AvaTrade Review: Irish Broker with Many Possibilities
AvaTrade is an Irish FX and CFD broker with a base value catalog consisting of over 200 instruments. The broker gives its clients a lot of freedom of choice. This starts with the desired account type and the spread mode and ends with the selection of several trading platforms including those for automated trading. The entry barriers of the market maker are low: For the smallest account type, a minimum deposit of only €100 is required. New customers receive very high deposit bonuses as long as they meet the respective requirements.
AvaTrade Review Pros & Cons
- Customer deposits are held in trustee account
- Many possibilities for automated trading
- More than 200 base values from all asset classes
- High deposit bonuses, e.g. €500 bonus with €1,000 deposit
- Market making
- Regulation in Ireland
- Deposit bonuses only for fixed spread accounts
Broker Test: Our AvaTrade Review
1. Trade Conditions: Close to the Market Maker Industry Average
In foreign exchange and CFD trading, AvaTrade acts as a market maker. This means that the broker determines the buying and selling prices. Market making is widespread in OTC trading, but can pose a risk of potential conflicts of interest. This is particularly the case when a market maker does not hedge the net positions that result from the in-house netting of the customer positions and thereby takes an economic counter-position to its customers. The market model is thus a big con in our AvaTrade rating.
- Spread EUR/USD: 1.8 Pips (Typical, Variable Spread)
- Spread EUR/USD: 3.0 Pips (Fixed Spread)
- Spread Gold: $0.60
- Spread DAX: Market+1.5
- Spread DJIA: Market+3.0
- Spread Shares: Market + Predominantly 0.06-0.10
The effective conditions in currency trading also depend on the chosen account type. Investors can choose between fixed and variable spreads. Beginners who are giving an off-market FX broker such as AvaTrade a try for the first time often expect greater security from fixed spreads in terms of the trading costs. This is a fallacy: On the one hand, brokers also grant themselves the right to expand the bid/ ask spread under volatile market conditions in their general terms and conditions – even on fixed spreads. On the other hand, the spreads among such customers are always much wider than for accounts with variable spreads.
This also applies to AvaTrade: The minimum spread in EUR/USD is 1.0 pips, the typical spread is 1.8 pips. For the fixed-spreads account, 3.0 pips are due. As such, the broker operates at a level that is customary for market makers.
CFD trading of base values outside the foreign exchange market is commission-free. The costs are made up of the market and the broker spread. In the case of share CFDs, the broker spread predominantly amounts to €/$0.06 to €/$0.10 respectively. In any CFD contact with the Dow Jones, 3.0 points are due in addition to the market spread. For DAX trading, 1.5 points are due and, in the trading of gold contracts, $0.6 is due.
2. Base Value/ Trading Platform Offering: More than 200 Base Values from all Asset Classes
Much like the overall cost level, the base value catalog was of crucial importance in our AvaTrade review. The broker offers a variety of possibilities for automated trading. In this context, a large number of high-quality trading signals are of particular importance, which can only be achieved by considering a correspondingly large number of markets. In short, the more base values are available, the greater the probability of profitable results.
The following can be traded via AvaTrade:
- 60 currency pairs
- 4 digital currencies
- 16 precious metals/ commodities
- 100 shares
- 20 indexes
- 22 ETFs
- 5 bonds
- Currency options
The AvaTrade base value catalog includes approximately 60 currency pairs, 4 digital currencies (e.g. Bitcoin), 16 base values from the commodity segment (precious metals, agricultural commodities, and energy), approximately 100 individual stocks (including those from the USA, UK, France, and Germany), 20 indices (e.g. Dow Jones, DAX, EuroStoxx 50, etc.), 20 exchange-traded index funds (ETFs), 5 bonds (e.g. US T-bills), and currency options.
The base value catalogue thus is neither a pro nor a con in our AvaTrade review: Some brokers offer less, while other brokers offer significantly more base values. The CFD offering for indices and individual shares is particularly capable of improvement. As is the case for other brokers, an increase in the use of the still relatively new Eurex mini-contracts would be desirable.
3. Order Features of the Trading Platform: Entry, Stop, Limit, and More
The situation for the order types is much the same as the situation for the base values: The more of these are available, the better. This applies, in particular, to automated trading without the client being present in front of the screen. AvaTrade allows for entry limit, entry stop, markets, OCO, stop loss, and trailing stop order types. Not all order types are necessarily available on all trading platforms.
Entry Limit, Entry Stop, Market, OCO, Stop Loss, TS
Tactical orders enormously expand the possibilities for active trading. For example, a stop sell order can be placed just below an actual support. If a slump below the level of support occurs, the lessons learned from the chart technique usually lead to an even more marked decline. The stop sell order automatically opens a short position when the desired price level is reached. This can be combined with a stop loss.
WEITER ZU AVATRADE: www.avatrade.de
4. Analysis Features of the Trading Platform: Charts, Indicators, Trading Systems and More
In our AvaTrade review, the choice between MetaTrader4 and the in-house platform AvaTrader was seen as a big plus. Both platforms are available as a download, web-based, and mobile version. AvaTrader features a chart tool with drawing tools and indicators. Automated trading systems can also be used. MetaTrader 4, which is used by many other brokers, too, and is particularly known for Expert Advisors, offers comparable functions.
Depending on the account type and by request, the integration of the AutoChartist tool into the AvaTrader platform is possible. AutoChartist automatically searches for relevant market-rate patterns and thus serves as a market scanner. Especially for beginners, who are considering giving AvaTrade a try and do not have profound market-analysis knowledge (yet), this tool is a big plus.
A proprietary platform is available for trading FX options. According to the broker, AvaOptions is “the first truly accessible online platform for the trading of OTC Vanilla Calls and Puts.” Special platforms for options trading such as AvaOptions allow for simplified placement of strategies such as straddle, butterfly, etc., among other things, thus saving users from having to perform tedious calculations. In addition, it is ensured that all contracts are opened at the same time in the case of strategies for several option contracts.
5. Regulation, Deposit Guarantee, and Risk Limitation: Irish Broker with Trustee Accounts
For customers from Europe, the route to an account with the broker includes a limited company based in Dublin, Ireland. This is an important aspect of our broker review, as Ireland has received international support to stabilize its financial system in the wake of the financial and economic crisis. The situation in Ireland, however, was never comparable to that in Southern Europe, where, unlike on the island of the “Celtic tiger,” structural problems were the main contributory factors in addition to the problems in the financial sector. The Irish economy recovered very quickly in the aftermath of the crisis and is still on a growth path. The financial-system crisis is largely under control. However, the Irish regulatory environment is not comparable to that in Germany or the UK, but is considered to be much more stringent than the environment in Cyprus, for example.
It can be assumed that AvaTrade has gained experience with the security needs of many customers and has therefore introduced an additional security component. The broker not only secures customer deposits in segregated customer accounts (which is the rule for all brokers in accordance with the EU Financial Markets Directive, MiFID), but also allows for the funds of the clients to be deposited in trustee accounts at Danske Bank. Thus, the broker does not have access to these funds.
Especially for beginners, the possibility of negative account balance is a big con in our AvaTrade review: The losses in the trade can exceed the trade account balance and trigger a margin-call obligation that is theoretically unlimited. Such scenarios can be expected in case of extreme market conditions, which do not allow for a timely evening up through the broker's closeout systems.
6. Automated Trading: MirrorTrader, MQL5 Signals, ZuluTrade and More
Among those traders who have experience with an off-exchange FX broker such as AvaTrade, a significant number is interested in automated trading. Trading signals are triggered by mechanical trading systems based on algorithms. This discipline is one of the strengths of the Irish broker: There are far more opportunities for auto trading than with most competitors.
Firstly, the entire range of MetaTrader4 features are available: Expert Advisors can be programmed or imported independently. By means of back tests, mechanical trading systems can be tested for their performance in the past. Secondly, trading signals can be obtained from the MQL5 signal service. These can be integrated into the MetaTrader 4 trading platform via an interface.
Thirdly, trading signals can be obtained from the MirrorTrader platform. The platform allows you to copy trades from other users and does not require your presence in front of the screen. Users can decide for themselves to what degree the automated takeover of trade signals is to take place. Complete automation is just as possible as the semi-automatic or manual transfer of trade signals.
Fourth, Signaltrader trading signals can be imported. These signals originate from the trades of other traders, too. Fifthly, it is possible to connect your trading account with the social trading platform ZuluTrade. This is one of the largest platforms of this type. Sixth, trade signals can be imported from external sources via an API.
7. Account Opening and Minimum Deposit: Several Account Types to Choose from
There are no account fees. The minimum deposit is based on the chosen account type and is €100 for all “Silver” accounts, €1,000 for all “Gold” accounts, €10,000 for all “Platinum” accounts and €100,000 for all Ava Select accounts.
Demo accounts can be opened very easily without contacting customer service. The accounts will be equipped with a virtual starting balance of €100,000 and will be released for a period of 21 days. AvaTrade does not guarantee that the market rates of the demo account correspond to those of the live trading account. As a result, the spread of the demo account could be lower than the bid/ ask spreads for actual trading.
The larger account types offer an extended service offering. Compared to the silver account, for example, the gold account offers market analyses and AutoChartist trading signals. In addition, direct access to the Dealing Room is included as part of the platinum account. Holders of an Ava Select account receive discounts on trading conditions that are not publically communicated and, if necessary, have to be negotiated with a personal customer adviser.
A weak point of the AvaTrade review report concerns the inactivity fees. After three consecutive months without any transactions, a fee of €25 will be charged. After every twelve months of inactivity, €100 will be charged.
There is a customer-referral program. If a third party can be convinced of opening an account – through a personal AvaTrade review exchanged among friends, for example -, the broker will pay up to €400 depending on the minimum deposit of the new customer.
WEITER ZU AVATRADE: www.avatrade.de
8. The Broker and Its Competitors: 20,000 New Customers since 2006
In addition to its headquarters in Dublin, Ireland, the broker has offices in Italy, Japan, China, France, Australia, Mongolia, Nigeria, and Spain. On top of the direct trading business with private customers, an Introducing Broker program is part of the broker’s offering: Introducing brokers can refer new customers and forward their orders to AvaTrade's trading platforms via their own frontend.
The company was founded in 2006 and subsequently expanded quite a bit according to the broker’s own accord. The company profile states that the broker has 20,000 registered customers, who carry out more than 2 million transactions per month. The total transaction volume of the company thus amounts to approximately $60 billion every month.
Using a sample, it was found that approximately 25 demo accounts had been opened within a few hours: These accounts are numbered consecutively. In its company portrait, the broker lists specific values and standards, which are particularly important for its corporate identity. It mentions integrity and fairness, customer service as being “most important above all,” “uncompromising self-evaluation,” and “constant innovation.”
Those who are interested in giving AvaTrade a try or checking out the current broker market should always take a look at the company background. Due to the cost structure for OTC trading, a certain critical mass is almost always necessary for favourable trade conditions. In addition, established brokers with their own trading platforms are preferable to new start-ups and introducing brokers without a genuine business model.
9. Additional Services and New-Customer Offers: Webinars, Tutorials, and Deposit Bonuses
Einsteiger, die erstmals mit einem FX Broker
Beginners who are giving an FX broker such as AvaTrade a try for the first time are likely to have encountered various brokers with lush deposit bonuses for new customers. These bonuses are widespread in retail currency trading, but should not be the decisive factor for or against opening a trading account for two reasons.
Firstly, a very high deposit bonus can be amortized very quickly from the broker's point of view if the spreads are wider than necessary or the costs are incurred elsewhere. Secondly, the bonus credits at AvaTrade as well as all other providers are subject to conditions. Thus, the bonuses can only be requested for disbursement when a fixed trading volume has been reached. In the case of AvaTrade, this amounts to 10,000 trading units per €1.00 bonus.
The broker provides seminars and video tutorials. The topics covered include technical market analysis, trading strategies, order types, or basic trading knowledge. These tools are generally useful, but they cannot replace the study of the relevant literature. Live trading seminars would be desirable.
10. Customer Service and Website: Easy to Reach
During business hours, customer service is available by phone, e-mail, and live chat at all times. As part of our test, the customer service staff was able to respond quickly and correctly to a live-chat inquiry.
In contrast to previous years, the website looks extremely professional. The menu navigation follows a strict logic and allows you to find most of the information with one click. The website is available in 17 languages.
Conclusion of our Avatrade Review
The broker strives to win its customers over with many useful features. This applies to the safekeeping of customer deposits in trustee accounts, the selection of several trading platforms and account types, access to AutoChartist, and the high deposit bonuses, for example. The spreads for CFD trading and FX trading with variable margins are competitive compared to other market makers, but not a selling point with a 1.8-pips spread in EUR/USD, for example. AvaTrade is the right address for beginners and moderately advanced traders who do not need to take on the trading of currencies and other base values at a professional level.
Our AvaTrade Rating as a Test Score: B
WEITER ZU AVATRADE: www.avatrade.de