The foreign exchange market, also known as forex or FX, is the most active financial market in the world. Trillions of dollars are constantly being exchanged across the globe, with this market operating 24 hours a day and five days a week. It offers immense opportunities for traders to make fortunes or experience rapid losses.
To participate in this dynamic market, finding a broker specializing in currency trading is crucial. Not all well-known stock trading platforms offer this service. Since forex markets have distinct characteristics compared to stock markets, your criteria for evaluating a forex broker will significantly differ from those used for assessing a stock broker.
Best Forex Brokers
- IG – Best Forex Broker Overall
- eTORO – Best for Copy and Crypto Trading
- Plus500 – Best for Mobile Users
- Interactive Brokers – Best for Professionals
- CMC Markets – Best Platform Technology
- Saxo Bank – Best Web-based Trading Platform
- Public.com – Best for Affordability
- XTB – Best for Research and Education
1. IG – Best Forex Broker Overall
IG Group (IG), established in 1974 by Stuart Wheeler as the world’s pioneering spread betting company, forms a part of IG Group Holdings plc, a publicly traded conglomerate listed on the London Stock Exchange under the symbol IGG. Unlike many other brokers mentioned in this compilation, IG welcomes forex traders from the United States. This has been possible since early 2019 when the firm decided to re-enter the U.S. market.
Globally, IG caters to individuals interested in trading CFDs and those seeking to engage in foreign exchange markets. It is as straightforward as that. To effectively fulfill these objectives, IG follows an age-old principle: “Think big or go home.” They have every reason to do so because they can back it up with their offerings – low spread costs, a strong focus on customer service and education initiatives, valuable research findings that translate into actionable insights for traders, and user-friendly interfaces that facilitate seamless navigation through their platform.
Pros
- A diverse array of services
- Welcomes clients from the United States
- Regulated by the Financial Conduct Authority (FCA) in the U.K. and the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) in the U.S.
- Focus on education and research
- Provides safeguards for client accounts in the U.K./E.U.
Cons
- IG platform lacks copy trading and back-testing integration
- Elevated fees for share-CFDs on the platform
2. eTORO – Best for Copy and Crypto Trading
eToro is renowned for its expertise in social trading, making it an excellent choice for novices. This platform allows you to mimic the trades of experienced traders who have a history of success. Furthermore, eToro offers exceptional educational materials specifically tailored to those new to forex trading.
Their user-friendly multi-asset and social trading platforms and applications are accessible to all users from the get-go. However, it’s worth noting that they do not currently support popular MetaTrader 4 and 5 (MT4 and MT5) trading platforms.
Pros
- The platform is simple and easy to navigate.
- CopyTrader feature enables new traders to replicate strategies employed by professionals.
- Virtual dummy account provides $100,000 for practicing trades.
- Mobile app includes advanced trading features.
Cons
- Elevated non-trading fees
- Absence of crypto-to-crypto trading pairs
- Customer support requires enhancement
3. Plus500 – Best for Mobile Users
Plus500, a European-based derivatives broker, specializes in offering CFDs (Contracts for Difference) to a wide range of traders. Their platform is particularly popular among advanced traders and those who prefer to trade on mobile devices. With thorough information provided about the assets available for investment, Plus500 allows you to easily start buying into CFDs and add them to your portfolio.
For newcomers, there is the option of using demo accounts to practice navigating the platform. However, it should be noted that Plus500 lacks an extensive selection of educational tools for beginners. Therefore, novice traders may want to explore alternative options while experienced professionals continue utilizing Plus500’s unique asset offerings for greater profits.
Pros
- Accessing both sides of the forex market proves beneficial for advanced traders.
- There are no obstacles for advanced traders looking to sign up and get to work.
Cons
- You might perceive CFDs as overly intricate for you to handle.
4. Interactive Brokers – Best for Professionals
Interactive Brokers is recognized as one of the most well-funded non-bank brokers for traders and investors based in the United States. They offer a wide range of assets, covering 135 markets across 33 countries and supporting 23 currencies.
Their extensive product and service offerings can meet any client’s needs, from individual accounts to retirement planning and asset management, as well as algorithmic portfolios. Regarding trading fees, Interactive Brokers stands out with some of the lowest rates in the industry.
In terms of technology, Interactive Brokers utilizes cutting-edge trading platforms. The flagship platform, IB Trader Workstation, is particularly notable for supporting algorithmic trading strategies. Traders also have access to Interactive Advisors’ Robo portfolio unit, allowing them to invest with just $100. Furthermore, their Investors Marketplace offers over 2,000 services across five categories, while Probability Lab supports options traders.
Pros
- Numerous features available
- Abundance of educational services
Cons
- Excessive volume of information
- Absence of bonuses or promotions mentioned
5. CMC Markets – Best Platform Technology
Established in 1989, CMC Markets (CMC) is a reputable U.K. forex broker that has effectively adjusted to the dynamic online brokerage industry. CMC is publicly traded on the London Stock Exchange (LSE) with the ticker symbol CMCX.
Appealing to a wide range of traders, from beginners exploring forex trading, CFDs, and spread betting to seasoned professionals seeking diverse investment options, CMC Markets offers competitive fees compared to its counterparts in the market.
Pros
- Diverse array of services
- Regulated by the Financial Conduct Authority (FCA) in the U.K.
- Focus on education and customer service
- Leading-edge research facilities in the industry
- Provides security for client accounts
Cons
- Unavailable for U.S. clients
- Contrasts between Next Generation and MT4
- Elevated CFD spreads observed in specific indices
6. Saxo Bank – Best Web-based Trading Platform
Founded in 1992, Saxo Bank Group (Saxo Bank) is a prominent Fintech specialist that facilitates investment opportunities in global capital markets. It emerged as one of the pioneers in online trading platforms back in 1998. Saxo Bank has been actively operating in the United Kingdom since 2006 through its subsidiary, Saxo Capital Markets U.K. Ltd (SCML).
Saxo Capital Markets primarily caters to experienced traders and offers a wide range of brokerage services for sophisticated investors, professionals, and institutions. However, individuals with smaller accounts may be disappointed due to higher account minimums, transaction fees, and limited customer support options.
While tiered accounts can provide lower trading costs and additional benefits as equity increases, it may prove challenging for most retail traders to achieve higher customer tiers.
Pros
- Diverse array of services
- Regulated by the Financial Conduct Authority (FCA) in the U.K.
- Research specifically focused on Forex
- Exceptional user interface
- Provides security for client accounts
Cons
- Limited focus on customer service
- Complex instrument fee structures causing confusion
- Not available for U.S. clients
- Absence of MT4 support
7. Public.com – Best for Affordability
In 2019, a financial services company called Public was launched in the United States by Jannick Malling and Leif Abraham. With its headquarters situated in New York City, Public specializes in developing an innovative mobile and web investing platform that allows users to invest in fractions of stocks. As a regulated broker-dealer, Public ensures that securities held in each account are protected up to $500,000.
Public aims to cater to beginner investors by offering a user-friendly and commission-free stock trading mobile app. The company specifically targets individuals who may be hesitant to invest due to their limited financial knowledge or lack of access to expensive financial products. Additionally, the high share prices often associated with traditional investing can be discouraging for many potential investors.
In response to these challenges, Public was created as a solution that provides wider access and inclusion within the stock market for all types of investors.
Pros
- Permits trading in fractional shares
- The integration of social media connects investors
- User-friendly mobile app
- Absence of Payment for Order Flow
Cons
- Restricted account options
- Limited investment choices
- Constrained features
8. XTB – Best for Research and Education
Established in 2002 as the first leveraged foreign exchange brokerage house in Poland, X-Trade underwent a transformation in 2004 to comply with new Polish regulations and became X-Trade Brokers. In 2007, the company went public and was listed on the Warsaw Stock Exchange under the ticker symbol XTB. Subsequently, it rebranded itself as XTB Online Trading (XTB) in 2009.
For traders looking to minimize their expenses, be it through reducing trade costs like bid/ask spreads or avoiding additional charges such as wire fees, XTB is an excellent option. Non-U.K. accounts can enjoy leverage of up to 500:1, while U.K. accounts have access to leverage up to 30:1. The firm places great importance on providing exceptional customer support and offers educational resources and research tools that are particularly beneficial for novice traders.
Pros
- Competitive FX spreads
- Regulated by the Financial Conduct Authority (FCA) in the U.K.
- Ensures security for client accounts
- Prioritizes customer service
Cons
- Not available for U.S. clients
- Elevated costs for non-FX spread expenses
Our Ranking Methodology for the Best Forex Brokers
In order to create our ranking of the best forex brokers, we evaluated them using three main factors.
- Wide Range of Forex Pairs: Our assessment included the availability of a broad range of forex pairs for trading among brokers.
- Competitive Spreads: We scrutinized the competitiveness of the spread rates provided, ensuring advantageous trading conditions.
- Low or Zero Commission: Our evaluation took into account whether brokers imposed minimal or no commission fees.
In our evaluation, we also considered additional factors such as the inclusion of spread betting and contracts for difference (CFDs) in forex trading. We also took into account the option to utilize third-party platforms like MetaTrader and TradingView.
Moreover, we conducted thorough research to assess the level of customer support provided by each broker. We also evaluated the availability and quality of educational resources offered by them. In addition, any associated fees were taken into consideration during our analysis. Crucial performance metrics like execution speed and success rates were carefully examined as well.
When it comes to regulatory compliance and dependability, one important aspect was confirming whether the broker was authorized by the Financial Conduct Authority (FCA), which is responsible for overseeing financial activities in the UK. Additionally, we analyzed customer complaint data obtained from FCA sources in order to evaluate each broker’s track record.
Best Forex Brokers – Buyer’s Guide
What is a Forex Broker?
Retail forex brokers are financial institutions that serve as intermediaries between individual traders and the foreign exchange market. These platforms operate online through official websites, catering to smaller traders who want to engage in margin-based currency trading.
Online forex brokers typically allow traders to execute transactions using their supported electronic trading platforms. Alongside their own proprietary software, many of these brokers also support popular third-party forex trading platforms like MetaTrader 4 and 5 (MT4/5) developed by MetaQuotes.
In addition to facilitating trades, some forex brokers offer valuable educational resources aimed at beginners. These resources can help increase your understanding of trading concepts. Moreover, they provide access to expert market analysis and financial news feeds that assist in making informed trading decisions.
If you opt for a forex broker that utilizes automation, you have the option to experiment with trading bots. These bots are equipped with artificial intelligence and rely on current data to conduct trades on your behalf.
Each bot follows a unique trading strategy aimed at maximizing your profits. Nonetheless, it’s important to note that trading bots are not flawless. Conduct thorough research, establish a budget, and regularly monitor your account for optimal outcomes.
Why Trade Forex?
Engaging in a forex transaction entails purchasing one currency while simultaneously selling another at an established exchange rate. This exchange rate is commonly referred to as the “exchange rate.” Forex traders generate profits by either buying a currency pair at a low price and selling it when the price is high or by initially selling the currency pair at a high price and subsequently repurchasing it at a lower price.
Numerous individuals are drawn to forex trading due to its ease of entry. By simply opening a trading account and downloading free platforms like MetaTrader, one can quickly embark on their forex trading journey.
The ability to swiftly enter and exit positions, trade at your own pace, and earn money based on your specific trading objectives make this an appealing option for many investors. It serves as an ideal starting point for those who wish to familiarize themselves with the intricacies of the currency market without feeling overwhelmed by complex assets they may be unfamiliar with.
Forex Pros and Cons
Traders encounter both advantages and disadvantages in the foreign exchange market, which are distinct to this particular field. Some of these are outlined below for your reference.
Pros:
- High leverage: Utilizing leverage in foreign exchange trading allows for control over substantial positions with a relatively modest margin deposit, as the exchange of currencies at the prevailing market rate holds no net value. While this enhances the potential for profit, it also increases the associated risk, particularly when capitalizing on minor exchange rate fluctuations.
- High liquidity:: The forex market, being the largest financial market globally, exhibits exceptionally high liquidity in major currency pairs. This high liquidity facilitates the execution of substantial transactions in these pairs at almost any time during regular trading hours.
- Around-the-clock trading: The forex market operates around the clock, commencing at 5 p.m. EST on Sunday and concluding at 5 p.m. EST on Friday, inclusive of U.S. holidays. This continuous availability ensures ongoing trading opportunities throughout market hours.
Cons:
- Fewer asset choices: Forex traders encounter a more restricted array of choices compared to stock traders, as the forex market predominantly offers a relatively small number of currency pairs, with not all of them being highly liquid, particularly the minors.
- Volatility: The forex market is prone to significant movements as participants assimilate new information. This volatility introduces the potential for traders to experience unexpected gains or losses.
- Unregulated OTC market: The Interbank forex market operates over the counter (OTC), maintaining a largely unregulated status. Nevertheless, various jurisdictions have implemented some regulations to safeguard retail traders conducting transactions through online brokers.
Forex Markets Explained
In the forex market, traders agree to swap one currency for another in order to carry out a transaction at a specific exchange rate. This exchange rate is influenced by supply and demand factors as well as the overall expectations of the forex market regarding future events, similar to how stock prices fluctuate.
Forex traders can profit from currency transactions in two ways. Firstly, if they purchase or go long on a currency that increases in value compared to the currency being sold, they will make a profit. Secondly, if they sell or go short on a currency and it depreciates against the purchased currency, they will also earn a profit.
Many of the currency pairs listed in the forex market exhibit significant volatility or fluctuations. These fluctuations can lead to either gains or losses for traders. By analyzing historical data for pairs like EUR/USD over different time periods such as weeks, months, or years, one can gain valuable insights and compare these movements with current events happening either in the U.S. or the European Union.
While comparing, you may observe that the correlation shifts in the opposite direction of the news you’re examining. As you delve deeper, you gain insights on predicting currency movements through analysis of ongoing events.
Risk and Reward in Forex Trading
In forex trading, the potential for rewards arises when you open a position in a currency pair and it subsequently increases in value. However, there is also a high level of risk involved if the market doesn’t perform as expected after you’ve entered into a forex trade.
Many brokers provide traders with the option to amplify their gains or losses through leverage. Leverage is typically presented as the ratio that determines how much control you have over a position based on the amount of base currency deposited as margin. For example, with a 500:1 leverage ratio, you can control a $500 position with just $1 deposited as margin.
Additionally, successful traders often establish minimum risk/reward ratios before considering whether to take on a trade. These ratios, such as 1:2 or 1:3, help evaluate if the potential reward outweighs the associated risks.
To illustrate this concept further, let’s say you believe that there’s an equal chance for a trade to gain 20 pips or lose 10 pips – in this case, your risk/reward ratio would be 1:2. If this meets your predetermined criteria for risk and reward, then executing that trade may be deemed worthwhile by you.
How Do I Start Trading Forex?
Before anything else, it is crucial to conduct thorough research. New investors should take advantage of the abundant research and educational materials offered by trading platforms and websites.
After that, it is essential to compare different forex brokers and select the one that aligns with your specific trading requirements. Once you have made your choice, proceed with opening an account. The next step involves devising a well-defined strategy for navigating the forex markets.
Lastly, it’s time to initiate, track, and ultimately close your inaugural position. By completing these steps successfully, you will have officially entered the world of forex trading.
How Much Money Do I Need to Begin Forex Trading?
In many instances, you can begin with a minimum of $100 as an initial investment. However, it is crucial to understand that forex trades are conducted using standard lots consisting of 100,000 units of currency. Consequently, you may need to invest more than $100 in order to participate.
What Types of Assets Can I Trade?
Forex brokers offer a diverse selection of products, so it’s important to select one that offers a wide range of tradable options. This includes currency pairs, indexes, commodities, shares, cryptocurrencies, and more. Make sure your chosen broker provides ample choices for your trading needs.
How Do I Know if My Forex Broker Is Regulated?
Maintaining business standards and safeguarding clients necessitates the regulation of forex brokers. The Commodity Futures Trading Commission (CFTC) emphasizes that most scams involve individuals, products, or companies operating without proper registration. Therefore, it is crucial to work with a registered broker when engaging in forex trading.
The CFTC takes responsibility for the registration and regulation of forex brokers. To ensure compliance, brokers must meet specific financial criteria, undergo background checks for their personnel, and adhere to conduct and disclosure requirements set by the commission.
To verify if a forex broker has been appropriately registered, you can visit the National Futures Association website (which operates under CFTC’s supervision) and utilize its search tool. This tool allows you to check a broker’s registration status as well as their disciplinary or regulatory history along with financial information associated with them. It is advisable to be cautious of any entity that lacks proper registration credentials.
What Fees Should You Be Aware of When Choosing a Forex Broker?
When selecting a forex broker to trade with, it is important to be knowledgeable about and verify the various fees involved. These fees can be divided into two categories: trading fees and non-trading fees.
Trading fees
These fees are associated with initiating, concluding, and maintaining a trade transaction and encompass the following charges:
- Spread: The discrepancy between the buy and sell prices of a financial instrument should be minimized. In our broker rating reviews, we perform a live spread test for each broker. An industry-standard spread of less than 1.0 pip, with zero commission, on EUR/USD is considered typical. Refer to our guide for the best forex brokers offering the lowest spreads.
- Commission: The expense associated with initiating and closing a trade should be kept to a minimum. In our broker rating reviews, we conduct a live fee test for each broker. An industry-average commission is considered to be $3.50 per lot per side on MT4 and MT5, and $3.00 per lot per side on cTrader.
- Swaps: The expense incurred for holding a leveraged or margined position overnight. The swap fee is determined by the disparate interest rates of the currency pair being traded, along with a broker’s markup.
To truly gauge the charges, it is recommended to either experiment with a trial trading account or initiate a live account with the minimum initial payment. Another option would be to peruse the broker review on FX Empire, where our team of analysts has meticulously evaluated the spreads on your behalf.
Non-trading fees
Account maintenance, account inactivity, deposits, and withdrawals are examples of non-trading fees. It’s important to examine the fees associated with depositing and withdrawing funds to avoid any unexpected high charges.
While some brokers may offer fee-free deposits, they might still impose fees for withdrawals. Usually, this information can be found on the broker’s website or by contacting their customer support team.
What Is the Best Type of Forex Trading Account?
Brokers typically provide different types of trading accounts, which can be broadly categorized as either commission-free or commission-based with reduced spreads. The reason for this distinction lies in the various execution methods that brokers offer, such as:
- Dealing desk: While less prevalent nowadays, it still exists. In this setup, the broker assumes the opposing position to your trade, anticipating that a majority of their clients will incur losses.
- STP: Straight-Through Processing has become more widespread among regulated brokers. In this model, the broker promptly forwards your orders to their liquidity providers for execution at the prevailing market rates. The broker generally applies a markup to spreads but typically refrains from imposing additional commissions. Explore our selection of the Best STP Forex Brokers, meticulously curated by FX Empire.
- ECN: Electronic Communications Network. This framework involves various liquidity providers and banks vying for your orders within an anonymous network. Since price quotes are directly derived from the interbank market, these accounts usually feature the narrowest spreads, although a commission is typically levied per trade. Delve into our guide on the Best ECN Forex Brokers.
The minimum deposit requirement varies for each type of account. In general, the trading terms, products, and services improve as the minimum deposit amount increases.
What Factors Should You Consider When Choosing a Leverage Level?
CFD trading accounts have contributed to the increasing popularity of foreign exchange trading. These accounts, known as “contracts for difference,” allow traders to take both long and short positions using leverage.
Leverage is a tool that enables traders to open larger positions by utilizing a smaller deposit. While leverage can amplify profits, it also magnifies potential losses. For instance, if a broker offers 1:30 leverage, you can open a position that is 30 times the size of your initial capital. This means that with just $1,000, you can trade with a position worth $30,000.
The amount of leverage offered by brokers depends on various factors such as the client’s categorization (retail or professional) and which financial regulator oversees the broker’s activities.
In 2018, the MiFiD II European Market Act Directive mandated Tier-1 regulators to impose restrictions on retail clients trading foreign exchange through leveraged accounts. As a result of this directive, retail traders are limited to maximum leverage of 1:30 in order to prevent them from depleting their trading accounts due to excessive use of leverage until now.
If you are considered a professional trader, brokers regulated by Tier-1 authorities have the ability to provide increased leverage, reaching up to 1:200 in forex trading. However, it’s important to note that as a professional trader, certain protections available to retail traders may not be offered, such as negative balance protection.
It is not uncommon for brokers operating in lightly regulated jurisdictions offshore to advertise leverage ratios of 1:1000 or even higher. It is crucial to understand that there are valid reasons why Tier-1 regulators have implemented restrictions on leverage for retail traders. Hence, it is advisable to exercise caution when dealing with brokers who promote excessively high levels of leverage.
Best Forex Brokers – Frequently Asked Questions
Can I Trade Forex With $10?
Although there are brokers who provide trading accounts starting at $10 or even less, this amount is only sufficient to hold a single micro position. However, if you want to actively trade Forex, you will need more capital than that.
What Is the ‘Spread’?
The disparity between the broker’s purchasing and selling prices is referred to as the forex spread. These spreads can fluctuate depending on the currency and time of day, serving as a means for brokers to generate profit. To measure these spreads, pips are used, which represent the fourth decimal place for all currency pairs excluding the Japanese yen.
Let’s say an investor engages in GBP/USD trading at 1.2030/1.2032; in this case, the spread would be calculated by subtracting 1.2030 from 1.2032, resulting in a difference of 0.0002 (equivalent to 2 pips). Brokers often strive to offer competitive spreads on major currency pairs since a wider spread diminishes potential profits from forex trades.
Is Forex Good for Beginning Investors?
Trading currencies and other forex assets allows beginner investors to diversify their portfolios, despite the complexity involved. It is crucial to exercise caution and gain a comprehensive understanding of the assets you intend to trade.
Numerous forex trading platforms provide abundant educational resources and research materials for your benefit, so make sure to take advantage of these valuable sources of information.
Final Thoughts
In the fast-paced realm of forex trading, where each moment is significant, selecting a dependable broker can determine your financial triumph or downfall.
Regardless of whether you possess extensive experience in trading or are just embarking on this business, discovering the most exceptional forex broker is an essential milestone in your journey. It encompasses more than just spreads and trading platforms; it also entails trustworthiness, security, and quality customer support.
Within this blog article, we will delve into the industry’s standout forex brokers. Our ultimate selection as the top choice is IG, a decision that will enable you to make well-informed choices and unlock a profitable and fulfilling trading experience.
