Brokers With The Best Risk Management Tools

Using brokers with the best risk management tools will help to mitigate the inevitable losses incurred over a long-term trading career. In this guide, we explore why risk management is so important to your trading strategy and offer tips and advice to help keep you on the path to long-term trading success. We will cover what risk management is and what it means for your portfolio, in addition to looking at some of the brokers with the best risk management tools.

Top Brokers With The Best Risk Management Tools

#1 - Forex.com

Why We Chose Forex.com

Forex.com boasts a global reputation with multiple awards and 20+ years experience. Regulated in the US, EU, UK and Canada they provide a huge range of day trading markets, not just forex, and offer competitive fees on a cutting-edge platform. The brand also provides a suite of additional tools, from performance analytics and SMART Signals to advanced charts and strategy builders.

"Forex.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."

- DayTrading Review Team
  • Instruments: Forex, Spot Metals
  • Regulator: NFA, CFTC
  • Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
  • Min. Deposit: $100
  • Min. Trade: 0.01 Lots
  • Leverage: 1:50

Pros

  • Excellent trading tools including the Trading Central research dashboard and the SMART Signals price pattern scanner
  • The proprietary Webtrader is an excellent option for day traders, offering over 80 technical indicators for detailed analysis
  • Forex.com is a respected and trusted broker overseen by tier-one regulators including the US SEC

Cons

  • The $15 monthly inactivity fee is higher than some competitors, including XM which only charges $5
  • The investment offering varies between countries
  • It's a shame that there's no copy trading platform for beginners or signal providers

#2 - Interactive Brokers

Why We Chose Interactive Brokers

Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.

"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."

- DayTrading Review Team
  • Instruments: Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
  • Regulator: FCA, SEC, FINRA, CBI, CIRO, SFC, MAS, MNB
  • Platforms: Trader Workstation (TWS), Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral
  • Min. Deposit: $0
  • Min. Trade: $100
  • Leverage: 1:50

Pros

  • With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.
  • IBKR continues to deliver unmatched access to global stocks with tens of thousands of equities available from 100+ market centres in 24 countries.
  • While primarily geared towards experienced traders, IBKR has made moves to broaden its appeal in recent years, reducing its minimum deposit from $10,000 to $0.

Cons

  • Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
  • You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
  • IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.

#3 - NinjaTrader

Why We Chose NinjaTrader

NinjaTrader is a US-headquartered and regulated brokerage that specializes in futures trading. There are three pricing plans to suit different needs and budgets, as well as ultra-low margins on popular contracts. The brand's award-winning charting software and trading platform also offers a high-degree of customization and superb technical analysis features.

"NinjaTrader continues to meet the demands of active futures traders looking for low fees and premium analysis tools. The platform hosts top-rate charting features including hundreds of indicators and 10+ chart types."

- DayTrading Review Team
  • Instruments: Forex, Stocks, Options, Commodities, Futures, Crypto
  • Regulator: NFA, CFTC
  • Platforms: NinjaTrader Desktop, Web & Mobile, eSignal
  • Min. Deposit: $0
  • Min. Trade: 0.01 Lots
  • Leverage: 1:50

Pros

  • NinjaTrader continues to deliver comprehensive charting software for active day traders with bespoke technical indicators and widgets
  • You can get thousands of add-ons and applications from developers in 150+ countries
  • NinjaTrader is a widely respected and award-winning futures broker and is heavily authorized by the NFA and CFTC

Cons

  • There is a withdrawal fee on some funding methods
  • The premium platform tools come with an extra charge
  • Non forex and futures trading requires signing up with partner brokers

#4 - eToro USA

Why We Chose eToro USA

eToro is a social investing platform that offers short-term and long-term trading on stocks, ETFs, options and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, eToro is still one of the most respected brands in the industry. eToro securities trading is offered by eToro USA Securities, Inc.

"eToro remains a top pick for traders looking for leading social investing and copy trading services. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer day traders."

- DayTrading Review Team
  • Instruments: Stocks, Options, ETFs, Crypto
  • Regulator: SEC, FINRA
  • Platforms: eToro Trading Platform & CopyTrader
  • Min. Deposit: $10
  • Min. Trade: $10

Pros

  • eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
  • The $10 minimum deposit and straightforward account opening process means beginners can get started quickly
  • The broker's Academy offers comprehensive learning materials for beginners to advanced-level investors

Cons

  • There's a narrower range of day trading instruments available compared to competitors, with only stocks, ETFs and cryptos
  • Average fees may cut into the profit margins of day traders
  • There's no MetaTrader 4 platform integration for traders who are accustomed to using third-party charting tools

#5 - OANDA US

Why We Chose OANDA US

OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available for short-term traders, alongside flexible contract sizes and automated trade executions.

"OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."

- DayTrading Review Team
  • Instruments: Forex, Crypto
  • Regulator: NFA, CFTC
  • Platforms: OANDA Trade, MT4, TradingView, AutoChartist
  • Min. Deposit: $0
  • Min. Trade: 0.01 Lots
  • Leverage: 1:50

Pros

  • The broker's API facilitates access to 25 years of deep historical data and rates from 200+ currencies
  • Seasoned day traders can access industry-leading tools, including an MT4 premium upgrade and advanced charting provided by MotiveWave
  • OANDA is a reliable, trustworthy and secure brand with authorization from tier-one regulators including the CFTC

Cons

  • There's only a small range of payment methods available, with no e-wallets supported
  • The range of day trading markets is limited to forex and cryptos only
  • It's a shame that customer support is not available on weekends

Risk Management Explained

Risk management is the process of limiting your positions if you suffer a loss or series of losses, so you can continue to trade subsequently. The best strategies will endeavour to leave you with enough capital to continue to trade over a long term timeframe. Effective risk management is not about avoiding risk entirely. Instead, it is about managing risk so that a single loss will not spell the end of a trader’s career or broker’s position.

Without a robust risk management strategy in place, traders may find themselves in a position that they either cannot recover from or that forces them to make decisions that focus entirely on short-term benefit, harming long-term positions in doing so. They may also open themselves up to:

Big losses can be tricky to come back from, not only from a financial viewpoint but also a psychological one.

Some traders will resort to taking even bigger risks to cover what they have lost, which can often leave them in an even worse position.

In the real world, we can see numerous examples of risk having been poorly managed, one of which would be the mortgage meltdown that triggered the 2007 recession. Risk management applies to any instrument in any market and can be used by individuals, corporations and governments.

Brokers with the best risk management tools tend to focus on retail and professional clients, mitigating the damage of market downturns.

brokers with the best risk management tools

Risk Management Tools

Stop-Loss & Take Profit Orders

Traders with good planning will always know their buy and sell price before they execute. Conversely, unsuccessful traders might enter a trade without an understanding of where they would make a profit or should cut a loss.

Sticking to predetermined limits helps to structure the process and means that reason, rather than emotions, dictates movement, which is more likely to result in the best outcome.

Setting these limits is usually done by analysis, which is where picking the right broker comes into play. You will need accurate data to track averages, monitor movement and forecast volatility. Make sure you check that your broker offers stop loss order types when comparing firms and platforms.

Deal Cancellation

Some brokers with the best risk management tools will provide some form of deal cancellation feature. This is generally a paid feature per trade that allows you to back out of a position if the markets turn against you, only losing the cost of the deal cancellation, rather than the cost of exiting the position. Such features generally have set time limits within which you can activate the cancellation.

Calculators

Many of the most helpful brokers with the best risk management tools will have a suite of trading calculators available for free use on their websites or within their trading platforms.

These will allow you to quickly and easily calculate the amount of risk a position will open you up to, how far an asset’s value must move to be profitable or not, the cost of a position in terms of spreads and commissions and other useful values.

These will help you build up an accurate picture of your situation so that you can make informed, sensible decisions.

Other Tools & Tips

One Percent Rule

This one is pretty simple. Essentially, you should never risk more than 1% of your capital on a single trade.

Should it all go terribly wrong, you should have more than enough to continue to trade, with the remaining 99% of capital still available.

This does not specifically mean no more than 1% of your capital should be used in a trade, just that no more than that can be risked.

Therefore, if you have stop losses in place that limit your risk to 1%, you can open a much larger position.

Diversify & Hedge

You have probably heard the phrase, “do not put all your eggs in one basket”. Well, it stands true for trading strategies too.

Diversifying your investment across, assets industries and sectors will help to manage risk in the event of volatility. Furthermore, it may open up new opportunities you had not previously considered.

Build Your Knowledge Base

Whether you have been trading for one year or 10, there is always more to learn. Ensure you stay up to date with the latest market news, take advantage of the resources available and use demo accounts where possible.

Some brokers will offer tutorials, training courses, guides and more, so check out what is provided. Online forums can also be a great source of information.

Pros Of Brokers With The Best Risk Management Tools

The ultimate benefit of trading using brokers with the best risk management tools is that clients are better protected. Whether that be through negative balance protection, stop-loss limits, regulation or leverage limits. These measures all have a unifying objective to help ensure that clients can overcome losses to keep trading.

Cons Of Brokers With The Best Risk Management Tools

Whilst it may seem that there are no obvious downsides to enhanced security, there are some that would argue that it can get in the way of trading opportunities.

It is a more conservative approach; reduced leverage,  regulatory compliance and tolls such as stop-losses offer traders additional layers of protection.

Final Word On Brokers With The Best Risk Management Tools

Using brokers with the best risk management tools can help you to limit the impact of any trading losses, improving your overall experience and trading. Risk management is a no brainer. It should be a part of every decision you make concerning your portfolio no matter how big or small.

It can be tricky to compare brokers with the best risk management tools but there are lots of brokers in operation today that offer a suite of order types, calculators and education on the concept.

FAQs

What Is Risk Management?

Risk management is the process of mitigating the financial impact of losses. Whilst there will always be risks associated with trading, navigating this is key so that you can carry on trading despite losses.

I Have Never Used Risk Management Before, Is It Too Late To Start Now?

No, it is never too late to incorporate risk management into your trading strategy. We recommend all strategies and traders incorporate the ideas of risk management into their trades.

What Are The Brokers With The Best Risk Management Tools?

Finding the best broker is not always straightforward and will depend on several factors, including your country of residence, expertise, trading capital and strategy.

Many of the top regulated brokers will offer trading platforms with a range of calculators and order types that can be used to mitigate risk.

Additionally, you could look out for firms with a range of educational content on the topic or specific additional features, like deal cancellation.

Is Risk Management Going To Impact My Trading?

At face value, risk management strategies may appear conservative. However, they have no impact on the results of trades, they simply offer a layer of protection for – both trader and broker – from extreme market volatility.

Is Risk Management Hard?

Risk management is not particularly hard to implement, though you need to understand the whys and hows. There is a wealth of information available online to help you get to grips with the principles. Furthermore, an increasing number of brokers offer free tools so you can weave it into your current strategies.