Want to trade in international assets but don’t know which platform to go for? Well, offshore brokers are the best for trading in international and foreign assets.
Wait, you don’t know what an offshore trading platform is? Don’t worry. In this article, we will discuss these types of forex broker platforms and find out whether they are ideal for opening an account with.
What are offshore brokers?
Offshore brokers are the financial institutions that operate outside the boundaries of the traders’ home country. Offshore brokers basically mean foreign or international brokers.
On such a platform, trade can invest in forex, stock, commodities, indices, cryptocurrencies, and other financial assets. Generally, offshore brokers are situated in countries where the financial regulations are relaxed so that they can operate in a free environment.
When trading in foreign currencies, stocks, or crypto, it is ideal to go for offshore brokers. You can find diverse global instruments, trading flexibility, top-notch security, and tax benefits on such platforms.
Are offshore brokers illegal?
No, offshore brokers are not illegal; they are generally registered under top financial authorities. They serve in multiple countries, so they have a license from multiple authorities, making them a more secure option.
However, even after that, many people have trust issues. And that is because many of the firms take advantage of the offshore flexibility and use the platform to conduct illicit activity.
Why You Should Choose an Offshore Forex Broker
An offshore trading platform can be better than an onshore broker in many ways. Here are the criteria by which such brokers stand out:
Global Exposure: With onshore brokers, trading instruments are limited. Generally, these brokers offer regional and some major international assets.
However, offshore brokers serve clients throughout the world. Thus, they need to provide a diverse range of financial assets to meet the requirements of diverse clients.
At an offshore broker platform, you will find access to the maximum number of forex currencies, global stocks, ETFS, indices, and all major cryptocurrencies. So they can help you with portfolio diversification and risk management.
Flexibility: Generally, onshore brokers are managed by the regional financial institutions. Thus, they work under a restricted environment and provide limited services following the guidelines.
However, offshore brokers enjoy flexible regulatory conditions. So you will get numerous features and services that a regional broker may not offer. Also with regional brokers need to follow the Pattern Day Trading Rule (PDT rule) that limits the number of trades. However, most offshore platforms are no PDT rule brokers.
High Leverage: Under trading, leverage can amplify the gains and losses. Thus, many financial bodies don’t allow regional brokers to provide more leverage. Onshore brokers generally offer a leverage of upto 1:100.
However, offshore brokers provide services globally. So if your country allows, you can get a leverage of upto 1:2000 on the platform. High leverage trading is quite risky; however, some advanced strategies require the use of high leverage. Thus, going for the offshore platform is a good idea.
Robust Security: Most countries allow a platform to serve their citizens only when it follows proper security protocols. And offshore brokers serve in diverse countries, so they need to follow the protocol for serving there.
Thus, such platforms use highly advanced technologies to ensure safe trading. You can get several client protection features and risk management tools.
Tax Benefits: A trader needs to pay a significant amount of tax to their respective government. With an onshore platform, the tax guidelines are strict for both the platform and the clients.
However, many of the offshore brokers are situated in a country where capital gains are exempted. So with such platforms, traders can save on the tax amount.
Round-the-clock support: Onshore brokers generally work in the active hours of the country in which they are situated. However, as onshore brokers serve global clients, they need to offer round-the-clock customer support. So with such platforms, you get client assistance 24/7 that too in multiple languages.
Limitations of Offshore Trading Brokers
Offshore broker platforms also have some limitations and drawbacks. So if you are thinking of opening an account with such a platform, first have a look at them:
Regulatory Concerns: When trading with onshore brokers, you can report any fraudulent activities to the local financial institution. However, an offshore broker can operate under the regulations of a global institute.
Taking advantage of these conditions, some offshore brokers register under vague financial institutions. Also, some brokers even use fake regulatory information. They conduct illicit activities in the name of offshore brokers. Thus, you may experience regulatory concerns with such platforms.
Also, in countries where the trading rules are strict, most offshore brokers do not offer services. For example, you can find very limited options when looking for offshore forex brokers accepting US clients.
High trading fees: Offshore platforms generally have the same fee structure for all types of clients. They typically charge traders in the form of US Dollars. So, a trader from a country with a weak currency may find the charges expensive.
Also, a broker can charge you fees for trading courses, education resources, swap charges, and trading robots. So collectively, the amount became significant for a new trader.
High Minimum Deposit: Generally, the minimum deposit for opening an account with an offshore platform is also high. Such platforms may ask for a minimum deposit between $100 and $1000. It can be a significant amount for a novice or passive trader.
Bottom Line
Offshore Brokers are great options to start trading in the financial market. An offshore broker offers ideal conditions for trading global assets such as forex and cryptocurrencies.
Such a broker platform may have some disadvantages, but the advantages outweigh the disadvantages. Also, dealing with these limitations is quite easy when you select the right broker.
Beirman Capital is also a leading offshore broker that serves global clients. We even provide demo account options to our clients, so that they can try and test our services. Open an account with us and move a step towards safe and secure trading.
FAQ -
1. Are offshore brokers illegal?
No, offshore brokers are not illegal; they are generally registered under top financial authorities.
2. Are offshore brokers legal to use?
Yes offshore brokers are legal to use. Traders can consider them for trading diverse financial assets.
3. Are offshore brokers safe?
Yes, offshore brokers are safe but only when they have proper license, great reputation and large customer base.
4. Can US clients trade binary options with offshore brokers?
No, US clients trade binary options with offshore brokers. US traders need to open an account with US exchange to trade binary options.
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