| Updated: September 1, 2025Hedging is a popular strategy in forex trading circles as it supports risk management and mitigation. The practice involves opening opposite positions in the same currency pair to protect oneself against potential losses during periods of increased volatility. Some brokers prohibit or restrict hedging either in order to comply with local regulations or to simplify their internal risk-management policies.
The good news is that we have compiled a comprehensive list of regulated brokers that allow direct or partial hedging, having tested all recommendations ourselves. We discuss hedging as a strategy in greater depth, tackling its advantages and disadvantages. The following article also contains detailed information on who hedging is suitable for and what to consider when selecting a forex broker that supports this approach.
Expert opinion by Christopher Lewis:The list below reveals the best Forex brokers for hedging:
Top 8 Forex Brokers Where You Can Use a Hedging Strategy
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Fusion Markets
- Australia regulated broker
- MT4, MT5, TradingView, Ctrader
- Leverage up to 500
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
-
FP Markets
- Australia and CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
-
Global Prime
- Australia regulated broker
- Advanced MT4
- $0 Minimum Account Size
Trading InstrumentsDeposit Methods- Commodities CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
-
Axi
- Raw spreads start from 0.0 pips
- Offers order execution faster than standard ECN model
- Axi Select Funded Trader Program offers funding up to $1 million
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
-
IC Markets
- Offers 2,200+ tradable markets, including 61 currency pairs
- Leverage of up to 1:1000 in select jurisdictions
- EUR/USD spreads from 0.8 pips for standard accounts
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
-
Vantage FX
- Broker offering some of the lowest spreads from 0.0 pips
- Operating in multiple markets under licenses from tier-1 regulators
- Provides a range of account types with great trading conditions
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
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BlackBull Markets
- Broker boasting lightning-fast execution speed
- ECN brokers with tight spreads from 0.0 pips
- $0 minimum deposit requirement
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
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ActivTrades
- Winner of 20+ Global Awards
- MT4/MT5, TradingView
- Leverage up to 1:400
Trading InstrumentsDeposit Methods- Bonds CFDs
- Commodities CFDs
- Crypto CFDs
- ETF CFDs
- Forex CFDs
- Indices CFDs
- Share CFDs
Brokers Compared by Spread
FX Brokers Deposit Method Comparison
| Brand | Minimum deposit | |
|---|---|---|
| Fusion Markets |  |
$0 |
| FP Markets | |
$50 (AU$100) |
| Global Prime | |
$0 |
| Axi | |
$0 |
| IC Markets | |
$200 |
| Vantage FX |  |
$50 |
| BlackBull Markets | |
$0 (Standard)$2,000 (Prime)$20,000 (Institutional) |
| ActivTrades | |
$0 |
Forex Brokers by Regulator
| Brand | Maximum leverage | |
|---|---|---|
| Fusion Markets | |
1:500 (ASIC | Pro Account), 1:30 (ASIC | Retail Account), 1:500 (VFSC | Retail Account) |
| FP Markets | |
1:500 (CySEC | Pro Account), 1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:500 (FSAS | Retail Account) |
| Global Prime | |
1:500 (ASIC | Pro Account), 1:30 (ASIC | Retail Account), 1:500 (VFSC) |
| Axi | |
1:500 (Elite Account), 1:400 (Pro Account), 1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:30 (DFSA | Retail Account), 1:30 (FCA | Retail Account), 1:500 (SVGFSA) |
| IC Markets | |
1:500 (CySEC | Pro Account), 1:30 (CySEC | Retail Account), 1:1000 (FSAS | Retail Account) |
| Vantage FX | |
1:500 (ASIC | Pro Account), 1:30 (ASIC | Retail Account), 1:500 (CIMA | Retail Account), 1:30 (FCA | Retail Account) |
| BlackBull Markets | |
1:500 (FMA), 1:500 (FSAS) |
| ActivTrades | |
1:400 (CMVM | Pro Account), 1:30 (CMVM | Retail Account), 1:1000 (FSC), 1:200 (SCB) |
Forex Brokers Platform Availability
| Brand | FX pairs to trade | |
|---|---|---|
| Fusion Markets | |
cTrader, MetaTrader 4, MetaTrader 5, TradingView |
| FP Markets | |
cTrader, TradingView |
| Global Prime | |
MetaTrader 4 |
| Axi | |
MetaTrader 4 |
| IC Markets | |
cTrader, MetaTrader 4, MetaTrader 5 |
| Vantage FX | |
MetaTrader 4, MetaTrader 5, Proprietary Web, TradingView |
| BlackBull Markets | |
cTrader, MetaTrader 4, MetaTrader 5, TradingView |
| ActivTrades | |
MetaTrader 4, MetaTrader 5, Proprietary Web, TradingView |
Comprehensive Comparison of Forex Brokers That Allow Hedging
| Brand | Min. Deposit | Trading Platforms | Spread | Regulation | Trustpilot |
|---|---|---|---|---|---|
 |
$0 |
|
AVG 0.93 pips |
|
|
 |
$50 (AU$100) |
|
AVG 1.2 pips |
|
|
 |
$0 |
|
AVG 0.96 pips |
|
|
 |
$0 |
|
AVG 0.1 pips |
|
|
 |
$200 |
|
AVG 0.82 pips |
|
|
 |
$50 |
|
AVG 0.15 pips |
|
|
 |
$0 (Standard)$2,000 (Prime)$20,000 (Institutional) |
|
AVG 0.3 pips |
|
|
 |
$0 |
|
AVG 0.5 pips |
|
Hedging in Forex Explained
Hedging in forex trading involves opening multiple positions to reduce potential losses. This strategy is used to mitigate risks associated with adverse market movements. For example, a trader who holds a long position in the EUR/USD currency pair may open a short position in the same pair to hedge against losses if the market moves in the opposite direction.
Hedging can be carried out using various techniques, including futures, options and spot transactions. It is essential to note that hedging is not a foolproof strategy, and it may not completely eliminate losses. However, it can help reduce them and provide traders with a degree of protection against market volatility. Hedging requires a thorough understanding of the forex market, as well as the ability to analyse and interpret market data. Traders who use hedging strategies must also manage their risk effectively and make informed decisions promptly.
There are several types of hedging strategies used in forex trading, including:
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Direct Hedging
This involves opening a position that is directly opposite to an existing one. For example, if a trader has a long position in the EUR/USD, they may open a short position in the same pair to hedge against potential losses.
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Indirect Hedging
This involves opening a position in a different financial instrument that is correlated with the original position. For instance, if a trader has a long position in the EUR/USD, they might open a short position in the GBP/USD to hedge against potential losses.
-
Cross-Hedging
This involves opening a position in a different financial instrument that is not directly correlated with the original one. For example, if a trader has a long position in the EUR/USD, they may open a short position in gold to hedge against potential losses.
Types of Forex Traders That May Benefit from Hedging
Hedging is a strategy that can benefit various types of forex traders. Scalpers, who open and close multiple positions within a short period, may use hedging to reduce potential losses. Day traders, who hold positions briefly, may also use hedging to mitigate risks. Another type of trader who may find hedging suitable is the swing trader, who holds positions for a longer period and may use hedging to protect profits.
Additionally, investors with a long-term perspective may use hedging to reduce losses and safeguard their investments. Hedging can also be beneficial for traders who are new to the forex market, as it helps them manage risk and gain experience. Overall, hedging is a versatile strategy that can be used by many types of traders to limit potential losses and achieve their trading objectives.
Factors to Consider When Choosing a Broker for Hedging
While there is a vast number of brokers that facilitate hedging, you should exercise caution when choosing the brokerage to trust with your real-money trades. When selecting a broker for hedging, several factors merit consideration:
- Regulatory compliance: The broker should be regulated by a reputable authority, such as the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), or another top-tier regulator. This ensures the broker operates in a transparent and fair manner.
- Trading conditions: The broker should offer flexible trading conditions, including competitive spreads, suitable leverage and reasonable margin requirements. These allow traders to open and close positions swiftly and efficiently.
- Execution quality: The broker should provide a reliable execution system with fast and accurate order processing. This is essential for hedging, as traders need to open and close positions quickly to mitigate losses.
- Hedging policies: The broker must allow hedging and have clear policies regarding the strategy. Some brokers impose restrictions, so always review their terms before opening an account.
- Customer support: The broker should offer reliable, responsive customer support to assist with any queries or issues.
- Trading platforms: The broker ought to provide a range of platforms, including MetaTrader and cTrader, to suit different trading styles and preferences.
- Account types: The broker should supply various account types, including demo and live accounts, to meet different trading needs and objectives.
- Fees and commissions: The broker should maintain competitive fees and commissions with transparent pricing and no hidden charges.
- Risk management tools: The broker should provide a range of risk-management tools, including stop-loss and take-profit orders, to help traders manage exposure effectively.
Comparing Strengths and Weaknesses of the Hedging Strategy in Forex Trading
If you are unsure whether hedging is a suitable strategy for your forex trading sessions, we suggest comparing its advantages and disadvantages. This strategy has several notable strengths and weaknesses.
Some of the key strengths include:
- Risk reduction: Hedging can help reduce potential losses and protect traders’ investments.
- Flexibility: It can be applied in various market conditions, including trending and ranging markets.
- Increased confidence: Hedging offers a degree of protection against volatility, boosting trader confidence.
- Improved trading performance: By reducing exposure to adverse price movements, hedging can enhance overall performance.
- More trading opportunities: Traders can capitalise on movements in both rising and falling markets.
- Reduced stress: The added protection can lessen the anxiety typically associated with trading.
Despite these advantages, there are also weaknesses to consider:
- Complexity: Hedging can be intricate, requiring an in-depth understanding of the forex market and trading techniques.
- High transaction costs: The strategy may involve elevated costs, including spreads and commissions.
- Market volatility: Hedging may be less effective in highly volatile markets where prices move rapidly and unpredictably.
Overall, hedging in forex trading can be an effective way to limit potential losses and protect profits, but it demands careful planning, precise execution and robust risk management. Traders should weigh the strengths and weaknesses of hedging before incorporating it into their strategies.
Common Mistakes to Avoid When Using Hedging
To help you elevate your trading experience with hedging, we would like to highlight some common mistakes traders make when adopting this strategy. While hedging can be an effective form of risk management, the following errors should be avoided:
- Over-Hedging: Hedging too much of a position can lead to unnecessary costs and reduced profits. This often occurs when a trader is overly cautious or fails to adjust their hedges as market conditions change.
- Under-Hedging: Insufficient hedging offers inadequate protection against losses. This may happen when a trader is overly optimistic or lacks a clear understanding of their risk exposure.
- Poor Position Sizing: Inaccurate sizing of hedging positions can result in either inadequate protection or excessive costs. Position sizes should be adjusted as market conditions evolve.
- Lack of Discipline: Failing to adhere to a hedging plan can lead to poor decisions and increased risk, especially if emotions drive trading choices.
- Failure to Monitor and Adjust: Hedging positions need to be reviewed and adjusted regularly to remain effective as markets shift.
- Incorrect Hedging Instrument: Using an inappropriate instrument may provide insufficient protection or add unnecessary expense. Traders should understand the available instruments and their characteristics.
- Over-Reliance on Hedging: Depending exclusively on hedging can detract from other essential risk-management techniques.
- Failure to Consider Correlation: Ignoring the correlation between the underlying asset and the hedge can undermine the strategy’s effectiveness.
- Failure to Consider Volatility: Neglecting the volatility of both the underlying asset and the hedging instrument can lead to inadequate protection.
- Failure to Consider Liquidity: Overlooking liquidity can make it difficult to enter or exit hedging positions efficiently, increasing exposure to risk.
Why You Should Trust RationalFX
When it comes to making informed decisions about forex brokers, it's essential to rely on trustworthy sources. RationalFX, a company with over 20 years of experience since its founding in 2005, has established itself as a credible authority in the industry. With an impressive collection of over 2,500 reviews on Trustpilot, boasting a score of 4.2, it's clear that Rational FX has built a reputation for providing reliable and unbiased information.
What sets Rational FX apart is its rigorous evaluation process, which considers over 30 different criteria when selecting forex brokers. This comprehensive approach ensures that every aspect of a broker's service is taken in consideration, including regulation, forex spreads, trading platforms, deposit methods, and reputation. With its wealth of experience, transparent review process, and outstanding customer feedback, Rational FX is a trusted source for anyone seeking reliable information on forex brokers. You can reach us via e-mail at feedback@rationalfx.com or contact us through our social media accounts here: Facebook, YouTube, or leave a feedback here.