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The global foreign exchange market, known as forex or FX, is a hive of constant activity, with trillions of dollars in currency moving around the clock from Monday to Friday. It stands out as the most bustling financial market globally.
In this high-speed setting, traders have the potential to amass wealth swiftly or incur substantial losses since brokers often permit them to use substantial capital for their speculative ventures.
To engage in this vibrant market, locating a broker specializing in currency trading is vital. Many renowned stock trading platforms don’t offer this service.
Due to the unique characteristics of forex markets compared to stock markets, your criteria for assessing a forex broker will vary significantly from those used for evaluating a stockbroker's services.
8 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
IG – Best Forex Broker Overall
Established in 1974 by Stuart Wheeler, IG Group (IG) stands as the pioneering spread betting firm worldwide and operates under IG Group Holdings plc, a publicly traded conglomerate listed on LSE as IGG. Unlike many other brokers, IG accommodates U.S. forex traders following its re-entry into the U.S. market in early 2019.
Globally, IG caters to individuals interested in trading CFDs and those seeking involvement in the foreign exchange markets. It's a straightforward proposition. To achieve this effectively, IG has embraced the age-old mantra of "Go big or go home," simply because it can do so with confidence.
With its low spread costs, focus on customer service and education, actionable research facilities, and user-friendly interfaces. This broker is well-equipped to thrive in the online forex broker industry.
- Diverse array of products available
- Welcomes clients from the United States
- Regulated by FCA (U.K.) and CFTC, NFA (U.S.)
- Focus on educational resources and research
- Provides safeguarding for client accounts in the U.K./E.U
- Lack of copy trading or back-testing integration on the IG platform
- Elevated fees for share-CFDs
eToro – Best for Copy and Crypto Trading
eToro is dedicated to social trading, making it perfect for novices as it allows you to mimic the trades of seasoned traders with a reliable history. Apart from its top-notch social trading community, this brokerage offers superb learning materials tailored for forex newcomers.
Their user-friendly platforms and apps for multi-asset trading and social trading are accessible to all right away. Regrettably, they don’t accommodate the MetaTrader 4 and 5 (MT4 and MT5) trading platforms.
- The platform is easy to navigate and user-friendly
- Utilize the CopyTrader feature to mimic strategies employed by seasoned professionals
- Access a virtual dummy account with $100,000 for hands-on trade practice
- Enjoy advanced trading features within the mobile app
- Encounter high non-trading fees
- Lack of crypto-to-crypto trading pairs
- Customer support requires enhancement
Plus500 – Best for Mobile Users
Plus500 operates as a Europe-based derivatives broker, specializing in offering CFDs (Contracts for Difference) to a wide range of traders, particularly catering to advanced traders and individuals who prefer mobile trading. This Forex Broker provides comprehensive asset information for investment decisions and facilitates the seamless initiation of CFD investments into your portfolio.
For new users, demo accounts are an effective tool for familiarizing oneself with the platform. However, there’s a relatively limited availability of educational resources necessary for novice traders. As a result, inexperienced traders might seek alternative platforms while seasoned experts leverage Plus500 to capitalize on the distinctive assets offered.
- Unlock diverse facets of the forex market, catering to the needs of advanced traders
- Seamless registration process
- Perceived complexity of managing CFDs might be a deterrent for some
Interactive Brokers – Best for Professionals
Ranked among the top well-funded non-bank brokerage firms for US-based traders and investors, Interactive Brokers provides an extensive range of assets covering 135 markets across 33 countries in 23 different currencies.
Its products and services cater to various needs, including individual accounts, retirement planning, asset management, and algorithmic portfolios. Interactive Brokers stands out with some of the lowest trading fees in the industry.
Interactive Brokers uses state-of-the-art trading platforms, with its flagship platform IB Trader Workstation supporting algorithmic trading. Through Interactive Advisors, the firm's Robo portfolio unit, traders gain access to portfolios starting from just $100. The Investors Marketplace offers over 2,000 services spanning five categories, while the Probability Lab assists options traders.
- Diverse array of features
- Abundance of educational services
- Information overload
- Lack of reference to bonuses or promotions
CMC Markets – Best Platform Technology
Established in 1989, CMC Markets (CMC) is a reputable U.K. forex broker that has adeptly navigated the dynamic online brokerage environment. It’s publicly traded on the London Stock Exchange (LSE) with the CMCX ticker symbol.
CMC Markets caters to a diverse range of traders, accommodating both beginners venturing into online trading of forex, CFDs, and spread betting and seasoned professionals seeking access to an extensive range of products. The company's fee structure remains competitive within the industry.
- Diverse array of offerings
- FCA (U.K.) regulation ensures compliance
- Strong focus on customer education and service
- Cutting-edge research facilities in the industry
- Ensures protection for client accounts
- Unavailable for U.S. clients
- Variances between Next Generation and MT4 platforms
- Elevated CFD spreads on specific indices
Saxo Bank – Best Web-based Trading Platform
Founded in 1992, Denmark's Saxo Bank Group (Saxo Bank) identifies itself as a prominent FinTech specialist that facilitates people's access to investment prospects in global capital markets. It entered the market as one of the pioneering online trading brokers back in 1998. Operating through its subsidiary Saxo Capital Markets U.K. Ltd (SCML), Saxo Bank has been active in the United Kingdom since 2006.
Saxo Capital Markets targets experienced traders, offering brokerage services tailored for sophisticated, active traders, professionals, and institutions. However, for individuals with smaller accounts might find the higher account minimums, various fees, and limited customer support options disappointing.
While tiered accounts present reduced trading costs and additional benefits as equity grows, most retail traders may encounter challenges ascending to higher customer tiers due to these requirements.
- Diverse array of services
- FCA regulation in the United Kingdom
- In-depth forex research
- User-friendly interface
- Client account protection provided
- Customer service not prioritized
- Complex fee structures for instruments
- Unavailability for U.S. clients
- Absence of MT4 support
Public.com – Best for Affordability
In 2019, Public came into existence as a financial services firm in the United States, co-founded by Jannick Malling and Leif Abraham. The corporation's base is in New York City and specializes in creating a fractional investing platform for mobile and web usage. As a regulated broker-dealer, Public offers protection of securities up to $500,000 per account.
Public presents an intuitive stock trading mobile application for new investors charging no commissions. Its focus is on individuals reluctant to invest due to limited financial knowledge, restricted access to costly financial products, and the high prices of shares requiring substantial investments.
Public was developed specifically to tackle these challenges and open up stock market access to a wider spectrum of investors.
- Embrace fractional shares
- Foster investor connections through social media
- User-friendly mobile app
- Eliminate payment for order flow
- Restrictive account types
- Limited investment choices
- Few features available
XTB – Best for Research and Education
Established in 2002 as the pioneer leveraged foreign exchange brokerage firm in Poland, X-Trade transformed into X-Trade Brokers in 2004 to adhere to the new Polish regulations. The company debuted on the Warsaw Stock Exchange under the symbol XTB in 2007 and was later rebranded as XTB Online Trading (XTB) in 2009.
For traders aiming to reduce their expenses, whether through bid/ask spread or avoiding additional charges like wire fees, XTB presents a reliable option. Non-U.K. accounts can benefit from a maximum leverage of up to 500:1, while U.K. accounts enjoy up to 30:1 leverage. The company prioritizes customers support and provides valuable educational resources and research facilities suitable for novice traders.
- Competitive FX spreads
- FCA regulation ensures trustworthiness
- Client account protection is prioritized
- Strong focus on customer service
- Not available for U.S. clients
- Higher non-FX spread costs
Our Ranking Methodology for the Best Forex Brokers
In evaluating the best forex brokers, we considered three main factors to compile our list.
- Wide Range of Forex Pairs: Our assessment included the variety of forex pairs brokers provide for trading.
- Competitive Spreads: We scrutinized the competitiveness of the offered spreads to ensure favorable trading conditions.
- Low or Zero Commission: Our evaluation considered whether brokers imposed minimal or no commission fees.
In our evaluation, we also considered extra functionalities such as spread betting and contracts for difference (CFDs) in forex trading, along with the choice to use external platforms like MetaTrader and TradingView.
We conducted investigations to assess the caliber of customer help, the accessibility of learning materials, and any accompanying charges. Crucial performance indicators like average transaction speed and achievement rates were also scrutinized.
Regarding adherence to regulations and dependability, we validated whether the broker held authorization from the Financial Conduct Authority (FCA), the financial regulatory authority in the UK. We scrutinized data on customer complaints obtained from the FCA to evaluate the broker's past performance.
Best Forex Brokers – Buyer’s Guide
What Is a Forex Broker?
Retail foreign exchange brokers function as intermediaries between the forex market and individual traders. These platforms are present online through official websites and cater to smaller traders interested in margin-based currency trading.
Most online forex brokers facilitate forex transactions using their supported electronic trading systems. Alongside their proprietary software, many also endorse well-known 3rd party forex trading platforms such as MetaTrader 4 and 5 (MT4/5) from MetaQuotes.
Some US forex brokers provide valuable educational resources for beginners to enhance their understanding of trading. They grant access to expert analysis of the forex market and financial news feeds, assisting traders in making informed decisions.
You can explore trading bots if you opt for a broker using automation. These AI-powered programs utilize current information to execute trades on your behalf, each following a specific plan to maximize earnings.
Why Trade Forex?
Engaging in a forex transaction entails purchasing one currency while simultaneously selling another at a specific exchange rate, referred to as a forex rate. Forex traders generate profits by buying low and selling high on one currency pair or selling high and subsequently buying low on another.
Many individuals are drawn to forex trading brokers due to the accessibility they offer by opening a trading account and using platforms such as MetaTrader, which can be downloaded for free.
The ability to swiftly enter and exit positions, trade at one's own pace, and capitalize based on individual trading goals is an attractive proposition. It serves as an initial step for many investors seeking to comprehend the foreign exchange market without being overwhelmed by the traded assets.
Forex Pros and Cons
The foreign exchange market has unique pros and cons for traders, including those listed below.
- High leverage: Leveraging foreign exchange trading enables control over substantial positions with a modest margin deposit, amplifying risk and potential gains from minor exchange rate shifts.
- High liquidity: As the largest financial market globally, the forex market boasts significant liquidity in major currency pairs, facilitating sizable transactions at nearly any time during regular trading hours.
- Around-the-clock trading: The forex market operates continuously from 5 p.m. EST on Sunday to 5 p.m. EST on Friday, including U.S. holidays, ensuring constant trading opportunities throughout market hours.
- Fewer asset choices: Although many stocks are tradable, the forex market offers a limited selection of currency pairs, with only a few being as liquid as the majors.
- Volatility: The forex market can experience significant fluctuations as traders process fresh data. This unpredictability may lead to unanticipated profits or setbacks for investors.
- Unregulated OTC market: The over-the-counter (OTC) interbank forex market operates without significant regulation. However, various jurisdictions have implemented measures to safeguard individual traders conducting transactions via internet-based brokers.
Forex Markets Explained
In the realm of forex trading, individuals consent to trade one currency for another at a specific level known as the exchange rate. Similar to stock values, this exchange rate varies according to supply and demand dynamics and the market's projected outlook on future occurrences.
Currency traders have two avenues for profiting from a currency transaction. If they purchase or take a long position on a currency that appreciates in value against the exchanged currency, they realize a gain. By selling or going short on a currency that subsequently depreciates versus the acquired currency also results in profit.
Many forex market-listed currency pairs exhibit significant volatility or variations, which can lead to gains or losses for traders. It’s possible to analyze the EUR/USD pairing's performance over various time frames like week, month, year, etc., providing valuable insights into historical trends and allowing comparisons between market movements and current events in either the U.S. or European Union.
During this analysis process, it may become evident that movements of the pairing tend to oppose the news being consumed. Further exploration enables an understanding of how to predict potential shifts in currencies based on present-day occurrences.
Risk and Reward in Forex Trading
In forex trading, rewards are earned by taking a position, either long or short, in a currency pair that increases in value afterward. The main risk in forex transactions arises when the market doesn't perform as anticipated after executing a trade.
Several brokers offer traders the option to amplify their gains or losses through leverage. Leverage is commonly represented as the ratio of the position size controlled by depositing one unit of base currency as a margin. For instance, a 500:1 leverage ratio allows controlling a $500 position with just a $1 margin deposit.
Successful traders often have specific minimum risk/reward ratios for potential trades before considering them, typically at 1:2 or 1:3. For example, if a trade has equal chances of making 20 pips and losing 10 pips, it would present a risk/reward ratio of 1:2. Meeting this criterion might deem the trade worth pursuing based on your risk/reward assessment criteria.
How Do I Start Trading Forex?
Before anything else, conduct thorough research. Newcomers to investing should take advantage of the abundant research and educational materials offered by trading platforms and websites. Then, assess different forex brokers, select one that aligns with your trading requirements, and establish an account. Afterward, develop a plan for engaging in forex market trading.
Ultimately, initiate, supervise, and conclude your initial position. Voila! You have officially transitioned into a forex trader.
How Much Money Do I Need to Begin Forex Trading?
In many instances, you can commence with as little as $100. However, forex transactions are conducted in standard lots of 100,000 currency units. You may need to invest an amount exceeding $100.
What Types of Assets Can I Trade?
The selection of products provided by forex brokers differs, and it's essential to select a broker that offers an extensive array of tradable options, such as currency pairs, indices, commodities, stocks, and digital currencies, among other choices.
How Do I Know if My Forex Broker Is Regulated?
The regulation of forex brokers plays a crucial role in upholding business ethics and safeguarding clients. According to the Commodity Futures Trading Commission (CFTC), most fraudulent activities involve individuals, products, or companies that aren’t registered.
Therefore, engaging with a registered broker is essential when participating in forex trading. Fortunately, determining whether a broker is registered is a straightforward process.
The CFTC is responsible for the registration and oversight of forex brokers. To become registered, a broker must satisfy specific financial criteria, ensure its staff members pass background checks, and comply with designated conduct and disclosure standards.
Verifying the proper registration of a forex broker can be accomplished by accessing the National Futures Association website (which operates under CFTC's supervision) and using its search tool. Through this platform, one can review a broker's registration status and their disciplinary or regulatory past and financial details. Any entity lacking proper registration should be viewed with suspicion.
What Fees Should You Be Aware of When Choosing a Forex Broker?
When selecting a forex broker for trading, it's crucial to examine and compare various fees thoroughly. These charges typically fall into two categories: those related to trading activities and those not directly linked to trading.
These charges cover the opening, closing, and maintenance of trade and encompass fees for:
- Spread: Minimizing the gap between the buying and selling prices of a financial instrument is crucial. Our broker rating reviews include live spread tests for each broker to assess this aspect. The industry standard considers a spread of less than 1.0 pip, without any commission, on EUR/USD as competitive. Refer to our comprehensive guide for insights into the top forex brokers offering minimal spreads.
- Commission: The expense of initiating and terminating a trade should be minimized. Our broker rating reviews include a real-time fee assessment for each broker. The industry standard is a commission of $3.50 per lot per side on MT4 and MT5 and $3.00 per lot per side on cTrader.
- Swaps: Overnight holding costs for leveraged or margined positions involve a swap fee determined by the currency pair's distinct interest rates and a broker's additional charge.
To determine the fees firsthand, consider using a demo trading account or starting a live account with the initial deposit. Another option is to peruse a broker review on the FX Empire website, where our team of analysts has conducted spread testing for your benefit.
Fees unrelated to trading may encompass fees for maintaining the account, inactive account charges, and charges for deposits and withdrawals. It's prudent to examine the methods of depositing and withdrawing funds and their associated fees to avoid any unexpectedly high costs.
Many brokers may promote free-of-charge deposits but might levy fees on withdrawals. This data is commonly accessible on the broker's site; however, you can verify it with customer service.
What Is the Best Type of Forex Trading Account?
Most brokers will provide a range of trading accounts, typically categorized as commission-free or commission-based with reduced spreads. This distinction arises from the various execution techniques that the broker might present to you, such as:
- Dealing desk: Although less prevalent nowadays, some brokers still operate this way. Here, the broker takes the opposite side of your trade, anticipating client losses.
- STP: Straight-Through Processing is now a standard practice for regulated brokers. In this model, brokers send your orders directly to liquidity providers for execution at market rates. Spreads are typically marked up, but there's usually no additional commission. Discover top STP Forex Brokers, thoughtfully curated by FX Empire.
- ECN: Electronic Communications Network is where liquidity providers and banks compete for your orders in an anonymous network. With price quotes directly from the interbank market, these accounts have minimal spreads but often come with a per-trade commission. Check out our comprehensive guide on the Best ECN Forex Brokers.
Different account types typically have varying minimum deposit requirements. In most cases, superior trading terms, products, and services are offered with higher minimum deposits.
What Factors Should You Consider When Choosing a Leverage Level?
The popularity of foreign exchange trading has increased over time due to the prevalence of CFD trading accounts. With a 'contract for difference' trading account, you can engage in long and short trades through leverage.
Using leverage enables you to start larger positions with a smaller deposit, amplifying potential gains and losses. For instance, if a broker provides 1:30 leverage, you can establish a position 30 times larger than your initial capital investment. This means that with just $1,000, you could open a position valued at $30,000.
The extent of leverage brokers offer depends on your classification as their client (retail or professional) and the specific financial regulator overseeing the broker's operations.
In 2018, the MiFiD II European Market Act Directive mandated Tier-1 regulators to enforce a 1:30 leverage limit on retail clients engaged in foreign exchange trading. This directive was necessitated by the fact that numerous retail traders had been depleting their trading accounts due to excessive leverage.
If you fall into the professional traders' category, brokers operating under Tier-1 regulations may provide increased leverage, occasionally reaching up to 1:200 for forex trading. However this may result in the forfeiture of certain protections available to retail traders, such as negative balance security.
Certain brokers might promote leverage ratios of 1:1000 or even higher. These brokers tend to be situated in less regulated offshore jurisdictions. The rationale behind Tier-1 regulators imposing restrictions on leverage for retail traders underscores the need for caution when dealing with brokers who advertise extremely high leverage levels.
Best Forex Brokers – Frequently Asked Questions
Can I Trade Forex With $10?
Although certain brokers provide trading accounts starting from $10 or lower, having more funds for Forex trading is essential beyond just maintaining a micro position.
What Is the ‘Spread’?
The forex spread refers to the disparity between a broker's 'ask' price for purchasing and their 'bid' price for selling. The extent of spreads may fluctuate based on the currency and time, signifying the broker's profit margin.
Spreads are denoted in 'pips,' representing the fourth decimal place for all currency pairs except for the Japanese yen. For instance, when engaging in GBP/USD trading at 1.2030/1.2032, the spread would be calculated as 1.2032 minus 1.2030, resulting in 0.0002 (equivalent to 2 ‘pips’).
Since a broader spread diminishes potential profits from forex transactions, brokers vie by presenting competitive spreads specifically on major currency pairs.
Is Forex Good for Beginning Investors?
Trading forex may seem complex, but it’s feasible for novice investors to broaden their investment portfolios by engaging in currency and other forex asset trading.
It’s crucial to be vigilant and familiarize yourself with the assets you intend to trade. Various forex trading platforms offer abundant educational and research materials, so capitalize on these resources.
In the dynamic realm of forex trading, where each moment holds significance, selecting a dependable broker can determine your financial triumph.
Whether you’re an experienced trader or a novice, identifying the finest forex broker is a pivotal stride in your journey. It's not solely about the spreads or trading platforms but also about reliance, safety, and client help.
This article will explore the foremost forex brokers that distinguish themselves in the industry, with our prime selection being IG. This choice will assist you in making an educated decision that could lay the groundwork for a lucrative and gratifying trading venture.
This content was provided by our sponsor, General Fanager. The FOX editorial team was not involved in the creation of this content.