Having a credible brokerage platform is vital for forex traders. People that are new to forex find it challenging and need assistance to make a safe and secure trade.
This is where forex brokers come in and offer a combination of competitive prices, trading tools, and reliable trade executions. Such platforms not only improve profit potential but significantly cut down the risks involved in this fast-paced and exciting marketplace.
In this piece, we will enlist some of the best forex brokers for beginners to help you get started. So, let’s dive right into it.
What Is Forex Trading?
Forex is the exchange of currencies and the investors earn profit from the fluctuation of exchange rates. If a currency goes up against the one that is sold the investor makes a profit and vice versa.
For example, let’s assume the exchange rate between the US dollar and EURO is 1.5. You would have to spend 1,500 USD to purchase 1,000 EUROS. Now if the Euro becomes even stronger, it will earn some profit but its devaluation would lead to a loss.
The Best Forex Brokers For Beginners
|Broker||Minimum Deposit (USD)||Max Leverage (USD)|
1. BDSWISS – Range of Accounts That Cater To Different Audiences
BDSWISS is one of the largest trading groups that entertain clients from 186 countries and has over 1.5 million members in its exclusive club. It is heavily regulated and governed by a Swiss bank license that offers worldwide coverage including the US.
Account opening is hassle-free and customers get quality education, and research tools that produce user-friendly trading conditions.
Currently, the firm offers three account types that include Classic, VIP, and RAW. Classic and VIP accounts are based on spread models while RAW also has interbank spreads and commission charge options. Two additional accounts, Cent and Premium accounts are also available for the FSC regulated markets.
BDSWISS also provides a demo account that can be used to develop and test new skills. The virtual balance in the account can be adjusted to 100,000 euros, pounds, and dollars.
Furthermore, the fees of BDSWISS are based on the spread and charged on each asset separately. You would be also charged additionally for the rollover of short and long positions if you hold them overnight.
Overall, the platform charges average fees and is lower than average on Plus500 which makes it suitable for beginners.
- Low minimum deposit
- Average fees
- Demo account
- Reputed platform
- Limited to forex and CFDs
2. NADEX – Offers Binary Options & Direct Data From Exchange
NADEX is a Chicago-based brokerage firm that specializes in spreads and short-term binary options. It is one of the few CFTX-regulated exchanges that are authorized to trade binary options in the US.
These options are simple and based on a yes or no proposition in addition to having well-defined profit and loss limitations which make them appealing to newcomers.
Furthermore, the platform offers tons of educational material on binary options and spreads to help the users understand what they are and how they work. Since it was devised specifically for binary options and spread the tools to focus on those trades only.
NADEX is not just a broker but an exchange that provides market data directly from the exchange. You can select the data directly on the chart, analyze and place orders all on one screen.
Plus, the platform has a built-in ceiling and floor level which means you know the potential profit and loss beforehand. This certainty would be an assurance for newcomers.
The platform charges fees on individual contracts and has a straightforward schedule. It starts from 1 USD and has a maximum cap of 50 USD even if there are more than 50 contracts. You can exit by either placing an opposite trade or waiting for the contract to expire.
- Wide selection of spread and binary options
- Low fees
- Excellent educational material
- No minimum account balances
- Smooth application
- Limited tools
- No promotion or bonuses
3. Interactive Brokers – Versatile Platform For All Types of Traders
Interactive Brokers focuses on low cost, superior trade execution, and broad market access. You can trade options, trade stocks, forex, bonds, and futures on 135 markets from a single platform. The company also has a socially responsible investing lens that evaluates asset values based on several considerations.
Furthermore, the platform offers one of the most powerful suites of tools to learn and analyze trading strategies. The stand-out tool is the “SmartRouting” which searches for the best stock, combination prices, and options when you place the order and execute immediately. As per a third-party analysis, it provides a net improvement of 0.62USD on 100 equity shares.
Portfolio analysis is another powerful tool that links all of your accounts and tracks financial performance. You can integrate savings accounts, credit cards, incentive plans, and investments with the account to get a complete picture of financial standings which helps in devising a better investment strategy.
Besides these, tons of other tools like Social Sentiment, ESG scores, fundamental data on stocks, and mutual funds are also available.
- A powerful suite of tools
- Fast order execution
- Low margin interest rates
- Provides a range of offerings
- SmartRouter is not available to Lite Clients
4. FOREX – Regular Content To Keep Up With Market Trends
Forex.com offers everything one needs in a foreign exchange market. It has low fees, tons of currency pairs, and a plethora of research tools to maximize profits and mitigate losses. Furthermore, it is regulated via four tier-1 jurisdictions which makes it a risk-free platform for CFDs and forex.
It offers a range of trading platforms that are designed for different audiences that including Advanced Trading, Web Trading, Meta Traders suite, and NinjaTrader.
Web Trading platform is the best fit for those that are just getting started as it comes with 100 indicators, 10 chart types, and 14 timeframes. You can easily conduct research and place trades in the breeze with these tools.
Furthermore, the platform publishes new content regularly that covers market trends and sector themes. It is written by an in-house team of analysts that are well-researched and thus guide the customers for better trades.
FOREX has varying fee mechanisms on different accounts. It either charges a commission fee or a spread fee depending on the account. The amount of fee is competitive and there are no charges on incoming deposits.
- Virtual Demo
- Multiple trading platforms
- Well-researched educational content
- Low minimum deposit
- Competitive fee structure
- Metatrader is not available in the US
5. OANDA – No Cap On Minimum Deposit
OANDA is a trusted brokerage platform with a solid regulatory track record that has a range of offerings. Integration of third-party research tools makes it an entrusted and reliable option to make trade transactions. Furthermore, cryptocurrency trading is also available on this platform albeit it is restricted to CFDs.
The platform offers 124 symbols and 71 forex pairs in total but their availability is subject to the region of operations. In the US, all the popular currency pairs are available that have higher liquefaction value.
Furthermore, the application has a versatile chart that has 33 technical indicators and 13 drawing tools. Zooming in and out of the charts is a fluid experience and you also have more than a dozen time frames to choose from. It also offers two platform suites that include MetaTrader 4 and OANDA’s fxTrade Web. Both of these platforms have tons of features to assist both beginners and established traders.
Within the OANDA marketplace, you also get access to third-party tools which help in devising better investment strategies. Seer Trading, for example, has an algorithmic, forward, and backtesting automated trading system.
This allows you to analyze previous strategies based on historical data and develop new one according to new trends in the market.
Moreover, the platform also offers account management where all of the financial accounts can be synchronized. You would be able to transfer funds conveniently while having a complete picture of the finances on the dashboard.
- Can trade in cryptocurrency
- Regulated by tier-1 jurisdictions
- Fluid interface
- No cap on minimum deposit
- A safer option for newcomers
- Scarcity of video content
Things You Need From a Forex Broker as a Beginners
Forex brokers not only make trades on your behalf but also guide you about the market insights. You often rely on the provided information to execute a transaction which gives them unparalleled importance and warrants a well-thought-out decision.
Hence, in this section, we will enlist some features that must be taken into account while making a decision about a forex broker.
1. Regulatory Compliance
The first and foremost thing to look for in forex brokers is their reputation. Foreign exchange is run across the globe via over-the-counter markets that are not centralized. Traders in Australia can trade in Euro, Yen, and USD despite the geographical boundaries without registering themselves in all countries.
This creates opportunities for financial embezzlement, irregularities, and scam that not only results in financial loss but also lands the investor in legal trouble.
Each country has a regulatory body to safeguard the interest of investors and protect the integrity of derivatives markets. In the US, National Future Association is the regulatory authority that issues licenses to forex traders.
Most brokers provide their registration number in the “About US” section on their websites. You can cross-check it on the NFA website for added assurance.
2. Funding and Withdrawal Options
Brokers have different platforms and options to withdraw the profit and fund the account. You can make transactions via bank accounts, credit cards, and personal cheques. Whereas some also permit the transfer between online wallets like PayPal, TransferWise, and Payoneer.
Furthermore, fees for these transactions also vary between different brokers. Hence, choose a platform that offers transfer options of your preferences and also has competitive fee schedules.
3. Customer Service
An efficient customer service that can quickly address queries is a must for a forex broker. The market remains operational 24 hours a day and users can run into problems at any time. Some brokers generate automated responses to the queries which can often mislead and do not offer a proper solution.
Hence, brokers that offer 24 hours live customer service and have less than average waiting time should be preferred.
Forex brokerage platforms are accessed via smart applications or web browsers which demand fool-proof security. You should look for a broker that offers two-factor authentication for every login. It not only protects from cyber threats but also eliminates the risk of accidental trades when a device gets in the hand of someone else.
5. Trading Platform
A trading platform is the portal to the market and provides necessary insights as well. You must ensure that the interface is smooth and equipped with analysis tools to make a safe trade.
A well-designed trade platform has prominent sell and buys buttons and some also have a panic button. It can cease all operations in a crisis and save you from potential loss.
Furthermore, the platform should also have an integrated web browser that is reliable and seamless to use. Some applications shut down in the middle of trade without issuing a warning and chance to log out the credentials which can expose you to financial irregularities and scams.
Customization, order entry, automated trading, and strategy-building options should also be considered.
6. Demo Account
A demo account lets you trade with a virtual currency and become familiar with the tools that the platform offers. It trains beginners for the real market without risking the capital. You can also test investment strategies with these accounts to ensure minimal loss and maximum profit. Most brokers offer demo accounts but still one must always check before signing up.
7. Currency Pairs
Foreign exchange market runs on currency pairs and trade can be made in virtually all currencies. That said, only a few pairs get the majority of attention as they offer high liquids. The popular pairs include EUR/USD, USD/JPY, GBN/USD, and USD/CHF.
It is quite possible that your strategy does not involve trading in popular pairs. Hence, look for the broker that offers currency pairs that interest you and are suitable for your investment strategy.
Quick Forex Terms For Beginners
Terminologies in the forex exchange can be quite confusing but their understanding is crucial to making the right trade and selecting a suitable broker. Let’s take a look at them.
Spot Forex or Spot Rate is the exchange rate at which currency is being traded. It is quoted by the broker and can vary in different platforms albeit the difference is minor.
Similar to equity markets, forex quotes are provided with ask prices and bids. The bid is the price at which a broker is willing to purchase in exchange for a counter currency.
Conversely, the ask is the price at which the broker is inclined to sell the base currency. The spread is the difference between the ask and bid.
stands for percentage in point or price interest point which is the smallest price move that can be executed in a forex market. Currency pairs are usually priced out to four decimals and the pip is the fourth point.
Contracts for differences or CFDs are contracts between financial institutions and investors which let the latter take a position on the future value of the assets. It allows the traders to speculate on the future value of the asset without taking its ownership.
Such contracts are illegal in the US as they are over-the-counter products and do not pass through regulated exchanges.
Forex spread bet is the speculation on the movement of a particular currency without actually making a transaction in the exchange. The components of a forex spread bet include the size of the bet, the spread of the instrument that is to be traded, and the direction of the trade. The benefit of placing such bets is that it allows traders to use leverage while making a trade.
In simple terms, a company quotes two prices, the bid and ask, for a bet. Traders can bet on whether the price of the pair would be higher or lower than the ask and bid prices.
It gives traders leverage to borrow capital from brokerage firms and place bets on the currency. Investors only have to meet the margin requirement which is the amount required to finance the bet rather than the full amount of the bet.
A margin is a good faith deposit to the broker in order to open and maintain a position in a particular currency. It is not the fee but rather a portion of the investment that is set aside to trade in those currencies. At its core, it is the borrowing of capital to increase the size of a position which generally improves the return on the trade.
To put it simply, it is like purchasing a larger number of stocks with borrowed amounts to control a position that otherwise would be possible owing to lesser shares. The amount of margin varies in different brokerage firms.
Leverage is the process of borrowing capital from the broker to invest in currency, stock, and security. It is quite common in the forex market which enables investors to earn more profit without needing to pump in additional funding.
That said, it also increases the risk of loss that must be compensated to the broker. You can learn to mitigate losses by using analysis tools and testing the strategy on the demo accounts.
Bottom Line – Best Forex Brokers For Beginners
Forex is lucrative and many see it as a quick way to earn capital. While it is true that it can make fortune overnight, the fact that it can bring down business empires is also correct.
Hence, as a beginner, you must proceed carefully and make decisions based on comprehensive research with the assistance of a credible broker. The choice of brokerage platform should be dictated by your finances and investment strategies.
Although no single broker would be suitable for all, NADEX is decent enough for most newcomers because of its zero minimum balance and the certainty of maximum loss or profit. We hope this piece on best forex brokers for beginners has been helpful.