A lot of traders think that a big broker is better than a smaller 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. While this basic assumption has some merit and to some degree “bigger is better”, it is not forex broker inc leverage total correlation between size and quality of forex brokers.
If you want to find out which are the biggest forex companies in the world, you should continue reading this article. However, if you want to know which are the best forex brokers in the world when it comes to trading conditions and customer satisfaction, you should check our special forex brokers ranking. 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. It is also important to note that market capitalization represents the value investors give to a specific company. A small but profitable company can have a higher market value than a large company unable to generate profits. Revenue – 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. Profits – 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. This measure is much more relevant than the previous ones, but it still lacks the differentiation between the forex business and the other services offered by the company. Considering the above mentioned criteria are irrelevant when judging the size of forex brokers, we must come up with a measure that is more relevant to this specific business.
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. We noticed that all the high quality forex brokers are also large ones and have their AVDT of at least three billion dollars. This is why, in this article we will list only brokers with daily transactions exceeding three billion US dollars. 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. In order to make it easier for you to identify the best forex brokers from the rest, we have also added our rating next to each broker. 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. Because of Europe’s cultural and linguistic diversity, local brokers had to adapt early to very different markets and stiff competition, but this has proven to be a great asset when they expanded globally.
Some of the European brokers have gone global, and their operations are spread on different continents. 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. Australian brokers are well represented outside Australia’s borders as well, because the jurisdiction is very solid and some of the brokers are offering top notch conditions and liquidity.
There are three major Australian forex brokers that generate very high average daily volumes, and all of them are experiencing good growth rates. Since the remaining big brokers are spread around the world and are not concentrated in a smaller region, we have included them in the “rest of the world” category. The brokers listed here come from very different jurisdictions such as St. The brokers in this category abide by different regulation and can vary a lot when it comes to reliability. 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?