A lot of traders think that a big broker is better than a forex 1 lot value 75214 one because a larger company has many advantages such as economies of scale, a better liquidity position and is the subject of higher scrutiny from the public and the regulators. How to measure the biggest forex companies When it comes to measuring the size of a company, there are several criteria that are generally used.
The most common criteria used in ranking companies by size are market capitalization, revenue and profits. Also, when it comes to financial companies such as banks or insurance companies, another way to measure size is by comparing the total assets under management. This would leave most forex brokers out of the ranking. While ranking forex brokers by revenue will render more accurate results, this criteria is still far from being relevant in this particular case. A broker’s revenues will come from the commissions it charges and the spreads the traders have to pay. A broker with higher commissions and spreads will generate more revenue than a similar sized broker with lower spreads. There is also the problem of integrated products offered by the companies.
Ranking forex brokers by profits is totally irrelevant, as this criteria includes the same problems we identified when discussing about revenues, and many more. Just think about a large company with a bloated business that has huge operating costs. It can be a really big company but generate no profit. In the case of forex brokers, the closest thing to AUM are the client funds. While they are not managed by the brokers, they represent the total value of the client accounts. In this case, we think that the most relevant criteria to rank forex brokers is by the average volume of daily transactions. The daily transactions of a forex broker can vary a lot, but the more active clients the broker has, the less volatile the value of daily transactions will be.
In order to get a better idea about the real volume of a broker, it is better to calculate the average volume for a larger period of time, as daily and seasonal fluctuations will be less relevant. Largest forex brokers by volume Below you will see the biggest forex companies in the world by volume of daily transactions. We have separated the companies based on their location, as we have identified four major regions when it comes to forex brokers: United States of America, Europe, Australia and the Rest Of The World. The regions we identified have different regulation and the brokers in each region must abide by specific rules. We have a dedicated page where you can read more information about our forex broker ratings. Largest forex brokers in the United States The United States is one of the largest forex markets in the world, but due to very restrictive regulation it has been declining in recent years. Largest forex brokers in Europe This is where most of the large forex companies are located.
European brokers are used by many traders in Asia, Africa, The Middle East and Latin America, and their total volumes are greatly boosted by their international operations. Some brokers may have the bulk of their activity from non-European clients attracted by the safety of European regulations and the excellent trading conditions offered by some of the world’s leading brokers. However, this does not mean that such brokers cannot be good, as you will see that the ratings they received are very different, from very good to very bad. Which large forex brokers are truly global? While US traders will have to settle with a US based broker since they are not allowed to open accounts with foreign companies, people from the rest of the world are free to trade using an offshore forex broker account.
You’ve probably come across these terms already during your investigation into currency trading. It is important to get a good grasp of these concepts before we go any further and explore the math associated with them. These concepts set the stage for knowledgeable Forex analysis and trading. The Pip Exposed As discussed in previous library articles, a pip is the smallest price change a given exchange rate can make.