Dennis Hammer is a writer and finance nerd with six years of investing experience. He writes about personal finance for Wealthsimple. Dennis also manages his own investment portfolio and has funded several businesses in the past. Dennis holds a Bachelor's degree from the University of Connecticut.
If you’re looking to trade contracts-for-difference products, you’ll undoubtedly come across AvaTrade, a popular broker with a strong reputation. There are countless brokers to choose from, so it’s important to investigate each carefully. In this guide, we introduce you to AvaTrade and explain its services and fees.
What is AvaTrade?
AvaTrade is an international online brokerage firm and part of the AVA Group of companies. It offers its customers access to forex and contracts-for-difference (CFD) trading. It also offers spread betting to customers in the United Kingdom and Ireland.Wealthsimple Invest is an automated way to grow your money like the world's most sophisticated investors. Get started and we'll build you a personalized investment portfolio in a matter of minutes.
AvaTrade was founded in 2006, making it one of the oldest online brokerages. Its administrative headquarters is in Dublin, Ireland, but it also has regional offices in Mexico, Milan, Johannesburg, Chile, Sydney, Mongolia, Tokyo, and Abu Dhabi. It’s regulated on five continents and accepts clients from around the world. It accepts trading in a variety of currencies and earns mainly through spreads.
What are AvaTrade’s services?
AvaTrade offers a variety of financial instruments in seven categories:
Forex (foreign currencies)
AvaTrade offers a wide selection of trading platforms for manual and automated trading. These platforms are available on a variety of devices and each offer a selection of indicators, charts, and analytical tools.
WebTrader: This award-winning platform is accessed through a traditional browser. No download is required, which makes it the preferred platform of many AvaTrade users.
AvaTradeGo: This is AvaTrade’s mobile app. It offers advanced charting and trading features with a simple, user-friendly interface. It’s available on Android and iOS devices.
MetaTrader 4: Like many forex brokers, AvaTrade offers MetaTrader 4, the most popular online trading platform. It’s a flexible trading environment that’s suitable for experts and beginners. It includes some automated trading features.
MetaTrader 4 Mac: A version of MetaTrader 4 that’s been optimized for Mac.
MetaTrader 5: This state-of-the-art trading platform is the upgrade to MetaTrader 4. It offers advanced trading tools, order types, technical analysis, timeframes, and graphical objects. It includes the new MQL5 coding language that supports automated trading.
AvaOptions: This options trading platform gives you total control of your portfolio with an intuitive and graphical interface.
Each trading platform has its own set of tools, but the most popular tools are available on all platforms. For instance, every platform offers relative strength, confidence intervals, moving averages, etc. All platforms allow numerous order types and include critical features like stop losses and pending order types. Nevertheless, each platform is different, so we recommend trying them out before committing to one.
If you’d like to practice trading, you can use AvaTrade’s demo platform. This tool lets you trade with virtual currency (pretend money). It’s a great way to learn about CFD products without incurring any cost, but of course you won’t earn anything either.
(Important note: CFD trading is illegal for USA citizens. Regulated brokers like AvaTrade do not accept US citizens or US residents as customers. However, traders from other countries can still buy and sell CFDs on US markets.)
What are AvaTrade’s fees?
AvaTrade requires a minimum deposit of $100 to open an account, but it doesn’t charge any fees to execute your buy and sell orders (like many brokers today). Instead, AvaTrade earns through the bid-ask spread. The spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to take.
The spread on each trade is different, so it’s important to understand how much you’ll pay before you execute a transaction. You can calculate the cost of a transaction using these formulas for each asset class:
Forex and AvaOptions: Spread * trade size = spread charge in secondary currency
Commodities, stock indices, bonds, individual equities, ETFs: Spread * trade size = spread charge in the currency the spread is denominated in.
Furthermore, AvaTrade has a small menu of additional fees:
|Inactivity fee||$50 after three consecutive months of non-use.|
|Administration fee||$100 after 12 consecutive months of non-use.|
|Overnight fee||Charged when a position remains open past 22:00 GMT. Fees vary.|
|Currency conversion||Fees vary.|
Is AvaTrade right for you?
AvaTrade is a popular brokerage for beginners and advanced traders. Its platform offers plenty of market data to help you make sound decisions, and its fees are quite reasonable compared to other trading platforms.
However, a word of warning: Forex and CFDs are complex financial products that come with high risk. OANDA, a similar broker, claims that 73.5% of retail investors lose money on its platform. AvaTrade is likely similar.
This is why we encourage beginner investors to stay away from these kinds of products in favor of less risky investments (though past performance does not predict future performance). If you’re looking to grow your retirement savings, we recommend less risky investment tools like high yield savings accounts and automated investing.
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