When it comes to trading, choosing the right Forex broker is essential. It can determine your success.
Brokers do a lot more than just execute your orders. They can offer you other services and incentives.
It takes effort and time to research and analyze data to pick the best broker for you.
For new traders, it can be hard to know where to start. Most of the time, they do not know what to look for.
This complete guide will teach you about:
- Basic information about forex brokers
- Best forex brokers for trading
- Best forex brokers for beginners
What is a forex broker?
A forex broker is also called a currency trading broker or retail forex broker.
It is a company that offers financial services to traders. It gives traders access to their platform. It is where they can either buy or sell foreign currencies.
Only a portion of the foreign exchange market is managed by a single foreign brokerage firm.
When a trader uses a forex broker, he opens a trade by buying a currency pair and closes the said trade by selling it.
A traded earns a profit if the rate goes up before he closes the trade. He loses money if the rate goes down before he sells it.
How to check if a forex broker is reliable?
When checking for the reliability and legitimacy of a forex broker, follow these simple tips.
Check out their site.
The first thing to do is to visit their website. Look for the company information and try to cross-check them.
If possible, you can call their number and see if it is a working phone number. You can also google the location.
Beware of affiliate links from review pages or sites that lead to the broker site. The author of the review is often getting paid for giving a review.
If the affiliation and commission are not made apparent to the reader, it is a cause for suspicion.
Also, check for information about an association with banks. Most reliable forex brokers are branches or divisions of established banks.
Check our public trading forums.
Joining and inquiring on forex forums gives you great insight on reliable and sucky forex brokers.
You get mixed reviews and actual experiences of people.
But be wary of users who advertise a single broker. There is a chance that they are associated with that broker, and getting people to join gives them incentives.
Also, several forums are biased.
Browse all the comments and try putting a comment yourself. Check if anything gets deleted or taken down.
Moderators can delete negative comments. It is a sign that the forum is promoting chosen brokers.
Read blogs for negative reviews.
While one dissatisfied client does not make a firm a bad broker, it at least gives you an idea of possible problems that you can encounter.
Check negative reviews on the broker. If there are several bad reviews, you might want to steer away from them.
Additionally, see if you can find issues about withdrawals. It’s usually a sign of a scam.
Examine terms, conditions, and agreements
Before entering a contract or registering, make sure you read and understand all the fine print.
Sometimes, scam companies hide loopholes in their terms and agreements to bait unknowing clients.
When it comes to investment, you have to be vigilant.
If you are unsure of a provision in the agreement, you can do more research or consult legal professionals.
Also, it is vital to check their minimum deposit. The reason is to see if you can afford it, and the second is for reliability.
Be suspicious if a broker offers a low minimum deposit and promises a ridiculously high number of returns.
Remember, forex is not a lottery.
Perform a tryout
Do not go all-in on your deposit.
Drop a small deposit in your account, just enough to reach the minimum deposit.
Doing this will minimize risks in case you get scammed.
Do a try-out, and test out their services and their platform.
After a few weeks, try making a withdrawal.
- If the transaction goes smoothly, then you can continue trading.
- If there is a problem, try reaching out to their support.
- If it does not get resolved immediately, it is probably a scam.
Who uses forex brokers?
The clients of forex brokers are private individuals who are called retail currency traders.
Large financial firms can also use forex brokers when trading on behalf of other customers and investment banks.
What are the roles of a forex broker?
The roles of forex brokers depend on whether they are execution-only or full-service brokers.
The primary role of a forex broker is to execute and organize certain financial transactions on behalf of another party or individual.
Other services that brokers can offer are:
- Providing market data
- Providing financial or trading advice
- Technical tools for data analysis
- Tutorials, educational platforms, and knowledge centers
- Providing leverage (use of debt or borrowed fund to amplify returns)
In exchange, brokers make money by charging a small percentage as a commission.
The commission is for every executed order and service availed by clients.
What can currencies can you trade through forex brokers?
In forex, there are what are called g10 countries or currencies.
These currencies make up the top traded currency pairs in the world.
The G10 currencies include:
- United States dollar (USD)
- Euro (EUR)
- Pound sterling (GBP)
- Japanese yen (JPY)
- Australian dollar (AUD)
- New Zealand dollar (NZD)
- The Canadian dollar (CAD)
- Swiss franc (CHF).
Nevertheless, most forex brokers allow trading also allows trading of emerging currencies.
Are all forex brokers reliable?
The forex industry has regulations and standards of its own. But companies are operating below the standards.
New traders are more likely to be victims of scams because of the staggering number of illegal companies out there.
Forex scam companies are not technically brokers. These supposed brokers do not let you trade in the world market.
They let you trade in a local market within the platform only.
The clients only trade with each other or with the platform itself.
Like casinos, the platform will limit the profits by controlling the pricing because otherwise, it will lose money.
Clients have reported experiencing problems such as:
- Juggling quotes
- Requotes against positions
- Freezing of accounts which are most of the time unjustified
Legitimate forex brokers are intermediaries of their clients in the global market.
They seek counterparty and aims for the success of their traders.
The larger the client deposits, the higher the volume of trading and the higher the profit percentage for the broker.
What are the characteristics of a reliable forex broker?
- Provides traders with up-to-date and relevant market analysis
- Offers withdrawal of orders to the interbank market
- It gives notification on sudden changes and helps traders implement risk control
- Registered, transparent with and required documentation of legitimacy and follows all legal regulations
- Advises traders regarding the risks and benefits of investments
- It offers to protect and secure their clients’ personal and trading information
- It offers advice and assistance for potential investors
- It has an information center where traders can get knowledge on various aspects of forex trading and the basics of using their platform.
Which broker is the best?
Each forex broker has its pros and cons. It offers a wide and different variety of services to its clients.
But overall, our choice of the best broker is Fidelity Investments.
Fidelity Investments is a large company. It offers forex trading through Fidelity FOREX Inc.
What are the pros of Fidelity Investment?
While other brokers are slowly closing the gap, Fidelity remains the best. It is based on the overall service quality.
This company offers low costs. It gives their clients top-quality technical tools to help them keep analyzing and managing their portfolios.
It also keeps regular updates on the platform, so that traders can have an easy trading experience.
And one of the primary reasons that make this company stand out is its policy on sharing revenue.
Fidelity gives back a portion of the stock loan program revenue to its clients.
Here is a summary of the pros of using Fidelity Investments in trading.
- The company is committed to lowering the costs and improving returns
- It has complete and up-to-date research and educational resources for traders.
- The uninvested cash is added to a money market fund.
- Almost all of the orders executed by Fidelity are at a better price than the national best bid.
Still, despite being the best forex broker, Fidelity has some disadvantages.
- Membership is exclusive to citizens of the United States of America
- While they offer varied choices insecurities, they have no option for futures or commodities.
- The research and tools on their web platform are only available to the Active Trader Pro account, meaning beginners on the demo account cannot access them.
Which broker is the best for forex trading?
Here are other notable companies that belong to the top 7 forex brokers.
IG is one of the trusted forex brokers around the globe.
It started in the mid-70s. Fifty years in the business has made it one of the best brokers you can ever find.
Pros of IG
- It offers competitive pricing.
- It has sophisticated learning and research resources, as well as, leading technical analysis data.
- It is regulated in 6 jurisdictions.
- It offers more than 80 currency pairs.
- It gives up to 50:1 leverage.
- It has an extensive range of charting capabilities on all its platforms.
- It offers 20% pricing on EUR/USD pairs than other brokers.
- It has a Demo account for beginners.
Cons of IG
- It has slow customer assistance and support, which is a letdown when you have technical issues
- It offers a limited product portfolio.
- It offers high fees on forex and CFD
Forex.com was founded recently by StoneX Financial Ltd (a parent company of StoneX Group Inc.).
Despite being new, it boasts competitive fees and other attractive features.
Pros of Forex.com
- It has a diverse technical tool for research.
- It offers a wide range of currency pairs.
- It charges low fees for trading forex.
- It does not charge $0 for withdrawal.
Cons of Forex.com
- Its platform is hard to navigate which is a problem, especially for beginners.
- It has a limited product portfolio.
Pepperstone is an Australian forex broker that was founded eleven years ago. It has offices in Melbourne, Dallas, London, and Shanghai.
Although it has only been in the business for a little over a decade, it has grown substantially.
Pepperstone is now one of the largest forex brokers in Australia with a 20% annual growth.
Pros of Pepperstone
- The coast has great customer service.
- Quick account opening, usually take a day.
- Membership and registration are done virtually or digitally which is very convenient.
- Fast, easy, and free deposit and withdrawal.
- They do not charge an inactivity fee.
- There is no minimum deposit.
- They offer demo accounts for practice trading and novices.
Cons of Pepperstone
- Their MetaTrader platform is very basic.
- They cannot accept US members because they do not have an office in the US.
- There is no guaranteed negative balance protection.
- Clients outside of the EU and Australia are paying high fees for withdrawal.
- Not listed on the stock market
AVATrade is established in Ireland. It has been serving clients around the world for more than a decade.
They offer various services and allow CFD and forex trading.
They are regulated in:
- The British Virgin Islands
- South Africa
- Abu Dhabi
The forex fees in AVATrade are average. They are built into the spread. The good thing is they are transparent about their fees.
You can see just how much each position is going to cost you by using the forex calculator that is available on their platform.
The calculator is easy to use.
- First, input the type of instrument.
- Next, you will need to choose the currency pair you want to trade.
- Then, put the leverage level.
- Choose whether to buy or sell.
- Choose the trading platform you want to use (MT4 or AVATradeGO)
- Opening of account is fast and easy. It can be done digitally.
- Free deposits and withdrawals.
- User-friendly and diverse learning resources and data analysis tools.
- Allows deposit using bank card and electronic wallet.
- Supports trading of 6 based currencies.
- Offers demo account
- It charges high inactivity fees which is $50 for every quarter after 3 months of inactivity. And, an additional $100 administration fee after 12 months of inactivity.
- Charges average forex trading fees
FXPro is a popular forex broker. It was established in England.
It is an award-winning brokerage firm. It earned several awards for its MetaTrader and trading platforms.
This company is regulated in:
- South Africa
- the Bahamas
- the United Kingdom
Pros of FXPro
- No withdrawal fees.
- Allows deposit using bank card and electronic wallet.
- Allows trading of 8 base currencies.
- Opening of account is fast, straightforward, and fully digital (verification of account only takes 2 hours).
- Provides demo or practice account
- Offers low financing rate
- Low forex fees
- Great customer service
- Low minimum deposit ($100).
Cons of FXPro
- The charges inactivity fee is $15 after 12 months of non-use and a monthly $5 for Cysec jurisdiction.
- Only allows trading of forex and CFD which is a letdown if you also want to trade other securities.
Vantage forex is based in Australia and allows clients from Asian countries like the Philippines.
This company offers negative balance protection and separation of funds for clients.
Pros of Vantage FX
- Superbly fast opening of account
- Segregated client funds that are healed in the National Australia Bank.
- Offers commission-free trading
- Offers up to 500:1 leverage
- Offers trading using MT4, MT5 Vantage mobile trading app, and other social trading platforms.
- The minimum deposit is only $200.
- No withdrawal fees
Cons of Vantage FX
- Investor protection is made available only for clients in the United Kingdom.
- Customer service can be improved.
This is a Danish company that was established in the early 90s. It offers investment services and online trading of forex and other instruments.
It offers its services globally and is regulated by several financial authorities including:
- the United Kingdom
Pros of Saxo Bank
- No withdrawal fees.
- Supports trading of 26 base currencies.
- Offers demo account for practice trading.
- Allows deposit using a bank card.
- Low forex fees.
- Low bank fees.
Cons of Saxo Bank
- Charges inactivity fee.
- The minimum deposit is very high ($2000)
- It takes 3 days to open an account.
- Deposit through the electronic wallet is not available.
- Charges custody fee.
- Offers high fees for options and futures.
- Clients have to avail VIP and Platinum accounts for a more favorable pricing structure compared to the classic account.
What is the best forex broker for beginners?
When you are a beginner, trading in the live market can get bring up mixed emotions. Nervousness, doubt, and hastiness can lead to loss.
It is vital that you find the right forex broker when you are starting.
Here are three excellent brokers for new forex traders.
It is a forex broker that offers forex and CPD trading. It operates in various countries.
It is fairly young with only 13 years in the business. But despite this, it competes globally.
One of the great things about Markets.com is it is regulated under several different jurisdictions.
|Country of jurisdiction||Regulating authority|
|Australia||Australian Securities and Investments Commission|
|Cyprus||Securities and Exchange Commission|
|British Virgin Islands||Financial Services Commission|
|United Kingdom||Financial Conduct Authority|
|South Africa||Financial Sector Conduct Authority|
Pros of Markets.com
Here are other advantages of using Markets.com in trading:
- Simple and easy process in opening an account
- Learning tools and technical analysis for new traders and old-timers alike
- Quick withdrawal and deposit process with zero charge
- Five choices of the trading platforms that can be accessed using a single account
- Specialized tools for every single trading platform they offer
- Mentioned in the London Stock Exchange so it follows a strict disclosure requirement
This broker aims its efforts in providing new and advanced traders with the best trading experience.
It provides varied tools for learning and research.
Pros of TD Ameritrade
- Zero minimum deposit for regular account
- Excellent technical support
- Free materials for research (e.i learning guides and tutorials)
- Sophisticated and updated trading platforms and mobile trading application
- Varied range of investment selection
Cons of TD Ameritrade
- Unused cash deposit is not automatically invested (unlike most competitors)
XTB is a Polish forex broker that has offices in Warsaw and London.
It is regulated by numerous financial authorities: the Financial Conduct Authority, Komisja Nadzoru Finansowego, CySEC, and others.
Pros of XTB
- Extensive research and educational tools and resources.
- Over 1500 tradeable instruments
- Sophisticated web xStation platform
- No commission trades
- Minimal forex fees (significantly lower than others)
- Quick deposit and withdrawal process with zero charge
- Straightforward account registration
- Zero minimum deposit
- Allows bank card and electronic wallet for placing deposits
- Supports at least four base currencies
Cons of XTB
- Few available instruments in their product portfolio
- Few basic data
- There is a charge for inactivity.
Forex trading can be intimidating and confusing for the first-timer. But with experience, it can be very profitable work. The income can be limitless. You can do it in your spare time or as a full-time job.
As long as you stick with a well-rounded strategy and, of course, pick the right broker.
There are a lot of great forex brokers out there. They all have their strengths and disadvantages.
The trick is to pick one that has an interest in their client’s success. Choose a company that will provide analytics, tool, and resources.
Also, fees are a significant consideration. Read all fine print before agreeing to the terms and conditions. Make sure there are no hidden fees.