Disclosure

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

AvaTrade is a privately held online forex and CFD broker that was founded in 2006 as AvaFX and advertises that it is "committed to empowering people to invest and trade, with confidence, in an innovative and reliable environment; supported by best-in-class personal service and uncompromising integrity".

Headquartered in Dublin, Ireland, AvaTrade has satellite offices throughout Europe and the Asia-pacific region and is registered with multiple jurisdictions globally. Like many forex brokers, AvaTrade does not accept U.S. traders.

AvaTrade offers a broad variety of tradable instruments including forex, stocks, commodities, cryptocurrencies and indices, with industry standard spreads, on a "wide-selection of trading platforms for both manual and automated trading, across a variety of device types".

New traders can open accounts for as little as 100 units of the base currency and the broker offers dedicated educational and research resources that should get them up to speed quickly. Additionally, AvaTrade states that accounts across all jurisdictions do have negative balance protection and also offers AvaProtect which allows the client to take out insurance on a trade.

Of note, AvaTrade is not regulated by the Financial Conduct Authority (FCA), a highly regarded regulatory entity with a reputation for being strict in ensuring that market practices are fair for both individuals and businesses, which means that it is not subject to ESMA mandated client account protection and leverage restrictions.

Key Takeaways

  • AvaTrade is for the novice investor seeking to gain a basic understanding of forex and CFD trading.
  • AvaTrade offers negative balance protection and AvaProtect, which allows the client to take out insurance on a trade, but is not regulated by FCA.
  • AvaTrade offers customers copy and social trading with AvaSocial, ZuluTrade, DupliTrade, and MQL5 Signal service.

Who AvaTrade Is For

AvaTrade is for the novice investor seeking to gain a basic understanding of forex and CFD trading. With a product suite that offers variety, reasonable spreads, and a choice of user interfaces, AvaTrade is ideal for new and undercapitalized traders seeking to build on limited skill sets.

Pros
  • Full slate of forex, CFD, cryptocurrency offerings

  • Unique social trading features

  • Impressive educational offerings

  • Negative balance protection

Cons
  • Not regulated by FCA

  • Trading platforms lack news and research functionality

  • Does not accept U.S. clients

  • No guaranteed stop loss

Pros Explained

  • AvaTrade provides access to financial instruments across a wide range of different asset classes, including forex, indices, commodities, stocks, bonds, ETFs, options, and cryptocurrencies
  • AvaTrade offers customers access to third-party platforms for copy and social trading with AvaSocial, ZuluTrade, DupliTrade, and MQL5 Signal service.
  • Well-organized tutorials, offered through Sharp Trader, are segmented into beginner, intermediate, and advanced topics, offering logical paths to skill building. 
  • AvaTrade offers negative balance protection and AvaProtect, which allows the client to take out insurance on a trade.

Cons Explained

  • AvaTrade is not regulated by the FCA, a highly regarded regulatory entity with a reputation for being strict in ensuring that market practices are fair for both individuals and businesses.
  • WebTrader, AvaTrade's default user interface, is functionally limited especially when compared against its competitors in the forex online broker landscape.
  • AvaTrade does not accept U.S. clients due to regulatory constraints which, coupled with the fact that it is not FCA regulated, is cause for a bit of concern.
  • AvaTrade does not offer guaranteed stop loss orders (GSLO) which protect the trader from market gap risk.

Costs

The broker touts no commission trading which would mean that client trades "crossing" the bid/ask spread is the principal means by which AvaTrade generates revenues. Retail traders are charged higher spreads than professional traders but the requirements are such that few clients will be able to obtain that latter designation.

Experienced traders can qualify for a "professional" account which would allow them to increase their maximum leverage from 30:1 to 400:1 but the spreads remain the same. To qualify investors must meet at least 2 of the following criteria:

  1. Carried out transactions, in significant size, on the relevant market (OTC Derivatives such as Leveraged CFDs, Forex, Spread Betting) at an average frequency of 10 per quarter over the previous four quarters activity with AvaTrade and / or other providers
  2. Have worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.
  3. Their financial instrument portfolio is greater than €500,000 (including cash saving and financial instruments)

The "Trading Conditions & Charges" link under the "Trading Info" tab lists the spreads, available leverage, and margin requirements for all of AvaTrade's instrument offerings. The minimum advertised spreads for FX majors are inline with the industry average with EUR/USD at 0.9, USD/JPY and AUD/USD at 1.1, GBP/USD and USD/CHF at 1.6, NZD/USD at 1.8, and USD/CAD at 2.0. As is the norm in the FX industry, clients will be charged swap fees on positions that they hold overnight.

It takes just $100 to open an account and AvaTrade offers no volume discounts or guaranteed stop losses. They charge a $50 fee after three months of account inactivity and a $100 administration fee after one year of inactivity. As mentioned, no withdrawal or closure fees are listed in the marketing materials but the legal documents noted fees for bank transfers and credit card transactions. Withdrawal processing can be unusually slow, requiring as long as 10 business days to receive wire transfers. Islamic accounts are offered but they will incur wider spreads.

Trade Experience

While AvaTrade has discontinued RoboX and Mirror Trader social trading programs and AvaTradeAct, their dedicated platform and Metatrader alternative, it still offers a broad variety of platforms to cater to manual and automated traders.

WebTrader is its default interface that can be accessed via a browser. It is user-friendly and intuitive but rather plain and lacking some basic features that competitors offer. Clients executing traditional technical or fundamental trading strategies can also opt for the industry-standard Metatrader 4 (MT4) and the newer Metatrader 5 (MT5).

AvaTrader WebTrader
AvaTrader WebTrader.

In a nod to transparency, AvaTrade lists other pertinent information in the "Trading Info" tab on its website, such as "Order Execution Policy", "Holiday trading hours", "Economic calendar", "CFD Rollover" information, and "Stocks Earnings Releases", to aid the client in their trading decision. Additionally, the "Forex Calculator" link informs the trader about the potential profits, losses and costs to trading, like overnight interest calculations.

WebTrader has three basic order types, a plain market order and two pending orders, with the option of attaching "take profit" and/or "stop loss" orders to them.

  • Market - The simplest order where a trader signals that their trade request should be executed at the prevailing market rate.
  • Limit - A pending order where the entry is at a predetermined point below or above the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.
  • Stop - A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.
WebTrader Pending order
WebTrader Pending order.

Traders can take spot and options positions through AvaOptions, a dedicated but basic platform that provides plain vanilla and complex hedging with streaming put and call quotes for a subset of forex pairs, as well as a diverse set of strike prices and expiration dates.

AvaTrade also offers customers access to third-party platforms for copy and social trading with AvaSocial, ZuluTrade, DupliTrade, and MQL5 Signal service which offer most of the functionality of the discontinued programs and should satisfy the needs of those that require these features. Furthermore, in 2020, AvaTrade partnered with Trading Central, an independent provide that offers trading signals and analyst recommendations.

Metatrader and AvaOptions web versions provide integration with desktop platforms and AvaTradeGO, featuring AvaProtect, now offers an Android and iOS alternative to the plain vanilla Metatrader 4 Mobile.

The rebranded and updated MT4-based app includes enhanced social trading capacity but a limited feature set that’s generated dozens of complaints on Google Play. The app is also geared toward newer and less skilled traders, providing “step-by-step guidance on opening trades” and a feedback system that experienced traders aren’t likely to use.

Range of Offerings

AvaTrade provides access to over 1250 financial instruments across a wide range of different asset classes, including:

  • Forex
  • Indices
  • Commodities
  • Stocks
  • Bonds
  • ETFs
  • Options
  • Cryptocurrencies

The list of forex, CFD and options trading instruments is on par with industry standards with the addition of cryptocurrencies providing new opportunities for high-risk speculators. CFDs include a basic selection of commodities and bonds while shares and ETF offerings are dominated by highly liquid US big tech stocks. UK and Ireland traders can open spread betting accounts as well, rounding out a full-featured investment product catalog.

Customer Service

A comprehensive FAQ will address most inquiries. The broker offers 24/5 chat/phone support as well as social media portals and an online form entry. Connecting with chat may be cumbersome, with requests at different times of day answered by a live representative after a lengthy wait.

The broker maintains international offices, allowing customers local contact when needed. They provide an international phone number as well as a laundry list of local phone numbers covering their numerous jurisdictions and EU member states.

Education

As per its website, trading courses and other educational materials are offered through Sharp Trader. Well-organized tutorials are segmented into beginner, intermediate, and advanced topics, offering logical paths to skill building. A broad variety of general articles covered all sorts of market topics as well as tutorials on trading platforms. Materials were segmented into five major sub-topics, allowing clients to find answers quickly and efficiently. A buggy search function detracted from the learning experience, failing to include many articles and topics.

Also, the broker provides "Key Information Document" (KID), which outlines the basics of what each available instrument is and the risks associated with trading it, and an E-book. Inexplicably, the main broker site includes an education sub-menu and a variety of useful materials not integrated into the dedicated Sharp Trader site.

Portfolio Analysis

Basic, real-time information about client activity, such as balances, transaction activity, and profit/loss breakdowns are available on WebTrader, but there is no built-in tool for analyzing trading activity and AvaTrade does not provide a trading journal or tax accounting tools on the platform.

Research Amenities

AvaTrade provides an economic and earnings calendars and limited research through Sharp Trader. A brief (2 to 4-minutes) daily Trader’s TV video (via YouTube) comprises the core of research materials, with the script then transcribed as a Daily Market Review. Trading Central provides intra-day updates and short-term technical signals while a blog keeps the client updated on market events.

Security

AvaTrade answers the question that is preeminent in most customer's mind in its KID, namely "What happens if Ava is unable to pay you?".

"In the unlikely event that Ava are unable to pay you, for example due to insolvency, you may lose the value of your investment. However, we segregate all retail client money from Ava money in accordance with the Client Asset Regulations. You have some protection from the Investor Compensation Scheme (“ICS”). This product is categorized as an investment product under the ICS so eligible claimants are covered up to the first €20,000 of loss. Further information about the compensation arrangements is available at www.investorcompensation.ie."

The company holds client funds in a segregated account but runs a dealing desk that might raise potential for conflicts of interest, especially since AvaTrade is not not regulated by the Financial Conduct Authority (FCA). A large Australian operation is regulated through the Australian Securities and Investment Commission (ASIC). The broker also advertises negative balance protection and AvaProtect, but it provides no additional guarantees for safety of client funds.

AvaTrade does not offer two-factor authentication (2FA) or bio-metric authentication for its desktop, web, and mobile platforms although the user will be logged out for inactivity and account holders can use MT4's One Time Passwords (OTP).

Verdict

AvaTrade offers average-to-competitive spreads, depending on account type, and adequate educational resources. Its low account minimums make it ideal for new and undercapitalized traders seeking to build on limited skill sets.

The website and marketing material, while aiming for transparency, could be confusing for prospective clients looking for information about account types, spread schedules, and fee listings.

Not being FCA regulated is concerning and large-scale and professional traders are likely to find better value elsewhere due to the lack of volume discounts, high-end trading platforms, and comprehensive news and research resources.

********************************************************************************************************

Trust

2.5

Desktop

3.8

Mobile

4

Research

2.5

Education

4.5

Special Features

3.5

Investment Products

4.2

Commissions and Fees

2

Customer Support

4.5

What You Need to Know

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Investors seeking a wide variety of forex, CFD, and cryptocurrency offerings may find what they are looking for with Avatrade. See how they compare against other online brokers we reviewed.

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.

In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.

Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.