AvaTrade is a global brokerage that specializes in forex and contract-for-difference (CFD) trading, offering a range of platforms and tools for investors. However, U.S. traders cannot access AvaTrade because the firm is not registered with U.S. regulators and does not accept American clients or funds. Even attempting to open a demo account from the U.S. is not possible. While this makes AvaTrade inaccessible for American investors, its offerings still provide insight into how international brokerages structure their services.
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Services and Features: What Does AvaTrade Offer?
AvaTrade is a feature-limited trading platform. This means that it offers only a certain segment of assets to trade. However, AvaTrade does offer more asset classes than most feature-limited platforms. Investors on this service can trade foreign currencies (forex), cryptocurrency, contracts for differences (CFD), stocks and ETFs, some options and a limited selection of bonds. CFDs, which the Securities and Exchange Commission regards as unregulated over-the-counter securities, are not legal to trade in the United States. Other common assets, most notably mutual funds and many types of option contracts and bonds, are not available.
Although it offers a relatively wide range of assets, AvaTrade is primarily a currency marketplace. This firm specializes in forex, offering more than 50 different currency pairs, and has expanded that specialty into the cryptocurrency market.
The rest of AvaTrade’s offerings are more like add-ons to this core service. Yet, that’s not a small thing. One of the biggest handicaps with many forex platforms is that they are feature-limited to the point where an investor has to use multiple services to maintain their entire portfolio. AvaTrade’s more expansive options allow investors to maintain their portfolio of mainstream assets alongside their currency trades.
AvaTrade offers multiple trading platforms to suit different traders. MetaTrader 4 (MT4) and MetaTrader 5 (MT5) provide advanced charting, automated trading, and a user-friendly interface. AvaTrade WebTrader offers a browser-based option, while AvaTradeGO delivers a seamless mobile experience. For specialized trading, AvaOptions supports forex options, and DupliTrade and ZuluTrade enable social and automated trading. These platforms ensure flexibility for various trading strategies.
While AvaTrade offers the standard range of technical indicators for trading research, this service actually has several very creative features that investors will find useful. The Trading Calculator, for example, helps you to assess risk in a forex position. By entering the details of a position you’re looking to take, this system will then generate information about exposure, risk and what it will take for this investment to make or lose money. AvaTrade’s economic calendar provides a running calendar of important economic events that influence economies (and their currency), while AutoChartist provides a steady stream of intra-day technical indicators for high volume traders.
Meanwhile, AvaSocial takes advantage of the modern trend of social trading. This app-based feature lets you follow other traders, track their positions and even link your portfolio to theirs. While often a gimmick, in the hands of AvaTrade social trading has become a particularly useful feature for a forex-oriented platform. It allows investors to learn the market by studying the movements of other traders. This is an excellent way to start trading in currencies, a notoriously complex marketplace.
Fees: How Much Does AvaTrade Cost?
There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:
- Trading fees. Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
- Trading commissions. This is when a broker will charge you a percentage based on the volume or value of each trade.
- Inactivity fees. Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
- Non-trading/Other fees. Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.
When trading currency, it is essential to understand the concept of “pips.” A single pip refers to the smallest amount by which prices of an asset can change, regardless of that asset’s class or market. In foreign currency markets, prices are almost always expressed out to four decimal places. This means that a single pip will mean 0.0001 (1/100 of 1%) in whatever unit of currency is being traded. This can also be referred to as one basis point.
Note, however, that a pip does not always have to mean 0.0001. A pip is defined as the smallest unit of change for a given asset regardless of how that unit is measured. If, for some reason, a particular asset were measured in tenths of a cent, then a pip would mean 0.1.
As with many forex-oriented platforms, AvaTrade has a complicated fee structure. Investors need a minimum investment entry of $100. It also charges an inactivity fee of $50 after three months without trading, and a $100 inactivity fee for each 12 month period.
AvaTrade’s main fee structure comes from the bid-ask spread with currency pairs. The spread changes constantly, and is different for each given set of assets. In particular, a bid-ask spread tends to be higher for less common currencies. For example, at time of writing the EUR/USD pair had a spread of 0.9 pips, while the NZD/USD pair had a spread of 1.8 pips. Currencies also accrue interest when held overnight.
AvaTrade charges no commissions or fees on most other trading, such as stocks and options. However, investors should take care, as AvaTrade does not clearly list its prices or account options. Since fees vary by account type and traded assets, it can be difficult to determine exact costs upfront.
Effectiveness: How Well Does AvaTrade Work?
While SmartAsset was unable to use AvaTrade directly, because it is not permitted in the U.S., its features are well designed and well-targeted for its audience. Much of AvaTrade is built around giving traders access to information and education. In particular, the firm’s website offers a wide range of tutorials and educational articles to help investors understand currencies. These articles scale in terms of complexity, aimed at helping investors from raw beginners to even higher levels of expertise.
This focus extends to the platform’s many add-ons, such as the social trading and data features, and even an Islamic trading option that helps investors find assets that meet particular religious preferences.
AvaTrade offers a decent support network. In addition to e-mail based contact, investors can also reach out by phone and chat.
While AvaTrade’s platform options are not necessarily well curated, investors can access this platform from virtually any device (including Macs). Web access is easy, and both account creation and login are very straightforward. Finally, the platform offers a series of automated trading options for more hands-off investors. From building your portfolio around pre-designed strategies to mirroring other traders, this is a user-friendly tool that may prove highly valuable.
Bottom Line
AvaTrade is a forex-oriented trading platform that provides a range of tools and services for currency and CFD traders. Customers can trade more than 50 different currency pairs, and has expanded that specialty into the cryptocurrency market. If they do begin operating for U.S. customers they will be worth a serious look.
Tips on Investing
- Whether you’re considering getting started with investing or you’re already a seasoned investor, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.
- AvaTrade may not be the tool for you, but that doesn’t mean the right trading platform isn’t out there. In fact, you may want to enlist a financial advisor to help you select and manage your investments. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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