to political instability or policy shifts in those regions. Similarly, global events like the COVID-19 pandemic impacted ETFs across sectors, influencing CFD prices dramatically.
9. Corporate Earnings and Dividends
For equity-based ETFs, the earnings performance and dividend payouts of the underlying companies play a significant role. Strong corporate earnings drive ETF prices higher, reflecting improved profitability of the constituents. Similarly, dividend-paying ETFs become more attractive during periods of high payouts, influencing their CFD prices positively.
10. Speculative Trading and Leverage
ETFs CFDs are often traded with leverage, which amplifies price movements. Speculative trading, driven by short-term market trends or news events, can create additional volatility in CFD prices. Traders leveraging positions based on anticipated moves in specific ETFs can cause rapid price fluctuations, especially during times of heightened market activity.
Final Verdict:
If you are a trader looking to trade ETFs (CFDs), you can choose a forex broker that offers diverse ETF markets, competitive fees, and advanced trading tools. We have thoroughly reviewed and compared the top forex brokers for trading ETFs, focusing on their regulation, platform features, and overall trading conditions. Below are the best brokers for trading ETF CFDs:
- Pepperstone: Best overall for ETF trading, offering access to popular ETFs with low spreads, fast execution, and top-tier regulation by ASIC, FCA, and CySEC.
- IC Markets: Known for its tight spreads and superior liquidity, IC Markets provides cost-efficient trading for ETFs with reliable platforms like MT4 and MT5.
- ActivTrades: FCA-regulated and widely trusted in the EU and UK, ActivTrades offers a robust selection of ETF CFDs alongside professional-grade trading tools.
- Etoro: A top choice for social trading, Etoro allows traders to invest in ETF CFDs and replicate the strategies of experienced investors seamlessly.
- BlackBull Markets: Provides free access to TradingView, making it an excellent choice for advanced charting and technical analysis of ETFs.
- Exness: Renowned for its instant deposits and withdrawals, Exness combines efficient trading operations with a wide range of ETF CFDs.
- XM: Known for its deposit bonus, XM helps traders expand their trading capital, enabling a better ETF trading experience.
- Eightcap: Offers advanced trading tools and innovative solutions, making it a strong option for ETF traders seeking enhanced market insights.
- Avatrade: Best for automated trading, Avatrade supports multiple trading platforms and expert advisors for ETF CFD trading.
- FBS: High leverage of up to 1:3000 makes FBS suitable for experienced traders aiming for greater exposure to ETF markets.
Each of these brokers is regulated, and trusted, and provides a wide range of ETF CFDs with favorable trading conditions. Choose a broker that suits your trading preferences and start investing in ETFs confidently.
