If you are just getting started with currency trading, choosing a brokerage firm is one of the most vital decisions you need to make. Every day, trillions of dollars worth of assets are traded on the Forex market. Brokerages regularly allow individuals to borrow a significant amount of money to finance their speculations. In this guide, we have evaluated some of the best Forex brokers, discussing their features and their advantages and disadvantages.
Forex trading: risks and rewards
If you are following a trading plan that is in line with the market conditions, then you can make huge sums of money. In order to generate profits consistently, you need to educate yourself and formulate a solid strategy. Also, you need to stick to the plan and not fall prey to emotional decision-making.
There are multiple challenges in currency trading. Traders use margin for conducting trades. Sudden price shifts might lead to margin calls, and you might need to pay an extra amount consequentially. Also, before settling the trade, the exchange rates might change, leading to high trading commissions.
How much can you earn on Forex?
Some trading systems promise up to 10% average gains on a monthly basis, but in reality, it is quite difficult to make this much profit in the live market. Realistically, you should aim to make about 2-5% per month.
MT4 vs. MT5: what is the best Forex trading platform?
The majority of merchants these days use these two platforms to conduct their trades. MT4 is based on the MQL4 language, while MT5 uses MQL5. While MT4 allows single back testing at a slow pace, MT5 lets you run multiple backtests quickly. There is a large community behind MT4 but no dedicated support team. Technical support is available for MT5, so you can instantly get your issues resolved. MT5 also supports more timeframes and pending order types.
Short and long trading positions
When you take a position in the currency trading market, you are predicting that an asset to either appreciate or depreciate in value. When you engage in long trading, you are hoping the value of the asset will rise. On the other hand, short trading is conducted with the hope that the price of the asset will fall, so you can purchase it at a lower value in the future.
What is the best strategy for trading Forex?
One of the vital aspects of Forex trading is selecting the proper trading technique. There is a wide range of strategies defined by traders of different categories. Nevertheless, you need to select the one that is compatible with your trading style and risk tolerance.
If you have a lot of time to spare, you can try the scalping strategy, which is relatively low-risk and lets you profit from small market movements. For larger short-term gains, you may consider day trading or go for position trading if long-term gains are what you are looking for.
Real vs. demo account
Demo accounts let you trade with virtual money. There is zero risk, and you get to sharpen your trading skills and get used to the functionalities of the Forex trading platforms. In case you are a newcomer, you should start with a demo account to familiarize yourself with the order types, timeframes, and the various factors impacting exchange rates. Real accounts, on the other hand, involve real money, and you need to be mindful of the multitude of risks.
Which currency pairs are the most popular on the market?
While almost every country’s currency can be traded in the foreign exchange market, some currencies are traded more often. Pairs containing the USD are known as major pairs, and they are some of the most commonly traded pairs on the market. Examples include AUDUSD, USDCAD, USDCHF, GBPUSD, etc. Other popular pairs not involving the USD include EURJPY, EURCHF, AUDCAD, CHFJPY, AUDNZD, etc.
About Forex brokers
A brokerage firm acts as a bridge between the investor and the banking system. These organizations have credit lines in banks and access to liquidity. They allow you to conduct trades through them while charging a fee for the service. With them, you have the guarantee that the trades will be settled, so you don’t need to check the credentials of the individual you are dealing with.
How to find the best Forex brokers?
Finding the best forex trading platform is not an easy task. Although there is a multitude of options available, not all of them can be considered trustworthy. To avoid being scammed, you must consider the following factors:
Account opening and registration
The registration process should ideally be quick and simple. You want to sign up quickly and check out the features of the platform. That being said, the account opening process should be secure enough. Most platforms send you a verification code via email, and you need to enter this code to verify your account.
Account costs
Some brokers might have minimum and maximum deposit and withdrawal requirements. Before signing up, you should consider how much money you are comfortable trading with. Beginners should look for a platform that allows them to get started with very little.
Fees & commissions
You must consider how much you need to pay for each transaction. It is wise to sign up with a broker having a transparent pricing structure. All the expenses should be clearly laid out on the official website so you know what you are getting into. Stay away from those who charge inactivity or withdrawal fees. Different types of fees include margin fees, account fees, trading commissions, and spreads.
Market coverage
If you want wide market coverage, you need to make sure the broker supports a large number of trading instruments. If you wish to reduce risk and enhance your trading skills, you need to select a platform that lets you trade in a diverse range of assets. This way, you can switch to a different pair in the future if needed.
Trading tools and platforms
Most high-end platforms have advanced tools that make buying and selling instruments easier. With their help, you can efficiently carry out a technical and fundamental analysis. You can analyze your trading history to see which instruments are performing well and which aren’t generating returns. Some systems allow you to mirror the trades of seasoned merchants to get similar outcomes. While some of them have in-house trading platforms, you should still look for one that supports third-party services like MT4 and MT5.
Leverage
Usually, there is a limit to the amount of leverage the broker lets you trade with. To make the most of market shifts, investors generally search for higher leverage limits. This depends largely on the available liquidity for the particular currency.
Supported strategies
Profitability depends largely on the trading technique. There is no one trading scheme that suits all, so before registering with a firm, you should make sure it supports a large number of strategies. This will allow you to explore various opportunities in the market. Ideally, you should not sign up with a brokerage that only supports one-dimensional strategies.
Quality of services offered
The user interface of the platform should be easy to navigate. With a reliable platform, you shouldn’t experience too much loading time. It is always convenient when you can access all the different functionalities without opening multiple tabs. Having both desktop and mobile versions help a lot because it allows you to place orders from anywhere. You could get an idea about the service quality by going through authentic customer reviews.
Orders execution speed
Some strategies like scalping are time-sensitive and demand swift execution speed. They rely on opportunities that come and go in the blink of an eye. If you are working with a strategy like that, it would be wise to choose a broker with a high order processing speed. This ensures you never miss out on your profits.
Customer support
Every brokerage firm must have an efficient support team behind it. When it comes to issues concerning your money, you want them resolved quickly. With the best services, you get efficient and responsive customer support offered via multiple mediums. You can contact the support team via email, live chat, and phone.
Regulations
The financial activities of the brokerages are under the scrutiny of government organizations. While selecting a broker, you should first make sure it is well-regulated. When a firm holds licenses from trusted regulatory bodies, you know you can trust them with your money. The regulators make sure the brokers are not engaging in unscrupulous activities that may put your funds at risk.
How to start trading Forex?
The first step is to select a broker that will make your trading journey easier. Most of them would give you the option to practice your trades with virtual money on a demo account. This lets you learn the trading process without taking any risks. After you have tested your strategy, you can get started with a small deposit. Avoid investing too much at first, and study the markets to find out which pairs give you the best return.
Who can trade Forex?
The largest trades are conducted by commercial banks. Financial institutions have their individual trading desks which they use for conducting trades and allowing their customers to buy and sell currencies. Then there are the central banks of different countries that influence the price of currencies. They take action to make the country’s economy more stable and competitive. Other types of investors include MNCs, hedge funds, investment managers, and retail dealers.
Are there daily limits to the number of deals?
Generally, there is a limit to how much the price of an asset is allowed to fluctuate in a single trading session. However, most brokers do not limit the number of orders you can place on a single day. However, it is important that you understand the risks of overtrading.
Are all Forex brokers licensed?
No, there are some unscrupulous brokers that operate without licenses, and these are the ones you should avoid. Before signing up, you should check the official website to find information about the license.
CFDs in Forex platforms
CFD trading involves the investors trading price movements without owning the asset. When you deal in CFDs, you are entering a deal between yourself and the broker. The two parties sign a contract that forecasts the future price of the instrument. Since you don’t actually own the asset, CFD trading lets you avoid some of the major disadvantages of regular trading.
Is it possible to lose more money than you invest?
As long as you are using your own money to conduct trades, you can’t lose more than you invest. This is because the value of the asset can never become negative.
Should you use FX brokers?
Brokerage firms have tie-ups with liquidity providers and this allows them to facilitate trading for their clients. Of course, you can conduct trades through large banks, but only if you trade in substantial volumes.
Top 10 Forex brokers list
- TechBerry
- FXCM
- Pepperstone
- AvaTrade
- XM
- Interactive Brokers
- EasyMarkets
- IC Markets
- HotForex
- eToro
1. TechBerry
Features
Here are the main offerings of the top social trading platform:
- Performance: TechBerry can average around 10% a month and offers real-time stats on the website. The plan configurator can help you calculate the profits.
- Loss reimbursement: The platform offers a full loss reimbursement for its subscribers. It can be as low as 50% for the green or 100% for the Infinite plan.
- Available worldwide: Traders from all over the world can subscribe to the social trading platform.
| Pros | Cons |
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| Regulated by: | ASIC, SCB, CMA, CySEC, FCA, etc |
| Founded: | 2015 |
| Min. Deposit: | $5000 |
Verdict: Best overall and best for automated trading (TechBerry Review)
Get started with TechBerry
2. FXCM
Features
Let’s check out what this platform offers:
- Charting tools: This broker has its own trading platform known as Trade Station. Here, you can find a charting tool that runs parallel to the main terminal. There are numerous drawing tools and around 60 indicators you can access, and they let you draw precise trendlines.
- Mobile app: The mobile app contains almost every feature available on the desktop version. You can sync the assets across different platforms and use various order types.
- Customizable interface: The web trading platform is quite intuitive and lets you access to research and management tools. Also, there are several widgets you can customize.
Pros and cons
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| Regulated by: | FCA |
| Founded: | 1999 |
| Min. Deposit: | $50 |
| Max. Leverage: | 400:1 |
Verdict: Best for advanced trading tools
3. Pepperstone
Features
Here are the main offerings of the platform:
- Tight spreads: This firm uses numerous liquidity providers from top-tier banks to offer deep liquidity and low spreads for users. It also allows the broker to offer favorable pricing.
- Multiple account types: With Standard accounts, you get no commission and competitive spreads. The Razor account has 0.0 spreads at AUD$7 per lot.
- TradingView integration: You can access the wide range of charting tools on TradingView.
Pros and cons
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| Regulated by: | ASIC, SCB, CMA, CySEC, FCA, BaFin, and DFSA |
| Founded: | 2010 |
| Min. Deposit: | N/A |
| Max. Leverage: | 30:1 (ASIC, DFSA, FCA), 200:1(SCB) |
Verdict: Best for scalpers
4. AvaTrade
Features
Here are the features available on this platform:
- AvaProtect: Thanks to this risk management tool, you can protect your trades and get your money back from losing trades.
- Social trading: This broker has its own social trading app. Here, you can mimic top traders to get favorable outcomes.
- Globally regulated: AvaTrade has licenses in five continents, and its offices are spread out all over the globe.
Pros and cons
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| Regulated by: | CySEC, BVIFSC, ASIC, FSCA |
| Founded: | 2006 |
| Min. Deposit: | $100 |
| Max. Leverage: | 30:1 |
Verdict: Best for newcomers
5. XM
Features
The features of this system are as follows:
- Educational resources: At XM, you can access daily Forex webinars for free. Also, there are video tutorials where you can sharpen your trading skills.
- Advanced trading tools: There are more than 90 indicators available on this system, along with advanced charts.
- Personal account manager: With a personal manager, you don’t have to worry about monitoring your investments.
Pros and cons
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| Regulated by: | FSC, CySEC |
| Founded: | 2009 |
| Min. Deposit: | $5 |
| Max. Leverage: | 888:1 |
Verdict: Best for learning Forex trading
6. Interactive Brokers
Features
Let’s look at what this platform offers:
- Multiple order types and algorithms: There are several types of orders for Forex such as Conditional, Bracket, Basket, Scale, Market, Stop Limit, OCA, etc. IBKR also offers algorithmic order types from third-party providers.
- Advanced reporting: This broker provides you with detailed activity statements, trading model reports, risk reports, and compliance reports.
- Portfolio analysis: This tool has a sleek interface that lets you analyze your performance in a professional and comprehensive manner.
Pros and cons
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| Regulated by: | NYSE, SIPC, FINRA, FCA, ASIC |
| Founded: | 1977 |
| Min. Deposit: | $100 |
| Max. Leverage: | 400:1 |
Verdict: Best for margin trading
7. EasyMarkets
Features
The features are as follows:
- Tight spreads: Many individuals consider this the best forex broker since it is transparent about its prices. You always know how much you have to pay, and the spread always remains fixed.
- Negative balance protection: This feature is a standard on all accounts, and it protects your funds as you trade.
- No slippage: Trades are executed at a transparent rate, and the spreads don’t change during volatile conditions.
Pros and cons
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| Regulated by: | NYSE, SIPC, FINRA, FCA, ASIC |
| Founded: | 1977 |
| Min. Deposit: | $25 |
| Max. Leverage: | 1:400 (MT4), 1:200 (in-house app and TradingView) |
Verdict: Best for intermediate traders
8. IC Markets
Features
This broker offers the following features:
- Low spreads: This broker has an average spread of 0.1 for EUR/USD. Raw spreads start from 0.0 pips.
- Swift order execution: The average execution speed is under 40ms. Orders are processed through an Equinox NY4 server and a low latency fiber.
- Institutional grade trading: This firm offers deep liquidity and reduced slippage. More than 29 Billion dollars are processed daily in FX trades.
Pros and cons
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| Regulated by: | CySEC, ASIC |
| Founded: | 2007 |
| Min. Deposit: | $200 |
| Max. Leverage: | 1:500 |
Verdict: Best for day traders
9. HotForex
Features
Let’s look at what this system offers:
- Bonus offer: When you sign up and make a minimum deposit of $50, you can enhance your balance by 50%.
- Referral program: Through the referral program, you can pay up to $5000.
- Zero spread account: This broker offers super-tight spreads and raw spreads with zero markup fees.
Pros and cons
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| Regulated by: | CySEC, ASIC |
| Founded: | 2007 |
| Min. Deposit: | $5 (Micro), $100 (Premium) |
| Max. Leverage: | 1:300 to 1:1000 |
Verdict: Best for demo trading
10. eToro
Features
Here are the main functionalities of the platform:
- Copy-trading: This is, without doubt, the top forex broker for copy trading. There is a vast community of investors whose moves you can copy.
- Smart portfolios: On this platform, you can select a balanced portfolio fully allocated with investments focusing on different market segments.
- Demo account: Thanks to the demo account, you can practice your trading techniques before investing real money.
Pros and cons
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| Regulated by: | FCA, CySEC |
| Founded: | 2019 |
| Min. Deposit: | $50 |
| Max. Leverage: | 1:100 |
Verdict: Best for copy trading
Final word
As you can see, the brokerage firms highlighted in this article are all regulated by financial authorities and are legit platforms for conducting trades. While some of them cater to newcomers, others are better suited to experienced investors. It is, therefore, wise to consider your trading skills along with your budget before registering on a platform.
