The forex market is one of the largest and oldest financial markets with the highest liquidity, accounting for a trading volume of 6 trillion dollars per day. The forex market is highly volatile, making it risky and lucrative at the same time.
What Is Forex Trading?
Forex trading is referred to as the speculation of the currency price movement to make profits from the fluctuation in the prices. It is the act of buying or selling the currency pairs based on the speculations made. In forex trading, traders make speculations generally by conducting two types of analysis – Technical analysis and Fundamental analysis.
What Is A Forex Broker?
The forex market cannot be traded directly and requires an intermediary platform to place trades in the market. Forex brokers are such intermediaries that give traders access to the market to make their trades, by providing them trading platforms. There are numerous online forex brokers that are available, which makes choosing one a tedious job, especially for beginners who have limited knowledge about the subject.
What To Look For In A Broker As A Beginner?
Picking the right broker is very essential as not all brokers are genuine, and beginners with a limited amount of knowledge can fall for the wrong broker.
Some Of The Features To Look For In A Broker Are:
- Regulation: Regulation is the first sign of the reliability and trustworthiness of the broker. Regulated brokers comply with the rules and regulations set by the regulatory authorities. Some of the major regulatory authorities are – FCA, HCMC, CySEC, FSA, and FSCA. Regulated brokers ensure transparency and fair service. As a beginner has limited knowledge, opting for a regulated broker can keep him on the safe side.
- Commissions: Commissions are the trading charges that are charged by the broker for each trade placed. Brokers with fairly low commissions are great choices. Lower commissions can help in increasing your overall profits. Commissions vary from broker to broker. Low-commission brokers should be preferred.
- Spreads: Spread is the difference between the ask and the bid price of the currency pair. The ask price is referred to as the price at which the forex traders want to buy the currency pair, whereas the bid price is referred to as the price at which the forex trader wants to sell the currency pair. Brokers charge spreads that are either floating (variable) or fixed spreads. It is important to look for brokers that offer tight spreads and fairly lower commissions.
- Leverage and Margin: Leverage is the borrowed money that is offered by the broker to increase the exposure of the trader in the market. The leverage is expressed in a ratio. For e.g.; 1:X. If the broker is offering 1:100 leverage and the trader wants to trade with the position size of $100,000 (1 standard lot), the trader needs only $2000 to open the trade. Margin is the minimum amount required to open and hold a trade. The higher the leverage ratio, the higher the potential profit, however, leverage is a double-edged sword and must be used carefully and diligently.
- Customer Service: Customer service is a very important feature, it is better if the support team of the broker is responsive, as this would smoothen the trading process. Prefer brokers that have 24 hours customer service on all trading days, that can be reached via chat, email, and phone call.
- Currency Pairs Offered: Although most brokers offer a variety of currency pairs to trade with, it is important to ensure that the broker is offering the currency pair that you are interested in. There are three types of currency pairs – major currency pairs, minor currency pairs, and exotic currency pairs. Major currency pairs are the most traded currency pairs owing to their stable nature and high liquidity and tight spreads.
- Trading Platforms: Different brokers offer different trading interfaces. Traders must look for a simple yet sophisticated trading platform that covers all their trading requirements.
6 Best Online Trading Brokers For Beginners:
If you’re still confused about which broker to start with, here are reviews of the 6 best brokers that you can consider.
1. Fxview
Fxview is regulated by CySEC and is one of the most trusted forex brokers. The platform is known for its lowest commissions and tight spreads offering a wide range of trading options – forex, indices, stocks, commodity, and cryptocurrency. They offer a true ECN account that provides an ECN trading environment with high-speed execution of trades and the tightest spreads(Click to read the full Fxview review).
Fxview offers three types of trading platforms that can be chosen as per the trading needs of the traders- MetaTrader4, MetaTrader 5, and ActTrader. The broker also offers a copy trading platform- ZuluTrade for new traders who have limited trading knowledge or do not have time to place their trades on their own.
Trading Features:
Commission: $2 per $100K RT
Spreads: 0.1 pips onwards
Minimum Deposit: $200 for EU citizens and $50 for global
Leverage: 500:1
Trading Instruments: forex, indices, stocks, commodities, cryptocurrencies, etc.
2. AAAFx
AAAFx was founded in 2008 and is regulated by HCMC. The broker offers an array of trading instruments- forex, indices, stocks, commodity, and cryptocurrency. The broker offers a pure ECN environment with fairly low commissions and tight spreads(Click to read the full AAAFx review). The broker offers three types of trading platforms and the trader can choose among them according to their trading requirements. Three trading platforms are – MetaTrader4, MetaTrader5, and ActTrader.
The broker offers a wide range of trading accounts – ECN account, ECN Plus account, and ZuluTrade (for copy trading)
Trading Features:
Commission: $1.98 per $100K RT
Spreads: 0.1 pips onwards
Minimum Deposit: $10
Leverage: 500:1
Trading Instruments: forex, indices, stocks, commodities, cryptocurrencies, etc.
3. FXCM
FXCM is one of the leading and oldest forex brokers that allow trading in the forex, commodities, shares, via CFDs. The broker is regulated and offers great educational courses on trading forex that can be of great help to traders who have just started their trading journey. FXCM offers a wide range of trading platforms including- MT4, Ninja Trader,
and Trading view along with two types of trading accounts- CFD trading online and spread betting online.
Trading Features:
Commission & Spreads: Variable
Minimum Deposit: 50 CCY
Leverage: 400:1 for accounts up to $50, 000
Trading Instruments: Forex, shares, indices, commodities.
4. FXTM
FXTM is a top-tier broker that allows traders to trade various financial assets – forex, indices, stocks, and commodities. The broker offers three types of accounts – micro trading account, advantage trading account, and advantage plus account for traders with different experience levels. Traders can start trading with an initial deposit of $10.
FXTM offers a complete suite of MetaTrader (MT4 and MT5) that is a highly advanced and simple trading interface. MT4 and MT5 are the favourite and most used trading platforms.
Trading Features:
Commission: Average of $0.4-$2 based on volume
Spreads: 0.1 pip onwards
Minimum Deposit: $5
Leverage: 1:2000
Trading Instruments: forex, indices, stocks, commodities, cryptocurrencies
5. Pepperstone
Pepperstone is a regulated broker headquartered in Australia. They offer more than 700 financial assets including forex, CFDs and commodities to trade with.
Pepperstone offers two types of trading accounts- Razor 0.0 and Standard account.
The broker provides three types of trading platforms- MetaTrader4, MetaTrader5, and cTrader.
Account Features:
Commission: No commissions (Standard account) AUD $7 per $100K (round turn) (Razor 0.0)
Spreads: 0.2 pips onwards
Minimum Deposit: $200
Leverage: 500:1
Trading Instruments: Forex, Index CFDs, Commodities, Cryptocurrencies, Shares, Currency Indices
6. RoboForex
RoboForex is a multinational forex trading broker that offers an advanced trading environment for trading. They offer trading eight financial assets i.e., forex, stock, indices, ETFs, commodities, energies, metals, and cryptocurrencies. They are regulated by the central authority IFSC.
RoboForex provides a variety of trading platforms, meeting the needs of traders with different trading needs. These trading platforms are – MetaTrader4, MetaTrader5, cTrader, R Stock Trader, and RoboForex Terminals.
Trading Features:
Commission: Variable
Spreads: Starting from 0.1 pips
Minimum Deposit: $10
Leverage: 1:2000
Trading Instruments: forex, stocks, indices, cryptocurrencies, etc.
It is important to do your own research before signing up with a broker. Forex brokers facilitate the process of trading and offer various tools and environments that can make the process easy and simple. Prefer using the demo account of the brokers you are interested in, and use all features that are offered by them to ensure their reliability.
