5 Best Forex Brokers with Segregated Accounts for 2024

List of Top Forex Brokers with Segregated Accounts

What is a segregated account?

A segregated account is a distinct bank account where a forex broker deposits client funds, separate from its operational capital. This built-in separation acts as a financial firewall, ensuring that brokers cannot use traders’ funds for operational expenses or speculative investments, thus enhancing fund security.

For traders, a segregated account acts as a financial safety net. Imagine the unfortunate scenario where a broker faces insolvency or legal issues. In such a case, a segregated account ensures that the broker’s financial setbacks won’t impact your deposited funds. Your money remains protected and can be returned even under these adverse conditions.

How Did FX Empire Select the Best Brokers with a Segregated Account?

• We only selected brokers with a high overall score in our proprietary rating system.
• We reviewed the broker’s terms and conditions to ensure they follow rules that segregate client funds.
• We verified the authorization and licenses for each broker to provide investment services in the regions they operate in.
• We opened a live trading account with each broker to test their trading fees for competitiveness and transparency.
• We tested each trading platform to identify how user-friendly it is and how many features and tools it incorporates.
• We examined the different account types to ensure there is a suitable range for beginner and advanced traders.

Our team of experts has identified brokers’ strengths and weaknesses using FX Empire’s comprehensive methodology. Here’s how we test.

Now let’s go through the selected brokers.

How to choose a forex broker with a segregated account?

Here is a quick guide on how to choose a forex broker with segregated accounts.

How is the broker regulated?

A regulated broker has to abide by strict rules and guidelines in managing your money and executing your trades. This higher level of regulatory oversight provides extra protection for your money. However, not all regulators provide the same level of protection.

In our broker rating reviews, we categorize regulated brokers into three tiers:

• Tier-1 regulators operate in well-established financial centers. This includes the UK FCA, CySEC, ASIC, IIROC, and many others.
• Tier-2 regulators operate in well-established but smaller financial centers. This includes the FMA New Zealand, FSCA South Africa, and others.
• Tier-3 regulators tend to operate in offshore countries. This includes the FSC BVI, FSA Seychelles, SCB, and others.

Read more about Best regulated forex brokers.

How do segregated accounts enhance trader trust?

Tier-1 regulators generally provide the highest level of protection. However, not all Tier-1 regulators are equal. While they all legally require brokers licensed by them to segregate client funds and provide a negative balance protection not all of them offer access to a compensation scheme.

Brokers operating entities licensed by Tier-2 and Tier-3 regulators are not legally required to segregate client funds from company funds. Therefore, they could transfer your client funds to the other accounts, loan them out, and invest them which all put your capital at risk.

If a broker doesn’t segregate client funds, your capital is at risk, potentially being used for the broker’s operations or even loaned out. Trading with a broker legally mandated to segregate client funds offers essential protection, especially if they’re also part of a compensation scheme, which can help recover some or all of your deposit if the broker defaults. Always scrutinize the terms and conditions for fund protection when selecting a broker.

What is a compensation scheme?

A compensation scheme in the context of financial markets is a safety net established to protect traders and investors in case a financial institution, such as a broker or a bank, fails or becomes insolvent. These schemes are generally backed by regulatory bodies and guarantee that clients will recover a certain portion of their funds if the institution can no longer meet its financial obligations.

In my examination of legal documents from various global broker entities, I discovered that some brokers disclaim responsibility if the financial institution holding your segregated funds goes under. This means that even if your funds are segregated, you may still risk losing some or all of your money.

Top-tier regulators like the UK’s FCA, Canada’s IIROC, Cyprus’s CySEC, and Japan’s FSA require brokers to participate in compensation schemes, offering traders a financial safety net in case of broker insolvency. However, the coverage varies: IIROC offers up to 1 million CAD, the FCA provides up to 85,000 GBP, and CySEC covers up to 20,000 EUR. It’s crucial to factor in these differing compensation limits when choosing a broker regulated by these entities.

Check out our guides on Best FCA-regulated brokers and Best CySEC-regulated brokers.

What fees to consider when choosing a broker?

Trading fees have a big impact on your overall profitability. Below are a few fees to be aware of when choosing a broker:

• Spread. The difference between the buy price and the sell price.
• Commission. A fee to buy or sell.
• Overnight/swaps. The fee to hold a leveraged or margined position overnight.
• Payments. Deposit and withdrawal fees.
• Inactivity. A fee due to no activity on an account.

The broker’s trading fees should be clear and transparent on their website in the ‘fees’ section and in the legal terms and conditions. If it is not, then the broker may be hiding something and you should avoid them.

Read more about Best lowest spread forex brokers and Best lowest swap forex brokers.

How to choose the best account type?

In my extensive experience, brokers usually offer a range of one to seven different trading accounts. Each account type can vary in terms of the number of tradable instruments, minimum deposit requirements, and access to special products. However, the most significant difference between these accounts is invariably the trading fees.

Trading accounts can be broadly classified into commission-free and commission-based accounts.

• A commission-free account does not charge any fees for buying or selling. Instead, most of the fees are incorporated into the spread, which is why these accounts typically have wider spreads.
• A commission-based account charges a fee for buying and selling. However, this fee is in exchange for receiving price quotes directly from the interbank market, which results in lower spreads.

The suitability of a trading account depends on the individual trader’s trading style. Beginner traders may prefer a commission-free account because the costs are included in the spread, resulting in fewer risk management decisions. Short-term traders may prefer a commission-based account to gain access to lower spreads, allowing them to execute trades at precise levels.

Learn more about Best ECN forex brokers and Best STP forex brokers.

What is leverage and how does it work?

Leverage has played a significant role in the growth of forex and CFD trading. Leverage refers to the ability to control a large position in a currency pair with a relatively small amount of capital. It’s essentially a loan extended by the broker to the trader.

For instance, if a broker offers a forex leverage ratio of 1:50, it enables you to manage a $50,000 position with just $1,000 in your account. In other words, you have the power to control a position that’s 30 times greater than your initial deposit.

While top-tier regulatory bodies like the UK’s FCA, CySEC, ASIC, FSA Japan, and IIROC cap retail trading leverage at 1:30, unregulated offshore brokers tout sky-high leverage ratios, sometimes going up to 1:3000.

Keep in mind that elevated leverage can amplify your gains and the same time can exponentially increase your losses. Your profits or losses are based on the entire trade value, not just the initial margin you put up. Exercise caution when considering offshore brokers that offer extremely high leverage, as it may exacerbate your risk exposure.

Find Best forex brokers with high leverage.

How to choose a suitable trading platform?

A trading platform is your portal to the global market, enabling you to monitor real-time, market price data and execute your trading orders. When selecting a platform, there are several factors to consider:

• Ensure the platform is accessible across desktop, web, and mobile devices.
• Check if it offers free, real-time price data.
• Look for inbuilt drawing tools and technical indicators.
• Verify if the platform offers tutorials for better understanding.
• Confirm that customer support is easily accessible for any help.
• Determine if the broker allows third-party integrations.

Some of the most common trading platforms include:

• MetaTrader 4: The ‘go-to’ forex trading platform which has excellent charting capabilities, technical analysis tools, and automated trading features. Read more about best MT4 brokers.
• MetaTrader 5: An updated version of MT4 with more indicators, timeframes, and markets. Read more about best MT5 brokers.
• cTrader: A platform specifically designed for high-frequency traders and scalpers. Read more about best cTrader brokers.
• TradingView: A browser-based social trading platform with advanced research tools and access to global markets. Read more about best TradingView brokers.
• In-House Proprietary Software: Some brokers may invest in having their own proprietary trading software.

Check out our guide on Best forex trading platforms.

How to avoid forex and CFD scams?

Unfortunately, there are a lot of forex and CFD scams. Here are a few tips to avoid them:

• Beware of Offshore, Unregulated Brokers: Exercise caution with brokers operating offshore, as they are often unregulated. While they may present terms and conditions, these are usually not rigorously enforced, limiting your legal recourse in case of mishandling of your funds.
• Verify Physical Office and Support: Ensure the broker has a physical office in a reputable financial hub and offers a live customer support team for assistance.
• Conduct Background Checks: Conduct a background check by searching for the broker’s name online and reviewing any news articles that mention them.
• Choose Familiar Payment Methods: Stick to familiar payment methods and steer clear of unfamiliar ones.
• Review Terms and Conditions: Scrutinize the terms and conditions carefully to understand the legal obligations you’re committing to.

Our Methodology

We evaluate brokers using a proprietary rating system that involves analyzing 250 data points across nine core categories, which include:

• Trustworthiness: We check the authorization and licenses for each broker with the regulator in the country they operate in.
• Fees: We examine the broker’s trading fees by opening a live trading account and comparing them to the industry average.
• Trading platform and tools: We test the broker’s trading platforms to identify the number of features they provide and their user-friendliness.
• Tradable instruments: We identify the number of tradable instruments to ensure there is a diverse range available.
• Customer support: We interact with the customer support team to test the ease of access, knowledge, and helpfulness.
• Payment methods: We examine all of the different deposit and withdrawal methods available.
• Account types: We explore the features and benefits of each account type including execution method, minimum deposits, and more.
• Research and education: We assess the quality of the broker’s research and educational materials.

Read more about our review process here.

For this guide, we scrutinized the terms and conditions of each broker to confirm they adhere to regulations that segregate client funds. Additionally, we verified the licenses and authorizations of each broker, ensuring their legitimacy to provide investment services in the regions where they operate. To gauge competitiveness and transparency, we went a step further by opening live trading accounts with each broker to assess their trading fees. Finally, we put each trading platform through its paces, evaluating its user-friendliness along with the range of features and tools available.

Meet Our Writers

The team of forex and CFD writers and editors at FX Empire is composed of trading industry professionals and seasoned financial journalists. Our writers have been published on leading financial websites such as Investopedia and Forbes. In addition, they all have extensive trading experience.

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