Top 10 forex trading companies

Some of the top 10 forex trading companyoffers the best features & services to their clients these include technical and fundamental analysis, efficient trading platform, different account types, training and education, customer support and free demo account.

But the key parameters are the ones we would be focusing on:

•    Also, we will be looking at their assets and trading volume extensively.

•    Comparing forex trading company in the world can be done effectively by comparing their performance based on certain indices such as spot bet, CFD trading and Spread bet. 

•    Market capitalization, revenue, and profits.

TRADING VOLUME:

Most of the top ten trading platforms in the forex market perform transactions valued at 105 billion dollars or more. It is a major indicator of the strength of a forex company.

Average daily trading volumes (ADTV) - The daily transactions of a forex broker can vary a lot depending on the active clients on his list, but the more active clients the broker has, the less volatile the value of daily transactions will be. In order to get an accurate indicator about the real volume of a broker, it is better to calculate the average volume for a larger period of time this helps give a more reliable value and neutralize the effect of trend and changes, as daily and seasonal fluctuations will be less relevant. We think the (ADTV) becomes relevant when the average over a period of time is taken into consideration let’s say (3-6month) In order for a forex broker to be considered large it must have an (ADTV) of at least one billion dollars (more than 10,000 standard lots traded daily) The tip top forex brokers have an ADTV of at least three billion dollars that’s something they all have in common top 10 forex trading company. 

MARKET CAPITALIZATION

The only companies that can be ranked by market capitalization are public liability companies (those quoted on a stock exchange). This would leave most forex brokers out of the ranking as there are quoted on the stock exchange. It is also important to note that market capitalization represents the value investors give to a specific company. A simple example is that of a small but income generating company having a higher market value than a large company unable to generate income/profit.

REVENUE

The strength of a forex trading company based on revenue will render more accurate results; it still isn’t the most accurate parameter. A broker's revenues generally come from the commissions it charges and the spreads paid to him by traders. Now, if a broker with higher commissions and spreads will generate more revenue than a similarly sized broker with lower spreads. There is also the problem of integrated products offered by the companies. A listed company on the stock exchange offering stocks trading, options and futures along with forex trading will generate revenue from more sources as compared to a company solely into Forex Trading. Now, if the stocks business generates most of the revenue which is possible, the company can be very large but the forex division can still be small compared in comparison the more reason why revenue isn’t an accurate indicator.

PROFITS

Ranking forex brokers by profits give a false indication of how well the company is doing, as this criterion includes the same problems we identified when discussing revenues, and many more. Just think about a large company which is very extensive in reach and size but with huge operating costs. It can be a really big company but generate no profit.

ACTUAL ASSETS UNDER MANAGEMENT (AAUM)

In the case of forex brokers, the closest thing to AAUM is the client funds. While they are not managed by the brokers, they represent the total value of the client accounts to the forex company. This measure is much more accurate than the ones discussed above, but it still fails to differentiate between the forex business and the other services offered by the company. If you mix stocks trading with forex, it is very likely that the largest part of the client funds will be used in trading stocks, not forex. Another thing key factor that makes this parameter less accurate is leverage used by brokers. Lower leverage needs more funds in the broker's custody for the same operations. Also, it is possible to have large forex accounts with very little trading activity.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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