Germany is often regarded as the world’s miracle economy. Having survived a lot of hardship, it, nevertheless, managed to stay afloat, and, on top of that, ensuring continuous and rapid growth. To this day, there is no clear consensus on what factors are the ones that contributed the most to the case of German economic success, but many name the pragmatic. highly-disciplined and cold-headed nature of German people. Regardless of what exactly is responsible for this growth – some sort of magic power or an overall character of this nation – the truth remains that it is a leading economy both within the European Union (EU) or all around the world. Germany is an integral member of the EU, which makes a significant contribution to both the stability of the region and the strength of the EUR.
Given the overall state of the German economy, it does not come as a surprise that the Forex trading market there is one of the strongest, most secure, and one of the fastest-growing. The regulations that this market is subjected to are quite strict, however, it does not prevent it from expanding at an exponential speed and attract traders and brokers from all around the world. Below, we will provide you with a comprehensive assessment of the FX market in Germany, which will give you all the information you will need to decide whether Forex trading in Germany best suits your needs.
As previously mentioned, when it comes to trading in Germany, the opportunities that it offers are plentiful. Nevertheless, your success will depend heavily on whether or not you will be able to choose the broker that is right for you, among the variety of choices available on the market. We are well aware that such a procedure can be quite stressful and time-consuming, both for beginners and experienced traders alike. For that reason, we provided you with a comprehensive list of best Forex brokers in Germany, which, we hope, will come in handy when you are choosing the one that best suits your trading needs.
CySEC, IFSC, ASIC
100 currency units
CIMA, FCA, NFA
When it comes to Forex trading in Germany, the first thing that comes to mind is safety and strict regulations. It is, indeed, true, that it can be extremely hard for the German brokers to obtain a license and operate there, however, it is the very exclusivity of licensing that makes local brokers so prestigious and popular among the traders from all over the world.
The aforementioned license can be obtained from the German regulatory body, or any other regulatory body within the European Union (EU). But what does it take for a broker to obtain it, and what are some of the additional regulations that Germany imposes upon the FX market to make it more secure, transparent, and reliable for the traders? Here, you will a breakdown of everything that you need to know about the licensing and regulation of Forex trading in Germany.
The main German regulatory body responsible for overseeing the Forex trading market is the Federal Financial Supervisory Authority ( Bundesanstalt für Finanzdienstleistungsaufsicht), or BaFin. This institution is, in turn, directly regulated by the Federal Ministry of Finance, and its extensive list of responsibilities includes banks, financial and payment services, EU foreign credit institutions, domestic and foreign investment funds, pension funds, asset management, and, of course, Forex trading in Germany. While it is true that more often than not, such an extensive and varying area of operation might cause the overall performance to decrease, it is definitely not the case with BaFin. Its policy of striking a balance between tough regulations that ultimately produces some of the best, most prestigious Forex trading brokers in Germany – and here is how this was achieved.
Both concepts that we are about to discuss are quite controversial by their nature. They can both result in large profits and elevate an overall trading experience for, but can also be a cause of huge losses for others. For that reason alone, regulatory bodies treat leverages and CFDs with a pinch of salt and tend to apply appropriate measures, where necessary.
When it comes to leverage, its main function centers around allowing traders to trade funds that they do not necessarily physically possess. While the experienced traders often find leverages quite beneficial, practice shows that more often than not, beginners tend to lose their funds while treating leverages with the lack of knowledge and skill. Based on the regulations issued by the European Securities and Market Authorities (ESMA), German BaFin has limited the permitted leverages to 30:1 for the major traders and 20:1 for the non-major ones. By doing that, the regulatory body ensured that trading in Germany is not subjected to any unnecessary risks and is operating within a safe environment for both the brokers and traders alike.
Similarly, CFDs can be a great tool for securing lucrative profits, if treated with skill and expertise. Since they can also be a root of various risks and potential losses, the ESMA, and, consequently, the BaFin has put a limit on the leverages available for the CFDs on cryptocurrencies, equities, commodities, and other assets of a similar nature.
This is a common regulatory measure that is used in various countries across the world to ensure the safety of the traders. By requiring brokers to possess a minimum trading capital at all times, various bodies ensure that the broker is not operating on the verge of complete bankruptcy, and, by doing that, putting its clients at the risk of losing their funds.
According to BaFin, the requirements for the minimum capital varies depending on the German broker seeking to obtain a license. For example, for those brokers that are trading on the behalf of their clients, the minimum requirement is 125 000 EUR, while those trading themselves are required to have at least 730 000 EUR at all times.
Yet again, such a measure is often used for the top Forex brokers all around the world. What it encompasses is the necessity to keep traders’ funds separate from those of the brokers. Such measure is necessary to ensure that in case of some unfortunate event that will lead to the broker losing all of its funds, the clients will still be able to recover their own money safely, On top of that, keeping broker’s and traders’ funds separately is crucial to make sure that the latter is not misused by the broker, accidentally. Segregation of funds is one of the most basic regulatory requirements, and virtually every Forex trading broker in Germany is abiding by it.
Protection of the negative balance is a way for the brokers to ensure that their clients are not losing more money than they originally deposited. For the traders who like using leverages in their trading sessions this particular measure comes especially handy, as, with it, they will not lose the amounts that multiplied as a result of using the leverage.
Like many other countries, Germany is keen on making the overall trading experience secure and potentially profitable for traders who choose Forex trading in Germany. By making negative balance protection a necessary condition for the German brokers to receive the BaFin license, the country contributes greatly to the overall growth and prestige of its FX trading market.
In order to ensure continuous implementation of its regulations and conditions, the BaFin requires Forex trading robots in Germany to submit regular audits and reviews. Such detailed reports are necessary to assess whether the brokers’ operations are in line with the domestic and the EU regulations, and, can act as a ground-based on which the action in the form of a fine or any other form of appropriate measure, is taken.
Offering bonuses and promotions are a great way for brokers to attract more clients. They can vary between the welcome bonuses that are gifted to the trader upon making the first deposit, or simply for joining the new broker or refill bonuses that are issued periodically to the returning clients as a token of appreciation for their decision to cooperate with a certain brokerage over the others. Those bonuses can be the single most important factor for the trader looking for the right broker for themselves.
However, it is not all sunshine and rainbows with this one – very often such bonuses are regarded as a dangerous and aggressive marketing tool by the EU regulatory bodies. They are, therefore, banned in Germany as something that attracts customers into a potentially risky financial investment. Nevertheless, some of the top brokers in Forex make up for such limitation by providing a kick-start in a form of leverages, which, as mentioned above, are also regulated in a way that ensures traders’ security and safety of their funds.
In Germany, anyone who has reached the country’s legal age of 18 or older can get into Forex trading. The minimum age for the person to start trading is imposed for the purpose of keeping young adults from getting themselves into what can potentially become a life-time debt. Apart from that, there are no overarching legal regulations on who can start Forex trading in Germany, although local brokerages might have their own conditions on who can start trading with them.
When it comes to the costs of getting into trading, overall it is completely free or all. What that means, in specific, is that there will be no additional costs or fees that you will have to pay to join a broker. The only financial input required from you would be an initial deposit. The latter varies between something as little as 5 USD and up to 500 USD, depending on the brokerage that you end up choosing.
As mentioned above, the Forex trading environment in Germany can be described as both strict and very safe. Strict, because the number of conditions that the Forex trading brokers in Germany have to meet to get a license from BaFin are plentiful. Nevertheless, in assessing the FX market in Germany, we have determined that it is the complication and strictness of the licensing process that makes it so distinctly unique and highly developed. Before giving you our final verdict, we have created a breakdown of the reasons why one should seriously consider joining a German brokerage.
If we had to name a single reason behind Germany’s strong standing as one of the world’s most successful FX markets, we would say that it is its economic strength. The German economy is constantly boosted by its large exports that vary from car-manufacture giants, such as BMW, Mercedez- Benz, and Volkswagen to the production of the vehicle parts that are constantly in high demand all around the world. To top this up, Germany is the proud owner of one of the largest pharmaceutical industries, and its yearly exports of packaged medicine amount to a total of 43 billion USD.
If the successful export of this country is not enough to convince you, we are happy to report that Germany is widely considered as one of the best countries for foreign currency trading. One of the reasons for that is the aforementioned economic strength, however, the other one is merely the fact that USD/EUR is the most popular trading pair, and Germany is probably the best place to trade it.
What we have discussed in detail in a previous section of this overview can be best described as secure and efficiently regulated. While at the first sight it might seem that the regulatory measures imposed upon the Germa Forex trading brokers are too tough, in reality, it is due to those regulations that the local firms are considered to be so prestigious and reliable. Some of the best Forex brokers in Germany are also the ones that strictly follow the BaFin’s regulations and showcase deep care about the wellbeing of their traders.
Overall, we can definitely recommend traders to seriously consider operating in Germany. The combination of strict, yet just, regulations together with a strong and sustainable economic growth is what makes it so attractive for FX enthusiasts. With this guide in mind, and with a little bit of effort, we are confident that you will be able to find yourself the best Forex broker in Germany, among the many that are currently available.