Welcome to the world of foreign exchange trading or forex trading. This world has a lot to offer to those who understand its nitty-gritty. In this article, we have tried to present to you a comprehensive guide on choosing the most suitable forex brokers for your trading needs. We have also covered all the major related concerns around forex brokers such as the role of brokers, regulations, security, a list of top forex brokers, along with fundamentals of forex trading. So, without wasting a moment, let us start!
What is Forex Trading?
Foreign exchange trading is trading (i.e., buying or selling or exchanging) of one or more currencies instead of other foreign currencies. Forex can be translated into foreign exchange. These exchange currencies are known as currency pairs. The price of these currencies is decided based on the forex market’s exchange rates. The Forex market is the biggest financial market that is spread across the world. Reports suggest that, on average, around 6.59 trillion U.S. Dollars in the form of various currencies are traded every 24 hours. The foreign exchange market runs 24 hours a day and is active for five days a week.
In the process of exchanging, buying, or selling of foreign currency, forex brokers prove to be very useful. They are also known as trading brokers, as they place a trade on behalf of the trader.
More on forex broker:
Forex brokers aid in exchanging, buying, or selling of currencies. Using brokers is pretty straight forward. All you need to do is open an account, deposit money in the newly formed accounts, and then, with the help of the broker’s trading platform, purchase, or sell currency as per the platform’s margin.
Regulation: Given that forex traders place their trust on forex brokers, the regulation of these brokers, therefore, becomes quite important. Proper regulatory measures are in place to ensure security. In order to steer clear of frauds, two regulatory bodies govern the regulation of forex brokers. They are:
- The Commodity Futures Trading Commission (CFTC) and
- The National Futures Association (NFA)
These regulatory bodies keep financial activities under check. There are provisions for these authorities to launch lawsuits against those entities who are found guilty of illicit activities. This power assures customers’ safety on all fronts.
When you look for brokers, our advice is to do thorough research to check the credibility of the broker and see if its spreads, functions, and features match your needs. For research matters, the homepage of NFA and reviews such as ours can be quite handy and useful.
Usually, all the reputed forex brokers permit the clients to try a ‘practice account.’ This type of account allows the trader to get a fair idea about how the system works. This way, traders can have a mini first-hand experience on a number of broker trading platforms as they like, before choosing any. Another tip in finding a good broker is to check its 24 hours working feature like its customer service. The foreign exchange market works for 24 hours and 5 days a week, and the most reputable brokers work accordingly.
Which broker is the best for forex?
As we now have a fair idea about what a forex broker is and its purpose, it is time to move on to see which brokers are considered as the best in the market. To come up with a list of best brokers, we test a number of foreign exchange brokers for forex quality as well as CFD trading. Only after that, we suggest any name.
Before you go through the list of best brokers, it is important for you to know that CFDs are complex instruments. There is a high innate risk involved with them that can lead you to steep money losses as there is leverage involved. On average, approximately 69 to 78 percent of retail accounts tend to face losses during CFDs trading. That is why it is of high importance that you understand thoroughly how CFDs work. You should also trade as per your risk capacity as there are steep losses involved.
Best Forex Brokers for 2021
- IG – Best overall broker
- Saxo Bank – Best forex broker for advanced traders
- CMC Markets – Best for range of offerings
- Oanda – Best for trading experience
- Dukascopy – Best for European traders
- TD Ameritrade FX – Best for US traders
- City Index – Best for CFDs
- Forex.com – Best for high volume trader
- XTB – Best customer support
- FXCM – Best low-risk forex broker
- eToro – Best copy trading platform
Now it is time to look at the best forex brokers that can offer some fantastic trading advantages over others. So, here they are:
IG – Trade With The Best Broker
IG is a well-regulated forex broker and is considered as one of the best forex brokers. It is trusted worldwide. Since its commencement it has offered its clients with a good variety of:
- Versatile tradeable products
- Highly useful trading and research tools
- Industry’s top educational support
- Cutting edge rates
Basically, IG is an all-around forex broker that offers a wholesome trading experience. As per market reports, IG is considered 2021’s best overall forex broker. Another thing that you should be aware of is that approximately 76 percent of retail CFD accounts lose money at IG. For details on commissions, please refer to the official website.
2. Saxo Bank:
Saxo Bank – Trade with Global Capital Market
Saxo Bank has a reputation for serving the elite or VIP clients with utmost excellence. The minimum deposit at Saxo Bank is 10,000 U.S. Dollars, which is equivalent to 500 GBP. The salient features of this broker are:
- It offers competitive prices
- It backs its features with some well-made research
- The customer service of Saxo Bank is also exceptional
- It offers more than 40,000 trading instruments to its clients.
Overall, it is an exceptional platform for forex trading, and you can now see why it is attributed as the best forex broker. But the point to keep in mind is that around 72 percent of retail CFD accounts lose money at Saxo Bank. For details on commissions, please refer to the official website.
3. CMC Markets:
Trade From Anywhere Anytime With CMC Markets
CMC Markets is considered to be the best online broker and included among the best forex brokers. The clients at CMC Markets get to avail a variety of features as given below:
- The clients are offered a great variety of currency pairs
- Its offices are regulated in major international financial centers
- The traders get to use a good range of financial products
- The prices which CMC Markets offers are competitive
- It offers innovative trading tools and charting for commendable trading experience.
Overall, CMC Markets can be considered as the best forex broker. Market reports suggest that it is considered to be the ‘next generation’ forex trading place. For details on commissions, please refer to the official website.
Oanda – Well Know Forex Broker
Oanda is recognized among the most popular forex brokers. It has some unique and multifaceted features that its clients can avail. You can expect the following features from Oanda.
- No minimum initial deposit
- No commission fees for their trading services
- Very high execution speed of orders
- Advanced charting tools and features
- Competitive spreads as low as 1 pip for EUR/USD
- Two basic types of trading platforms: MetaTrader 4 (MT4) and FXTrade WebTrader
- Oanda is a very popular forex broker that improves its client’s trading experience many folds.
Oanda is a trusted global brand. It is safe because its global presence and compliance with international regulatory standards make it a safe broker to trade. Here are the Oanda review and more details about its features.
Dukascopy – Leading Forex Broker
Dukascopy is another well-regarded trading broker that offers all the major trading services. Here are some interesting facts to know about Dukascopy that may help you in deciding whether you want to use this as your forex broker:
- Dukascopy uses the JForex platform suite, which supports this trading broker to offer the industry’s top-notch trading tools to its clients.
- In addition, Dukascopy supports its clients with excellent market research.
A major drawback of Dukascopy is that its customer service is not that great. Also, Dukascopy offers narrow tradeable markets. For details on commissions, please refer to the official website.
6. TD Ameritrade FX
TD Ameritrade FX Trading Platform
TD Ameritrade FX is an exceptional trading platform which only functions within the United States’ borders. This trading broker offers some great functions to its clients:
- TD Ameritrade FX offers around 80 currency pairs to its traders for foreign exchange trading.
- Along the way, it backs its users with a great range of trading tools as well as strong research.
7. City Index
Earn More with City Index
City Index has made its name for offering excellent forex trading services. The clients get a range of useful trading products, multiple asset classes with competitive spreads. Further, clients get:
- Excellent platform options
- High tech research tools
- Dependable customer support
- Offers AT Pro (desktop-based) and Web Trader (web-based) along with MetaTrader 4.
All of these services are offered under the biggest international retail broker- GAIN Capital. Please also be aware of the fact that at City Index, around 71 percent of the retail accounts lose money.
Forex.com – Trading Specialist
Forex.com is another excellent trading platform that offers cutting edge pricing. It offers its services all over the world. Here, at this platform, you get:
- In-depth market research
- High tech mobile app for trading
- Feature loaded trading platform
- Both beginners, as well as expert traders, are welcome here.
Given the forex market has its innate trading risks, so is the case with this platform too. Around 69 percent of the retail CFD accounts lose money in trading.
XTB – Best Broker For 2021
XTB is known for offering the best customer support. It is a great trading platform that offers:
- Multiple asset classes trading
- Regulation in various major financial centers
- Competitive offering
- Excellent customer services
- xStation 5 trading platform
FXCM – Future of Trading
FXCM is known for offering well-rounded services. Despite offering a narrow range of tradable markets, it serves a number of types of traders. The pricing at FXCM is average. At this platform, you get:
- Strong trading tools that serve high volume traders and algorithmic traders amongst other types of traders
- Great market research-backed support
- Good customer support
What is the best forex broker for beginners?
In the foreign exchange market, many forex brokers cater to different categories of traders. Beginners in the trading market usually need extra support. So we decided to compile a separate list of best forex platforms for traders who have just ventured into the foreign exchange trading world:
Plus500 – Trade CFDs and Forex with Trust
Plus500 is great for novice traders. It is an online broker that is very supportive of its traders and is listed among the best forex brokers. This makes it a very user-friendly trading platform for forex and CFD trading. One can say that all the basic requirements of traders who have just started exploring trading are fulfilled. For experts, Plus500 may come across as a limited trading platform.
Markets.com – Enjoy Seamless Trading
This is another user-friendly platform. It is an online broker with a MarketsX trading place. Compared to other trading platforms, Markets.com is a bit expensive and does not have a number of trading features, spreads products, and tools other than the basic ones.
3. Saxo Bank
Saxo Bank – Connect With World
Saxo Bank is a great trading platform with competitive pricing, an exceptional range of trading tools, impressive research, and great customer support. In addition to all this, it offers a thorough variety of instruments of more than 40K trading instruments and is considered one of the best forex brokers. The only downside to it is that it charges a minimum deposit of 10,000 U.S Dollars. Another thing to notice at this platform is that around 65 percent of the retail CFD accounts lose money on this platform.
eToro – Copy Trading
eToro is great for copy trading and is considered to be one of the best forex brokers. Moreover, it was awarded this year for offering easy to use copy trading services. Traders here at eToro can copy the trades of other users through more than 1900 trading instruments. This wide variety of instruments includes CFDs on famous cryptocurrencies. The only point where eToro lacks is pricing.
easyMarkets – Unique Way Of Trading
easyMarkets is a unique web-based trading platform and is considered one of the best forex trading platforms. It offers trade protection to its users. It is indeed the best forex broker out there for beginners. It is an expensive trading platform but is very user-friendly. It offers two user-friendly features, namely:
- Deal Cancellation, and
- Freeze Rate
On the downside, this trading platform lacks market research tools. It offers just 169 tradable instruments. The mobile app of its platform is also quite average. On the other hand, around 74 percent of the retail CFD accounts lose money. For details on commissions, please refer to the official website.
How much money do you need to trade forex?
The minimum requirement to start foreign exchange trading at any platform varies. Some do not charge anything at all, and some do. The range of the minimum requirement starts from 100 U.S Dollars and goes up to 250 U.S Dollars. There are, however, some exceptions like Saxo Bank wherein the minimum funding is 10,000 U.S Dollars.
What do brokers do in forex?
Forex platforms’ role is to get orders for buying and selling of currencies and then to execute trade orders accordingly. They function on the OTC (i.e. Over the Counter) market. They offer access to all the main currency pairs, such as:
- G10 currencies, along with emerging market currencies.
The rules and regulations in these markets differ from other financial exchanges. The broker market lacks any centralized clearing mechanism, which puts the responsibility of the right execution of the trade at the trader’s shoulders. Therefore, it is important to do thorough research about the broker’s capitalization capability before placing your trust in him or her. It is the trader’s responsibility to choose the right forex broker.
Do you need a broker for Forex?
When you depend on online brokers, they continue to earn commissions from your pie regardless of your trade results. This happens because of the difference in the market price, and the actual price goes in their pockets. Their main role is to provide you with easy access to forex trading and profitable spreads. They keep their rights reserved. The results are not their responsibility. So, it can be a good idea to take charge of the entire process in your own hands.
You can gain insights into how the foreign exchange market works without losing money. You can try your hands at various demo accounts that are commonly available at various broker trading platforms.
Therefore, if you are just beginning your trade journey, we would suggest you take adequate time to first grasp the fundamentals of trading. Educate yourself about the various facets of the foreign exchange market (through a demo account) and understand how you can further push your trade portfolio without compromising security and regulations. Once well-comprehended, you will realize that foreign exchange trading is no rocket science! It may look daunting at first as there is so much to learn. But, with patience and persistence, you, by all means, can do foreign exchange trading without having to depend on a broker. Further, the following suggestions can help you kick start your journey smartly and intelligently:
High leverage and potential risk: When it comes to the daily trading volume, the forex markets are the largest. This promises a great deal of liquidity. Further, based on high liquidity, the entry and the exit at a trade position become way too easy. However, the challenge is that the banks, dealers, and online brokers in the market permit high leverage. This enables the traders to hold large positions at little money. Therefore, it goes without saying that the trader needs to understand the risky nature of the forex market. For instance, the leverage of 100:1 is a high ratio. It can swing to either high profits or steep losses. In some cases, the extreme ratios of leverage have ended many dealers with issues around insolvency.
Bird’s eye view of trading requirements: The foreign exchange market works 24 hours a day and for 5 days a week. Every day it starts in Sydney, Australia, and ends in New York. The main centers of the foreign exchange market are Sydney, Hong Kong, Singapore, Tokyo, Frankfurt, Paris, London, and New York. Now, as we all know that trading currencies need a fundamental understanding of the market and its functions as well as indicators. Therefore, a trader or investor is expected to have a bird’s eye view of the entire financial movement, the economies of various countries, the inter-connections, etc, to be able to reap the best trade results.
Forex Trading Risks: As discussed before, foreign exchange trading has an innate nature of risk. It is complex in nature too. Further, forex brokerage operates at varying degrees in different parts of the world. The regulation between the banks varies, the standardization of various forex instruments differs, and in some places, it is totally unregulated.
The inter-bank market determines and accepts risks. They design a structure around it to come up with an interoperable process that is as safe as possible. The regulation designed in such a fashion aims to protect every participant bank.
Know Forex Trading Risks
Given, the participating banks provide bids and other related offers for various currencies; this mechanism is therefore heavily dependent on the supply and demand rate. Due to large trade flows, influencing the price of any particular currency is difficult. With the help of inter-bank dealings, a sense of transparency is taken care of in the market.
Usually, small retail traders trade with comparatively low-key and almost unregulated forex platforms; there are always chances for them to re-quote rates and sometimes trade against the trader. Regulation on such platforms is highly dependent on which legislation they come under. This decides what type of industry and government regulation they are subject to. The protection measures for every trader vary from country to country.
Ideally, one should do a background check to see whether a broker is regulated in the U.S. or the U.K. Further, to ensure security, one can check what kind of account protection is offered by the forex broker features in times of crises and other insolvency issues.
The Bottom Line
We hope our discussion on forex platforms has helped you gain clarity on the subject. As for our final thoughts, we would say that forex trading is great for forex traders with limited money who are seeking day trading in small amounts. On the other hand, those with large sums of money to trade, long term trading can be more beneficial. New forex traders should take their time to gain a good understanding of the market, its fundamentals, and create an overall view of global economics to make well-informed trade decisions.
Forex platforms really help you gain easy access to the trade market and get access to the best spreads. But it is your responsibility to do thorough research to check the credibility of the broker and also to see if its functions, products, spreads, and features match your needs. For research matters, the homepage of NFA and reviews such as ours can be quite handy and useful.
The forex market is very risky in nature. Forex and CFD are complex instruments. There is a high innate risk involved with them that can lead you to steep money losses as there is leverage involved. On average, approximately 69 to 78 percent of retail accounts tend to face losses during CFDs trading. That is why it is of high importance that you understand thoroughly how CFDs work. You should also trade as per your risk capacity as there are steep losses involved.
1. Can one become rich by trading forex?
The answer to this question is a mixed one. There are people who have become rich through foreign exchange trading, but the majority have not. The simple reason is the risky nature of the forex market. There have been cases where people have made millions and billions through foreign exchange trading, but one must also not forget that similar amounts have also got swept away through steep losses in the forex market. Therefore, making well-informed and calculated risks is very important.
2. How can one start forex trading?
Forex trading is all about awareness and practice. One can start by using a demo account in order to gain a good understanding of the forex market, and its various functions, tools, trading platforms, etc. Learning through case studies, researching about the technicalities about the foreign exchange market is also very useful. Once you feel confident, you can choose a forex platform by researching its credibility. Open an account there, fund it with the minimum deposit requirement, and you are ready to trade!
3. How does one choose an appropriate Forex Broker?
Choosing the right forex broker is tricky, but is manageable. As the first step, you should look for brokers who are regulated within the legislation of your country. Further, you should check out the reviews about the broker platform to understand how good its trading support, costs, spreads, tools, research capabilities, customer service, and other spreads, features, and products are. Upon screening through your list of best brokers, you can finalize the most suitable and trustworthy forex broker based on your trade requirements.
4. Which forex brokers accept US or non-US clients?
Those forex brokers who have regulatory status in the U.S permit U.S. based clients and keep their rights reserved. On the other hand, those forex brokers who permit non-U.S clients are usually required to have licenses in countries where they come from.
5. Which currency pairs are popular?
There are seven currency pairs that are really popular in the market. They are also called the ‘Majors’. They are as follows:
Around 85 percent of all trades take place within these seven currency pairs or the ‘majors.’